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Office of the Inspector General Topics

Waiving Deductibles and Copayments

I heard that the Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued an opinion on the legality of physicians waiving deductibles and copayment for Medicare beneficiaries that have supplemental, or Medigap, coverage. What are the implications of this decision?

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 mandates that the OIG offer advisory opinions on the legality of existing or proposed financial arrangements upon request. The law requires that OIG provide written guidance regarding how fraud and abuse sanctions will be applied under particular situations. In its fourth advisory opinion, the HHS OIG stated that it may impose civil monetary penalties and criminal sanctions against a provider that pursues a Medigap insurer for denied claims if the provider does not seek payment from the beneficiary.

The OIG commented on an ambulatory surgical center's (ASC) proposal to only seek reimbursement for the applicable deductible and coinsurance that applied to a facility fee from the Medigap insurer, even after the insurer indicated that it would not cover the deductible and coinsurance. The ASC intended to cease collection efforts once the Medigap insurer officially denied to make the payment.

The OIG ruled that declining to pursue collection of copayments from certain patients who have employer-sponsored Medigap coverage constitutes grounds for the imposition of sanctions under the HIPAA of 1996 or under the federal anti-kickback statute. Under HIPAA, a waiver of deductible and coinsurance amounts that a provider knows or should know is likely to influence a beneficiary's choice of a particular provider is considered to be remuneration and subject to civil monetary penalties. An exception included in the law, however, allows providers to waive deductibles and co-pays after individualized determination on financial hardship and after reasonable collection efforts have been made. In this advisory opinion, the OIG said the following regarding reasonable collection efforts:

"Reasonable collection efforts are those efforts that a reasonable provider would undertake to collect amounts owed for items and services provided to patients. These efforts should include a bona fide attempt to bill and collect from the patient if the patient's insurer refuses to pay. When an insurer has taken a consistent position with the provider that a category of claims are not covered, the provider's continued submission of such claims, including subsequent appeals, is not a bona fide collection effort."

The OIG said that the proposed arrangement may also violate the anti-kickback statute, which prohibits payments (or lack of payment) made purposefully to induce referrals of business paid for by a federal program. The OIG noted that this decision reaffirms its position that providers who routinely waive copayments may be held liable under the anti-kickback statute. Although the opinion can only be relied upon by its requestors, the OIG's guidance has broader implications. If you treat patients with Medigap coverage, you should review your billing and collection procedures to ensure that they are consistent with this decision.

Last updated: 11/24/2015