by Kim C. Stanger, Holland & Hart LLP
Providers sometimes waive patients’ cost-sharing amounts (e.g., copays or deductibles) as an accommodation to the patient, professional courtesy, employee benefit, and/or a marketing ploy; however, doing so may violate fraud and abuse laws and/or payor contracts. From a payor’s perspective, waiving cost-sharing amounts creates two problems. First, payors often contract with providers to pay based in part on the provider’s usual charges. The Office of Inspector General (“OIG”) has argued that a provider who routinely waives copays is misrepresenting its actual charges. Second, and more importantly, payors require copays to discourage overutilization and reduce costs. Waiving copays and deductibles removes the disincentive for utilization, thereby potentially increasing payor costs. Accordingly, federal and state laws as well as payor contracts generally prohibit waiving cost-sharing absent genuine financial hardship.
Federal Programs. Waiving copays and deductibles for government program beneficiaries implicates at least the following laws:
1. Monetary Penalties Law. The federal Civil Monetary Penalties Law (“CMPL”) prohibits offering or transferring remuneration to federal program beneficiaries if the provider knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services payable by federal or state healthcare programs (e.g., Medicare) from a particular provider. (42 USC 1320a-7a(a)(5)). Violations may result in penalties of $10,000 per item or service provided, treble damages, repayment of amounts paid, and exclusion from federal programs. (Id.; 42 CFR 1003.102). The CMPL specifically defines “remuneration” to include waivers of copays and deductibles. (42 USC 1320a-7a(i)).