Ask an Expert
By Robert Liles, JD
Liles | Parker, PLLC

"Is it legal to offer 'cash-only' patients a discount or to do write-downs/write-offs similar to the way a contractual insurance adjustment would be handled? Can we charge them the allowable amount as if they did have insurance?"

Great question. Unfortunately, like so many issues in health care billing, the answer can be somewhat complicated. It's really best to start with an overview of the larger problem. The sad irony of medical care is that many of the patients who least can afford it are sometimes asked to pay the most. While Medicare / Medicaid and private insurance companies contract with health care providers to provide discounted services, uninsured individuals are often levied a provider's full retail charge when receiving care. Moreover, many providers have been hesitant to offer financially strapped patients free or discounted services for fear of infringing on laws that could endanger the provider's participation in Medicare / Medicaid and potentially expose the provider to criminal liability.

Two particular statutes within the Social Security Act (the "Act") are typically cited in connection with these concerns. First, Section 1128(b)(6)(A) of the Act states that providers may not charge Medicare / Medicaid rates for medical services that are substantially more than the provider's "usual charges." Providers have worried that cash discounts to uninsured or underinsured patients could bring the actual service charge below the usual amount charged to Medicare / Medicaid. Second, the Anti-Kickback Statute of the Act, Section 1128B(b), prohibits providers from offering inducements that could influence a Medicare / Medicaid patient to receive medical services from that provider. Although the rationale for this rule is to help curb fraud and to protect beneficiaries from unnecessary medical services and poor quality of care, in some cases providers have been reluctant to offer medical services at a lower cost to uninsured and underinsured patients. This article examines a number of the situations where providers can provide free or discounted care to uninsured and underinsured patients.

Uninsured and Underinsured Patients

The Department of Health and Human Services (HHS) has acknowledged that providing free or discounted services to uninsured patients does not pose a significant risk of Medicare / Medicaid fraud. Accordingly, the Office of Inspector General (HHS-OIG) stated that its enforcement policy does not require providers to include free or discounted rates offered to uninsured patients and "underinsured patients who are self-paying" when calculating the usual charge for services. (Jun. 18, 2004 Addendum, Bulletin, Off. Inspector Gen. (Feb. 2004)). In regards to the Anti-Kickback Statute, HHS-OIG does not consider discounts to uninsured patients in financial need a kickback, so long as the discount is not linked in any way to producing business that is payable to Medicare / Medicaid. (Id.)

Medicare / Medicaid Patients Facing Financial Difficulties

HHS broadly applies the Federal Anti-Kickback Statute to providers that offer "remuneration," defined as anything of value, to Medicare / Medicaid beneficiaries. Remuneration specifically includes discounts or waivers of Medicare / Medicaid co-payments and deductibles, as these patient responsibilities are designed to prevent excessive utilization of the programs by involving patients in the expense of their medical care. However, several exceptions apply to this general rule.

Providers wishing to offer price savings to patients in financial need may follow safe harbor rules set forth in Title 42 C.F.R. Section 1003.101. The safe harbor protects the provider from liability, so long as the provider: (1) does not offer the discount as a means of advertising or soliciting business, even in the most indirect form, such as word of mouth, (2) does not offer the discount on a routine basis, and (3) in good faith found the patient to be in financial need or made reasonable efforts to collect from the patient but was unsuccessful. HHS-OIG has been vague in setting forth a definition of financial need, but in general, HHS-OIG has stated that the provider should base the financial need determination on objective criteria, apply the criteria uniformly, recheck the need for financial assistance on occasion, and take reasonable measures to document the financial inquiry. (Bulletin, Off. Inspector Gen. (Feb. 2004)).

Title 42 C.F.R. Section 1001.952(k) sets forth a second safe harbor rule which allows providers to discount inpatient hospital services. Here, the provider must: (1) not claim the discounted amount as "bad debt" or shift the burden to an entity other than itself, (2) make the waiver independent of individual patient factors, including the period of the stay or the diagnosis, and (3) not use the waiver as a "part of a price reduction agreement," with the exception of Medicare SELECT.

Prompt Payments

On a more specific level, HHS-OIG recently addressed a situation in an advisory opinion that indicated that discounts offered for prompt payments may fall within the safe harbors. Among other things, the provider must design the discount program so that the discount bears "a reasonable relationship" to the savings from bill collection, and the provider must not advertise the discount. (Op. Off. Inspector Gen. No. 08-03 (Feb. 8, 2008)).

Finally, providers must be aware that individual state laws may prohibit the discounting of services. Such laws include State Anti-Kickback laws and anti-discrimination laws, which may prohibit offering discounts only to the uninsured. Health care providers considering a discount program should contact a health law attorney to ensure their compliance with all applicable Federal and State laws.

In view of applicable Federal statutes and regulations, in most instances it would be permissible for a provider to offer a discount to "cash-only" patients, as long as the concerns outlined above are properly considered and addressed. Similarly, charging uninsured patients the "allowable amount" as if they did have insurance would also be permissible (as long as the previously mentioned concerns are met).

This outline is provided as general information only. It does not constituted legal advice and should not be used as a substitute for seeking legal counsel. Readers with legal questions should consult an attorney for guidance. Robert W. Liles is an attorney with the Washington, DC firm of Liles Parker, PLLC. He may be contacted at (202) 298-8750, www.lilesparker.com.

PMI's "Ask an Expert" board will answer selected questions from Link readers and NetworkPMI members each month. Membership to NetworkPMI is free and includes access to a number of benefits and resources, such as the "Ask an Expert" Panel. Topics currently available are Compliance, Legal, Collections, Patient Relations, and HIPAA. Ask an Expert here.

Revised ABNs released this month

As of March 3, providers (including independent laboratories), physicians, practitioners, and suppliers may use the revised ABN for all situations where Medicare payment is expected to be denied. The revised ABN replaces the existing ABN-G (Form CMS-R-131G), ABN-L (Form CMS-R-131L), and NEMB (Form CMS-20007). CMS will allow a 6-month transition period from the date of implementation for use of the revised form and instructions. Thus, all providers and suppliers must begin using the revised ABN (CMS-R-131) no later than September 1, 2008.

As reported on The U.S. Department of Health & Human Services Centers for Medicare and Medicaid Services website posted (http://www.cms.hhs.gov/BNI/02_ABNGABNL.asp) See other Beneficiary Notices Initiative (BNI) links located on the left sidebar of this page or use the search option at the top.

Getting Involved - You can help shape the future of medical practice in the U.S.
By Maxine Inman Collins, MBA, CPA, CMC, CMIS, CMOM

Have you recently replaced one of your printer's ink cartridges? Did you notice the price? Did you stop to think how long this replacement would last and how many printers, fax machines, copiers that are necessary to operate a medical practice or clinic? This is just one example of the ever-increasing costs necessary for the ongoing operation of our practices. Now give additional thought to the cost of medical supplies. These costs have continued to increase in the last few years, and as it stands today we are facing a potential 10 percent decrease in Medicare reimbursements for 2008! By the year 2016, we could face cuts amounting to approximately 40 percent from CMS.

As I travel around the country speaking to medical office professionals, it amazes me the level of responsibility that we face to insure that our physician gets paid fairly for the services he or she provides. It is an uphill battle to keep costs at bay in this era of declining reimbursement. And we don't receive much help from the insurance carriers. The depth of knowledge that is now necessary to work in any position of the medical office is sometimes overwhelming. From the front desk through medical records, to the clinical area and back to administration and billing/collections, each staff member must have an extensive knowledge base in insurance, coding, and compliance to insure that we are operating effectively and protecting our physicians and providers.

Add to that a projected shortage of 85,000 physicians in the U.S. by the year 2020. Considering all the complexities of billing and receiving accurate insurance reimbursement, many physicians and providers that are nearing retirement age are deciding to call it quits. Others are not encouraging their offspring to follow in their footsteps as they did in previous generations. We have major challenges ahead of us in the healthcare industry.

What can you do? You may not realize it, but you have a very important role to play in shaping our future. Your voice and opinions are important to our profession. Your continual quest for knowledge and information is a crucial part of your career. Get all of the information you can and share it. Encourage others to work together and utilize the resources available to counteract these potential negative developments. Refer to the list of opportunities provided below and find an area in which you would like to participate. Be active and join in the shaping of the future of medical practices. The items below are just a few of the resources we have available. I urge and encourage you to join in and let your voice count! If , after reviewing some of these resources, you have further questions, please do not hesitate to contact me by email.

Thank you for the work you do for our medical practices.

www.ama-assn.org
Health Care Advocacy Agenda - The "Grassroots Action Center" has many areas of opportunities for your input. In addition the AMA has toolkits and articles available to enhance your understanding of various issues. You do not have to be a member to access this information.

http://cms.hhs.gov
Browse through the "CMS Highlights", "Frequently Asked Questions" and "Outreach & Education" sections to brush up on your skills.

This year's expanded 2008 National Conference will host a mix of nationally renowned lecturers and interactive learning panels

By now you have probably heard that Practice Management Institute® (PMI) has assembled today's top practice management experts together for a three-day conference in May for medical office professionals focused on proper coding, reimbursement and office management. The 2008 National Conference for Medical Office Professionals is PMI's biggest annual event and it's just two months away! Have you registered yet?

"Three years ago PMI debuted our National Conference for Medical Office Professionals. In this short period, it has grown to the point that for 2008, it must be held at the convention center in downtown San Antonio," said Jimmie Hebert, this year's Conference Chair. "At last year's conference the PMI Advisory Board met for many hours evaluating that conference, and planning for 2008. Attendees submitted evaluations and additional meetings were held throughout the past year. As a result, the 2008 conference is sure to be something very special indeed."

This much-anticipated annual learning event is organized into three learning tracks that will help put you on top of your game. An expanded lineup of topics, additional general sessions and three learning tracks: coding, reimbursement, and office management. Nancy Maguire, a nationally renowned coding lecturer, author and motivating force in the coding industry will share her insight on the past, present, and future of medical records. Exhibitors will be on hand to share product information and door prizes with participants. There's more to this conference than we can adequately cover here. I urge you to visit the conference web site for complete details. A limited number of discount hotel rooms remain. Join us for the ultimate PMI experience in San Antonio this May.

Looking at Percentages

When evaluating collection and adjustment percentages in a medical practice, make sure to include several months of activity, preferably one full year or at least six months. The reason is that the percentage can fluctuate drastically month to month. Patient volumes and the types of patients and procedures performed all change throughout the year. Example: more Medicare patients seen in the winter, thus higher write-offs and lower collections. Another month may include more particular procedures or surgeries in which a plan reimburses exceptionally well and thus adjustments go down and collections go up. There are also seasonal income changes for specialists such as pediatrics.

This month's quick tip provided by Practice Support Resources, a leading provider of information and educational tools for medical practice management, physician relations and physician recruitment.

Scholarship recipient chosen for February

Congratulations to Tammy Keckler, an Insurance Specialist with SJS Medical Management in Lees Summit, Missouri. Tammy is the recipient of February's J.H. O'Dell Scholarship and has elected to begin the Certified Medical Office Manager (CMOM)® Self Study certification program.

The J. H. O'Dell Memorial Scholarship consists of a self-paced certification training package and exam awarded each month in 2008. The scholarship application is available online at the NetworkPMI Web site: network.pmiMD.com. One recipient is awarded at the end of each month by random selection from the pool of electronic applications received. The program began in February.

PMI awards certification by exam to accomplished medical office coding, reimbursement, and practice management professionals. More than 12,000 medical office professionals have earned their credentials through PMI.

For more information about the scholarship program, visit network.pmiMD.com. Applicants must become a member of NetworkPMI (free online sign-up available at the site), have at least one year of experience working in a medical office, have an email address and access to the Internet to complete the application process. Scholarship recipients will be announced on PMI's Web site and the Link each month through December of 2008.

PMI's Ione Broussard featured in this month's BC Advantage magazine

Ever wonder what it's like to travel the U.S. teaching medical office professionals? BC Advantage asked PMI's Ione Broussard that question. See what she said in the latest issue of BC Advantage magazine. Did you know that subscribing to BC Advantage entitles you to participate in the Online CEU Center and earn up to 3 PMI CEUs annually. Visit www.billing-coding.com to learn more.