Have you ever provided free or discounted services to referring physicians or their staffers or families? How about hospital personnel, affiliated with discharge planning or otherwise? Home health agency staffers?
The provision of medical services to health care providers, their families or staffs at a discounted charge or gratis is known in the industry as “professional courtesy.” And professional courtesy can get you in serious trouble with the government unless handled carefully.
The problem is that professional courtesy can be construed as a reward for referrals. Such rewards run afoul of the federal anti-kickback laws, which prohibit “remuneration” (that is, anything of value, like professional courtesy) to a referral source in exchange for referrals. The government takes a dim view of such arrangements and investigates them enthusiastically.
In 1997, HIPAA set out conditions under which professional courtesy would violate the law. The Stark Law then created a professional courtesy exception for a physician or his/her immediate family members or office staff under specific conditions. Among other requirements:
-
The professional courtesy must be offered to all physicians in the local community or service area without regard to whether they are referral sources;
-
The courtesy policy must be set out in writing;
-
The courtesy may not be made available to anyone who is a beneficiary of Medicare, Medicaid or any other federal health care program; and
-
If the courtesy involves any reduction of copay or deductible, the insurer must be informed in writing of the reduction.
So what sort of professional courtesy is permitted? First, professional courtesy offered to physicians/families/staffs is permitted if it complies with the Stark Law exception listed above. Second, if a policy can be set up in a way that demonstrates it is not intended to induce referrals, and is offered to all health care providers (or all providers within a specific category, such as the entire staff of a hospital) then it may also be permitted.
Third, note that the Stark Law's very limited exception precludes professional courtesy for patients insured by government programs. Thus, it may make sense to limit professional courtesy to patients not covered by such payers.
Fourth, a discount must be applied across the board. That means you may not write off a copay yet charge the patient's insurance company. Waivers of deductibles and copays can increase utilization of services; one of the primary reasons for the anti-fraud laws is to curb overutilization of services. Also, if you write off the deductible or copay for a non-indigent patient, you are essentially reducing your fee by that amount.
For example, if you were to write off a $100 copay on a $500 piece of equipment, then the company actually is charging only $400 for the equipment. In that case, the amount billed should only be about $320 (80 percent of $400) rather than the full $400. If a supplier then asks to be paid for the full fee schedule payment ($500 instead of $400), the supplier is misleading the government with false information.
Note this applies to all patients, not just government-reimbursed patients. If you waive a copayer deductible for a private patient yet bill the full charge to the patient's insurance company, you are in effect telling the insurance company that your fee is higher than it actually was. This is almost certainly a breach of your contract with that insurer, and it may well constitute fraud under your state's health care laws or general fraud rules.
As a final point on professional courtesy, you might wonder whether it is safe to continue beyond the above parameters if it is limited to private pay patients. The answer is probably not. Most referrals sources for those patients are also referral sources for government-reimbursed patients. Consequently, any special benefit given to these referral sources may be evaluated by the government to determine whether it is an inducement for government-reimbursed referrals.
Materials in this article have been prepared by the Health Law Center for general informational purposes only. This information does not constitute legal advice. You should not act, or refrain from acting, based upon any information in this presentation. Neither our presentation of such information nor your receipt of it creates nor will create an attorney-client relationship.
Neil Caesar is president of the Health Law Center (Neil B. Caesar Law Associates, PA), a national health law practice in Greenville, S.C. He also is a principal with Caesar Cohen Ltd., which offers compliance training, outsourcing and consulting and the author of the Home Care Compliance Answer Book. He can be reached by e-mail at ncaesar@healthlawcenter.com or by telephone at 864/676-9075.
