Many managers realize that there are “compliance” issues with professional courtesy and waiver of co-pays, leading to confusion on how to handle them.
Professional courtesy needs to be distinguished from waivers of co-pay. Professional courtesy is the waiver or discounting of the Practice’s entire fee for patients who are physicians or dependents of physicians, or discounting of the fee for these individuals, such as 50% discount. Waiver of co-pays or insurance only may be a form of professional courtesy for physicians and their families, but is often extended much more broadly to practice staff, patients with financial hardship, or even all Medicare patients. Some practices even market or advertise their willingness to accept insurance only for Medicare patients, even after years of warnings from the government most practices recognize that this latter practice is illegal.
There can be an overlap between professional courtesy and waivers of co-pay, such as when insurance only is made available to physician-patients and their families as a form of professional courtesy. However, the two policies have very different legal standing. Professional courtesy – when it consists of waiver of co-pays to physicians and family, as a professional courtesy.
It is legal to provide professional courtesy to community physicians and their families, with two exceptions. It is illegal is when (a) it is targeted to those physicians or other persons who are in a position to refer business to the practice, or (b) when it takes the form of “insurance only”.
It is illegal to target professional courtesy to potential referrers because this may constitute a fraud and abuse “kickback” for referral of Medicare patients. The waiver of the practice’s usual fee can be viewed by as “non-cash remuneration” for potential future referrals.
Does this mean that professional courtesy may only be provided to physicians who are not in a position to refer Medicare patients to your practice? No. Professional courtesy can be provided to physicians and their families, including good referrers. What the practice cannot do is limit the availability of the free services to only the actual or potential referrers.
Professional courtesy can be expensive, particularly when the waived fee is for a surgical procedure. Therefore, some surgical practices want to limit their courtesy to no-surgical services only. That is fine. There is nothing suspect about such an arrangement because referrers and non-referrers alike are eligible for the courtesy benefit.
The waiver of co-pay/insurance only is similar to waiving the entire fee in a professional courtesy situation, in that both arrangements involve reduced cost to the patient. However the waiver of co-pays has a much more tenuous legal standing.
According to the government, waivers of co-pay for Medicare patients violates a federal statute which prohibits the offer of “remuneration” to a Medicare or Medicaid beneficiary that the health care provider “knows or should know is likely to influence” the patient to seek his or her care from the provider who is offering the co-pay waiver. Arguably, waving the entire fee, as in professional courtesy, is also likely to “influence” the beneficiary (who doesn’t like free medical care?). But the government only cites this statute with respect to waiver of co-pays. It does not seem to think that waiver of the entire fee as a professional courtesy is illegal, unless targeted to actual or potential referral sources, as noted above. The waiver of the full fee does not increase the cost of services to the Medicare program which is likely why it is not addressed. “Insurance only” courtesy has also been deemed as insurance fraud by some states. The theory is that the practice represents a fee to the insurance company that is not the fee that it actually intends to collect. Another way to look at this is the insurance reimbursement arrangement brings with it responsibilities for co-payments (and deductibles) that are a prerequisite for the insurance company’s payment. By waiving the co-payment without notice, the practice implies that it complied or will comply with the patient responsibility for payment.
There is one wee-recognized but very limited exception to the prohibition on co-pay waivers. This is a waiver based on demonstrated financial hardship. It is fine to waive the fee, even for Medicare, so long as they are pursuant to reasonable, consistently applied hardship criteria, and are not provided as a routine matter.
In today’s environment of heightened awareness of the need for compliance in both “form” and “operation”, it is important to review co-pay and courtesy policies to remove any risk of potential impropriety.