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Waiving Patient Financial Responsibility

Updated:
June 2020
Topic:
Admin/Record Keeping/Charting

Co-pays, co-insurance, deductibles and discounts - HELP!

For many years the practice of “courtesy” write-offs has been accepted as normal. Typically, this means insurance claims will be submitted for services provided and the patient is billed for only a portion, or none, of the remaining balance. This is often extended to other healthcare professionals, friends of the dentist, and even to low income patients needing treatment they can’t afford. Dentists should be aware that discounting or forgiving patient copays and/or deductibles could be illegal based on state and federal laws.

Basic Insurance Terms

It may be helpful to define a few basic insurance terms describing different ways in which patients may be financially responsible for dental care. 

  • Copay is a set amount for which the patient is responsible for a specific service. For example, a patient may have a copay of $25 for an office visit. Although a few dental plans have copay-driven services, this is more common with medical plans. Copays, when applicable, should be collected up front, prior to the patient being seen.
  • A deductible is the amount a patient is responsible for before insurance reimbursement. For example, many dental plans require the patient be responsible for the first $50 or $100 before the insurance calculates reimbursement. This is often an annual deductible for all services rendered.
  • Co-insurance is the amount, usually a percentage of the total insurance allowable, which is the patient’s responsibility. For example, a typical dental plan may reimburse 80% of their allowed amount for a specific service. The patient is responsible for the remaining 20%. In addition, when the patient is seen by an out-of-network provider, they are also responsible for any difference between the insurance allowable and the dentist’s full fee.

For the purpose of this article, when any of these terms are used, we are referring to the patient’s financial responsibility for their healthcare. This may be either dental or medical care, as all health insurance plans have a similar structure and are governed by the same rules of law.

Why Hold a Patient Responsible for a Portion of Treatment?

What is the purpose of holding the patient responsible for a portion of their dental or medical treatment? All insurance plans integrate some form of deductible, co-insurance, and/or co-pay for two major reasons. First, it mitigates the total paid out by the payer. Second, it holds the patient partially responsible for the cost of their treatment. There are a few insurance plans with no copayments; however, these plans typically come at a high premium. It is important to note here that even government sponsored plans, such as Medicare, Medicaid, and Tricare, require co-pays from their beneficiaries.

Insurance payers are serious about requiring patients to take responsibility for their financial share of treatment. Typically, both medical and dental payers are clear in their plan documentation regarding the patient’s financial responsibility for copays. Consider this excerpt from a statement Delta Dental Insurance has posted on their website for dentists.

Copayment waiver is when a dentist enters a fee on a claim that includes a copayment that the dentist never intends to collect, which makes the reported fee artificially higher than the dentist's actual fee charged. This causes the dental carrier to cover the patient's share of the fee. Copayment waivers are a form of overbilling the dental carrier.

Waiving copayments violates the contracted dentist’s participation agreement with Delta Dental as well as the patient’s dental benefits contract. This can jeopardize the stability of the patient’s dental coverage by driving up costs, because we assume the overbilled fee to be accurate and then base our premiums on inflated dental costs. When premiums increase, groups may consider dropping dental benefits altogether. Delta Dental may also terminate the dentist’s participation agreement if a dentist regularly waives patient copayments. 

The statement can be found in its entirety at

https://www.deltadentalins.com/dentists/guidance/copayment-waivers.html 

This is just one example of the wording of a contract policy typically used by all insurance payers. Similar language is found in almost all payers’ provider processing manuals and patients’ plan documents. As an in-network provider, you agree to adhere to the payer’s processing policy manual. This manual may be obtained via a download from the payer/provider portal or by contacting the provider relations department.

The Legality of Waiving Copays

The American Dental Association (ADA) Code of Ethics, Section 5, addresses the principle of veracity, or truthfulness. Section 5B is specific to charges for dental services. This document states, in part, the following: 

5.B. REPRESENTATION OF FEES.

Dentists shall not represent the fees being charged for providing care in a false or misleading manner.

ADVISORY OPINIONS

5.B.1. WAIVER OF COPAYMENT.

A dentist who accepts a third party payment under a copayment plan as payment in full without disclosing to the third party that the patient’s payment portion will not be collected, is engaged in overbilling. The essence of this ethical impropriety is deception and misrepresentation; an overbilling dentist makes it appear to the third party that the charge to the patient for services rendered is higher than it actually is. 

In essence, doctors should not accept payment from insurance payers as payment in full when a copayment is contractually required by the patient’s dental plan. This applies whether the doctor is in- or out-of-network. As previously noted, insurance payers consider patient responsibility and participation to be a contractual obligation and integral to the policy requirements. In addition, patients accept responsibility to pay the copayment by signing Box 36 of the 2019 ADA Dental Claim Form, which states the following:

I agree to be responsible for all charges for dental services and materials not paid by my dental benefit plan, unless prohibited by law, or the treating dentist or dental practice has a contractual agreement with my plan prohibiting all or a portion of such charges.

All states now have laws that prohibit the forgiveness of copayments. The specifics of these laws may vary by state and we recommend that dentists become familiar with the laws in their state. State dental societies, as well as healthcare attorneys knowledgeable of your state healthcare laws, are excellent resources when you are in doubt about any law pertaining to your dental practice.

Regardless of state laws, there are federal laws as well which pertain to waiving patient financial responsibilities. One law you may have heard of is the anti-kickback statute (AKS). In its document “A Roadmap for New Physicians—Fraud and Abuse Laws”, the Office of Inspector General (OIG) states the following:

The kickback prohibition applies to all sources of referrals, even patients. For example, where the Medicare and Medicaid programs require patients to pay copays for services, you are generally required to collect that money from your patients. Routinely waiving these copays could implicate the AKS and you may not advertise that you will forgive copayments.

Although the example of Medicare and Medicaid is given, this law applies to all insurance payers, commercial and government, medical and dental. The document does go on to say that copayments may be forgiven when a good faith effort has been made to collect payment from the patient. 

Forgiving Copayments

This may leave you wondering whether there is not some legal way to lessen a deserving patient’s financial responsibility. Forgiving copayments may be done appropriately — under very limited circumstances. 

One way you might legally waive a patient’s financial responsibility is to notify the payer that the practice will not be collecting any copayment from the patient. Note that the ADA’s Code of Ethics includes the phrase “… without disclosing to the third-party that the patient’s portion will not be collected”. This means that, if a copayment is forgiven, the doctor must notify the payer that the practice will not be collecting any copayment. The payer may then recalculate the claim and pay a lower amount, require the patient to pay the copayment, or refuse payment.

Note that if you are in a PPO contract, copay forgiveness is likely a violation of the contract. Participating providers may not waive copayments without breaching the PPO contract, even if the insurance company is notified. 

Providers may elect to write off balances for patients who meet specific financial hardship qualifications. When considering copay forgiveness for financial hardship, the following must be taken into account:

  • Write offs for financial hardship should be infrequent.
  • The practice of forgiving copays must not be an advertised process. Using copay forgiveness as a marketing technique is illegal.
  • Create policies to standardize the situations in which you will or will not write-off copays. These policies should clearly define reasons and criteria for determining a patient’s financial hardship. The policy should include a process for periodic review and auditing.
  • Patients applying for a financial hardship waiver should complete a form or provide some type of document that you can retain as proof that financial hardship was requested, reviewed, and approved for every copay waived. Recordkeeping and documentation is a must.

According to the OIG, it is not illegal to write off a patient’s copay balance if the provider makes a good-faith attempt to collect. However, that does become illegal when a provider has a policy of not attempting to collect copays. Some ways to avoid being caught in a trap of co-pay forgiveness includes, but are not limited to:

Collect co-pays and deductibles prior to treatment.

  • Estimate co-insurance as accurately as possible by verifying benefits prior to treatment. Collect this amount prior to treatment.
  • Create an office policy for the collection of copays and other types of patient financial responsibility.
  • Present patients with a financial agreement clearly stating that they will be responsible for any balance remaining after insurance reimbursement.

Even with the best pre-planning efforts, there may be times when a patient is left with an unexpectedly large balance. Patients sometimes have difficulty paying and may request that the dentist either waive or discount these balances. Remember, the amount of the patient balance does not diminish their responsibility. However, to maintain good patient relations, you may want to consider the following actions to assist the patient with their financial obligations:

  •  Offer credit card options or make arrangements to allow the patient to make monthly payments.
  • Billing statements should include reminders of balance and minimum due amounts.
  • Large balances which are considered to be uncollectable (i.e. the patient has not made payments nor responded to reminders, phone calls, etc.) may be turned over to a collection agency.
  • Consider dismissing patients who do not make reasonable efforts to fulfill their financial obligations.
  • Alternatively, you may want to require unpaid balances to be settled before a requested appointment is made.

What about Discounts?

Some would argue that offering a discount to an uninsured patient is not the same as copay forgiveness. It is important to understand that, in addition to being considered illegal in most states, the ADA considers it unethical to charge a higher fee to patients with insurance than to patients without insurance for the same procedure. If programs such as Senior Citizen Discounts are offered in your practice, they must be administered carefully and within the laws of your state. We highly recommend seeking the advice of healthcare attorney who is knowledgeable in the healthcare laws of your state. 

When an insured patient is given a discount, the fee listed on the claim form must accurately reflect the fee charged to the patient, taking into account any cash discounts and/or patient courtesies. For example, if a patient is given a 20% discount on a $100 fee, the charge amount listed on the claim should be $80, not $100. The payer will then adjudicate the claim based on an $80 fee. This is true even when the patient is an employee of the practice.

Forgiving Copayments for COVID-19 

In closing, we should mention one last scenario in which copay forgiveness may be appropriate. During this time of the COVID-19 pandemic, many patients are out of work and struggling financially. Most payers have policies on waiving patient copays, co-insurance, and deductibles during this national healthcare crisis. While many of these policies are specific only to COVID-19 related charges, especially telehealth visits, most payers will be more lenient of copay forgiveness until the immediate crisis passes. To stay up to date with COVID-19 news affecting dentists, visit our blog https://www.practicebooster.com/blog.asp

 

Disclaimer: The information presented in this articleis intended for educational and training purposes and is not intended to be legal advice. For any legal questions, contact an attorney. The information has been researched and is current as of the date of this publication and is always subject to change. We encourage you to visit the links provided for additional information.

 

© 2020 American Dental Support, LLC

 

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