Professional Courtesy Billing

Professional Courtesy Billing

Physicians may provide “professional courtesy” discounts to other physicians, as well as to those with whom they work or have a personal relationship (e.g., office staff, hospital employees, and family members). Professional courtesy services can create legal liabilities under Stark anti-kickback laws, which define the practice as “the provision of free or discounted healthcare items or services offered to a physician, immediate family member, or office staff.” To remain in compliance, Stark requires that:

  1. The professional courtesy is offered to all physicians on the entity’s bona fide medical staff or entity’s local community or service area without regard to the volume or value of referrals or other business generated between the parties;
  2. The healthcare items and services are of a type routinely provided by the entity;
  3. The entity’s professional courtesy policy is written and approved in advance by the board;
  4. The courtesy is not offered to a physician or immediate family member who is a federal healthcare program beneficiary, unless there is a good faith showing of financial need; and
  5. The arrangement does not violate the anti-kickback statute or any law or regulation governing billing or claims submission.

Medicare stipulates that a physician cannot bill for services or ordered services for his/her immediate family member, as shown below. Per the Medicare Carriers Manual [14-3-2332]:

Do not pay under Part A or Part B of Medicare for expenses, which constitute charges by immediate relatives of the beneficiary or by members of his/her household. The intent of this exclusion is to bar Medicare payment for items and services furnished by physicians or suppliers, which would ordinarily be furnished gratuitously because of the relationship of the beneficiary to the person imposing the charge. This exclusion applies to items and services rendered by a related physician or supplier, even if the bill or claim is submitted by an unrelated individual or by a partnership or a professional corporation. It applies to items and services furnished incident to a physician’s professional services (eg, by the physician’s nurse or technician) only if the physician who ordered or supervised the services has an excluded relationship to the beneficiary. The only exception is items furnished by an incorporated non-physician supplier.

Immediate Relative

The following degrees of relationship are included within the definition of immediate relative:

  • Husband and wife;
  • Natural or adoptive parent, child, and sibling;
  • Stepparent, stepchild, stepbrother, and stepsister;
  • Father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law;
  • Grandparent and grandchild; and
  • Spouse of grandparent and grandchild.

NOTE: A brother-in-law or sister-in-law relationship does not exist between a physician (or supplier) and the spouse of his wife’s (her husband’s) brother or sister.

A father-in-law or mother-in-law relationship does not exist between a physician and his/her spouse’s stepfather or stepmother.

A step-relationship and an in-law relationship continue to exist even if the marriage upon which the relationship is based terminates through divorce or through the death of one of the parties. For example, if a physician treats his step-father after the death of his natural mother or after the step-father and natural mother are divorced, or if he treats his father-in-law or mother-in-law after the death of his wife, the services are considered to have been furnished to an immediate relative and are excluded from coverage.

Members of Patient’s Household

These are persons sharing a common abode with the patient as a part of a single family unit, including those related by blood, marriage, or adoption, domestic employees, and others who live together as part of a single family unit. A mere roomer or boarder is not included.

John Verhovshek

John Verhovshek

John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.
John Verhovshek

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John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.

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