Feature February 4, 2021 Kayla Valiquette, BSN, RNC-NIC

Copays: Can you waive them?

Health insurance files for waiving copays.

Before your practice decides to waive a copayment, coinsurance, or deductible, you should be aware of the following potential problems:

The illegality of routinely waiving copays

Routinely waiving the patient’s insurance responsibility is a violation of the contract between your office and private insurance company plans. If your office is not able to prove that the patient’s responsibility was collected, or that attempts at reasonable means of collection were made, then the insurance company may demand a refund for any reimbursement paid. They may even cancel the contract with you, not allowing your office to provide services to their patients.

It is a felony to routinely waive copays, coinsurance, and deductibles for patients. Waiving the collection of this portion is illegal and considered health insurance fraud because your office is claiming the wrong charge for services when insurance claims are created. To explain this further, we will use the following example: If your patient has a $10 copay, then the insurance company will pay $90 on a $100 bill. However, if the copay was waived, the patient’s bill is only $90 total, not $100.

When it’s appropriate and legal to waive copays

There are different scenarios in which healthcare providers may feel it is appropriate to waive the patient’s insurance responsibility. Scenarios may include patients who would like to extend professional courtesy to colleagues or their families, when patients are in financial distress, and when collection efforts have negligible results. Each example involves regulatory and legal issues that healthcare providers must consider.

If a patient is in financial distress, healthcare providers may choose not to collect debts without risking allegations of insurance fraud. For example, if the physician does not collect the patient’s insurance responsibility during a period of severe financial hardship, the physician can choose not to pursue collection activity against the patient for the copay that is owed. However, physicians cannot routinely forgive debt; they must reserve this only for patients who are suffering a financial crisis or emergency.

Same rules for public health insurance programs

The same laws apply to Medicare, Medicaid, and Tricare patients, but the risk is greater if your office does not comply—healthcare providers may be charged with fraud against a government agency. Waiver of coinsurance raises potential Federal Anti-Kickback Statute, Federal False Claims Act, and state law liability issues. Additionally, your office must apply hardship programs to all patients. You cannot forgive a patient’s insurance debt for patients with public health insurance during times of crisis yet require patients with private insurance to pay full copays regardless of their financial circumstances.

All of these concerns have led the U.S. Department of Health and Human Services (HHS) to take the stance that it is unlawful to routinely waive coinsurance, including coinsurance for services deemed professional courtesy.

Wrapping up: make sure to document waived copays

If your office has a good reason for waiving a copay, coinsurance, or deductible or failing to pursue debt collection against a patient, records of all conversations with the patient should be kept. You should be able to provide evidence that a good faith effort was made to comply with the law and make exceptions only for specific reasons. Furthermore, healthcare providers should keep track of all payments and note any payment that was waived as evidence that the patient’s insurance responsibility is not routinely waived.

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