Feds crack down on facilities that routinely dismiss coinsurance fees
A casual attitude toward Medicare charges can lead to stiff fines
Adding another chapter to their campaign against health care fraud, federal enforcement officials are going after health care facilities that systematically waive the coinsurance portions of their Medicare patients’ bills.
Outpatient financial departments, in particular, are being advised to play it safe and desist from offering patients the waivers unless the reasons meet exceptions contained in a new health care reform law. The law, commonly called the Kennedy-Kassebaum law, named after its authors, became effective Jan. 1. The law’s official name is the Health Insurance Portability and Accountability Act of 1996.
Hospital outpatient departments and ambulatory care centers normally account for an extremely high volume of Medicare copayment and deductible dollars. Therefore, they are likely to be a leading target of enforcement by the Office of Inspector General of the U.S. Department of Health and Human Services (HHS) in Washington, DC.
"The government is very serious about this and is going to crack down on providers who intentionally ignore the law," warns Sanford V. Teplitzky, JD, a health care attorney with the law firm of Ober, Kaler, Grimes & Shriver in Baltimore.
The law specifically defines routine coinsurance waivers as an illegal compensation to Medicare or Medicaid beneficiaries and therefore, is unlawful under federal anti-kickback statutes. In making routine coinsurance waivers illegal, the act reiterates existing Medicare-Medicaid prohibitions against illegal coinsurance waivers.
But the new provisions outline three exceptions. The waivers aren’t unlawful if providers:
• do not regularly advertise that they’ll waive the fees;
• do not routinely offer the waivers;
• demonstrate sufficient reasons for their actions.
The third exception must be satisfied in all of the following ways: 1) The provider must make an earnest effort to collect the fees before deciding on the waiver; 2) the decision to waive is based on the patient’s financial need; and 3) the waiver complies with existing Medicare "safe harbor" standards.
Safe harbor provisions allow providers to forgive the coinsurance under certain conditions, namely that the fees aren’t the focus of a formal pricing arrangement with a third-party payer.
To be in compliance, providers must meet all three major exceptions.
Confusion may increase
The new law also raises civil penalties for violations. It hikes fines to a maximum of $10,000 per claim from the previous $2,000 and gives the government leeway to triple penalties (up from double penalties) based on the total dollar amounts of the coinsurance fees involved in the claims. It leaves open additional criminal sanctions under federal anti-fraud statutes.
Some health care attorneys believe the coinsurance sections of the act may only serve to worsen an already confusing area of Medicare reimbursements.
"The best way to avoid problems is by not offering the waivers at all. We generally tell our managers not to forgive the coinsurance under any circumstances," advises Lee Williams, CPAM, director of business development with Geisinger, a regional health system based in Danville, PA.
Coinsurance waivers have long been a subject of debate between providers and the Health Care Financing Administration (HCFA) in Baltimore. Financial managers have never completely been clear about when they can legally forgive the out-of-pocket fees or even if they should waive them for any reason, Williams says.
Although safe harbors provide some latitude, many facilities have allegedly ignored or misinterpreted them, according to some industry insiders.
Fees control utilization
HCFA requires the coinsurance payments as a way to discourage beneficiaries from seeking unnecessary services. But Medicare officials believe many hospitals are routinely waiving the payments to attract additional business and then getting the fees reimbursed through annual cost reports.
Jim Whicker, CPAM, of Intermountain Health Care in Salt Lake City, acknowledges that some providers may be abusing the practice. But he believes the fees are usually forgiven only when a patient can’t pay at registration or reneges on a promise to pay. Usually, "the sums are waived after efforts to collect are exhausted," says Whicker, Intermountain’s director of electronic data interchange. (For practical tips on complying with the Kennedy-Kassebaum legislation, see the chart, p. 11.)
Safe harbor provisions specifically limit coinsurance waivers to situations that don’t constitute a formal "price reduction agreement between a hospital [or other Part A provider] and a third-party payer."1 But they also exempt Medicare SELECT, a form of supplemental insurance offered by private insurers, which offers services through a network of preferred providers.2
Private carriers and some providers have allegedly used Medicare SELECT as the basis to sidestep prohibitions and waive the coinsurance to help build referrals, attorneys say. But facility financial managers have wondered at their own role when waivers are initiated by insurers and written into payer contracts.
Providers are being warned
According to Teplitzky, under Kennedy-Kassebaum, Congress is apparently attempting to strengthen existing safe harbors in hopes of clarifying past uncertainty. But the government also is warning providers that routine waivers are unlawful and imposing stiffer monetary penalties to get out the message.
Nevertheless, some facilities will inevitably continue to puzzle over compliance, Teplitzky adds. For example: How much effort to collect the fees will satisfy the statute? Will a provider be liable if an insurer routinely advertises the waiver and then refers a patient? Furthermore, "how do you justify the time and expense of going after a multitude of $3 copays to avoid breaking the law," questions Whicker of Intermountain.
To help answer these questions, the statute directs the HHS to solicit advisory opinions and ideas annually.
References
1. 56 Fed Reg 35,952-35,962 (July 29, 1991).
2. 61 Fed Reg 2,122- 2,123 (Jan. 25, 1996).
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content