Regarding the false claim issue, if a provider routinely waives deductibles or co-pays, he is misstating the charge. A common example occurs when a provider charges Medicare $100 for a procedure. Medicare then pays $80, and the provider waives the co-pay. In essence, the actual charge should have been $80, which means that Medicare should only have paid 80% of $80, or $64. Because of the misrepresentation, Medicare

overpaid the claim by $16. Sub-mission of a false claim is a violation of the False Claims Actand can subject the provider to civil and criminal penalties and exclusion from both federal and state healthcare programs.

Providers who routinely waive co-pays and deductibles can also be held liable under the Medicare and Medicaid anti-kickback statute. According to the OIG, the anti-

kickback statute "makes it illegal to offer, pay,solicit or receive anything of value as an inducement to generate business payable by Medicare or Medicaid." In other words, when a provider waives a co-pay or deductible, he "may be unlawfully inducing that patient to purchase

Professional Courtesy: WhenGood Manners Violate the Lawby Ronald E. Nyman, Esq.

Although physicians

might have good

intentions in granting

professional courtesy,

in many cases they may

be violating the law.

As the owner of a medical billing firm, I usually receive at least one inquiry a week from a physician regarding professional courtesy.Undoubtedly, the waiver of co-pays or deducti-bles for friends, colleagues, and their families has been a widespread practice. Why not offer a discount as a friendly gesture to those who deserve it? Other professionals, including lawyers and accountants, commonly grant discounts to preferred clients.

Such reasoning, although sound in the past, can no longer be relied upon. Unlike lawyers and accountants, physicians have an additional partner in the reimburse-ment process, the insurance carrier.Although physicians might have good intentions in granting professional courtesy, in many cases they may be violating the law. According to the U.S. Office of Inspector General (OIG) 1994 Fraud Alert, the routine waiver of deductibles and co-payments "is unlawful because it results in (1) false claims, (2) violations of the anti-kickback statute, and (3) excessive utilization of items and services paid for by Medicare."

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Finally, when can a provider waive a co-pay or deductible? Notwithstanding certain narrow exceptions, the general rule is that a provider can waive such charges if he determines in good faith that the patient is in financial need. In such an instance, it is good practice to document that need in the patient file. However, providers should note the OIG caveat that the financial need exception "must not be used routinely; it should be used occasionally to address the special financial needs of a particular patient."

The issue of professional courtesy is but one component of a myriad of compliance issues that all providers need to address. Nevertheless, a provider's past use of the practice makes it an area for potential liability. Providers should monitor their practices to ensure compliance with all applicable federal and state laws.

Ronald E. Nyman, Esq. is founder and presidentof Medi-Claim Services, Inc.

items or services from [him]." Violation of theanti-kickback statute can result in criminal prosecution and exclusion from federal and state healthcare programs. Moreover, the OIG views professional courtesy as a cause for over-utilization of healthcare services. In their view,when patients pay for their portion of health care, they become "better health care consumers, and select items or services because they are medically needed, rather than simply because they are free."

Providers should also be aware that the govern-ment can prosecute providers who improperly grant professional courtesy discounts to patients who have commercial insurance. Under the Health Insurance Portability and Accountability Act(HIPAA) of 1997, the federal government now has jurisdiction to take action against those who defraud private as well as public health programs. Therefore, all laws and regulations affectingwaivers of co-pays and deductibles apply,regardless of whether the insured is covered by a commercial or government insurance program.