A lot of insurance companies and public health institutions hold patients responsible for some type of copay for certain medical bills. This is often fine-print language that is built into their policy.
Unfortunately, a lot of co-pays can be financially prohibitive for patients. Especially those who require multiple appointments in a week or who are being served by multiple providers.
Sympathetic to their patient’s needs, some providers have started to waive co-pays, in order to make it more financially feasible for patients to continue to receive care. However, the government views co-pays as an important part of Medicare.
To that point, routine copay waivers are not considered illegal and providers who use them frequently could be vulnerable to criminal and civil penalties. This is due to the way routine co-payment waivers can potentially violate the False Claims Act.
What Are Co-Pays?
The term “Co-Pay” is a shorthand abbreviation for “Copayment.” This is a small portion of a medical bill that the patient is directly responsible for paying to the provider. Though the insurance company sets what the amount of a co-pay is, without provisions for the provider to make a change. This amount is usually determined by the patient’s level of coverage and is subtracted from the reimbursement schedule.
Though different insurance companies and public health institutions have different copay policies. For example, under Medicare Part B, which covers physician visits and most out-of-hospital services, the pre-assigned copay is 20% of the total approved charge.
However, co-pays aren’t always charged for all procedures. Under the Affordable Care Act, certain preventative procedures must be covered without any cost sharing.
What Is Patient Cost-Sharing?
Patient cost-sharing is a conglomerate term referring to co-payments, as well as coinsurance costs and patient deductibles. The Federal government regards them as an integral part of the Medicare and Medicaid programs. Thus, requiring patients to share a modest portion of costs makes them more conscientious care consumers.
Of course, with the current high costs of healthcare in the United States, this level of requirement in co-pays and patient cost-sharing is a hotly debated issue in health policy. In recent years there have been proposals to reform the healthcare industry. This includes proposals to overhaul Medicare to entirely eliminate patient cost-sharing requirements.
What Is a Copay Waiver?
A co-pay waiver is sometimes used by providers, therapists, or suppliers to not collect a copay. Though there are several different ways to waive a co-pay. This includes
- Billing the insurance company without collecting any form of a copayment
- Writing off the copayment amount
- Discounting services or products and applying the discount only to the patient’s copayment amount
- Drug manufacturers offer copay cards to essentially make copayments charged by pharmacists
- Medical equipment manufacturers offer copay cards to make the copayment for medical supplies
- Third-party charities paying for patient copayment amounts as charitable donations
Are Co-Pay Waivers Illegal
Not all copay waivers are illegal. It’s only routine co-pay waivers that are specifically designed to induce additional business that violates the law. This includes things like
- Advertising No Out of Pocket
- Advertisements promise that discounts for Medicare beneficiaries.
- Routine use of financial hardship forms stating that the beneficiary is unable to pay the coinsurance/deductible.
- Suspect Collection where the beneficiary has Medicare supplemental insurance
- Billing Higher Charges to compensate for the loss of copayment from the patient
It isn’t directly illegal to write off a patient’s copay balance if the provider truly makes a good-faith attempt to collect the payment. Though when a provider has a policy or pattern of failing to attempt to collect copays it becomes illegal.
Providers, therapists, and medical equipment suppliers are allowed to forgive the copayment if the patient can clearly demonstrable financial hardship.
In many of these cases, the legitimate Patient Assistance Program (PAP) is completely legal. Though this requires the provider to make an individualized determination of patient needs. Should a provider regularly waives copays due to financial hardship without actually evaluating patients’ needs, it violates the law.
In recent years the US Federal government and many states have started cracking down on a sophisticated version of co-payment fraud. This also includes large insurance companies that help establish independent Patient Assistance Programs, as well as charitable organizations, and pay co-payments for customers of the company’s product.
Is the Use of Copay Coupons Illegal?
In recent years a growing number of pharmaceutical manufacturers and medical equipment suppliers have started offering copayment coupons to insured patients. The goal of these programs is to help reduce or eliminate the patient’s out-of-pocket costs for their branded drugs or products.
In some of these instances, the manufacturer might offer a coupon for a branded drug to reduce the copay below its competitors. Depending on the details of the program the coupon eliminates the copayment altogether.
This type of copayment coupon is often legal for patients covered by private insurance. However, it is technically considered illegal for recipients of Medicare Part D. This makes it illegal in cases where these program sponsors don’t take sufficient care to exclude Medicare recipients.
Why Are Routine Co-Pay Waivers Illegal?
Routine co-pay waivers and deductible waivers violate the law in two ways. The first is that it violates the Anti-Kickback Statute which prohibits medical providers from offering, soliciting, paying, or receiving anything of value in exchange for referrals of Government Health patients. Without this protection in place instances of fraud would become widespread and disreputable providers would be faced with the temptation to take advantage of the public good.
The second reason that routine co-pay waivers are illegal is that they essentially force Medicare to pay more than it should. Which is a direct violation of the False Claims Act.
What Is The Anti-Kickback Statute?
The Anti-Kickback Statute is a set of regulations that includes making it expressly illegal for any healthcare provider to offer, solicit, pay, or receive anything of value in exchange for referrals of Government Health patients. This also means that discounted services are seen as a form of kickback.
Anytime a healthcare provider routinely waives copays to make their services seem cheaper to potential customers, they are offering a thing of value and violate the Anti-Kickback Statute.
At the same time, a lot of providers and medical equipment manufacturers frequently use copay waivers to induce physicians to prescribe their pharmaceuticals or products over more affordable generic competitors.
