Wiki Out-of-network: Billing the payer more than the patient

[CatchTheWind]

When in-network, I know it is common (and allowed) practice to inflate the charges sent to the payer and then write off the amount that is greater than the contracted rate.

But when you are out-of-network, I had learned somewhere that the most you can charge the payer is the amount you have agreed to accept from the patient. Let's say, for example:

Your charge is $150.

Patient A has in-network insurance which allows $100, so you send a claim for the full $150 and then write off $50.

Patient B has an out-of-network plan, and you've agreed to accept $120 as payment in full at the time of service from the patient, but you will file a non-assigned claim in the hope of getting him some reimbursement. Is it true that you cannot send a $150 claim, only a $120 claim? This is what I had learned, but I cannot find the source!

 

[thomas7331]

That's correct, this would be considered a false claim because you would be misrepresenting your charges to the payer on the claim if you have agreed to accept a lesser amount as payment in full than what you are billing.

There's a good discussion of this in the following OIG publication, in the section "Why Is it Illegal for "Charged-Based'' Providers, Practitioners and
Suppliers to Routinely Waive Medicare Copayment and Deductibles?":

https://oig.hhs.gov/fraud/docs/alertsandbulletins/121994.html

Although here they are specifically addressing the waiver of Medicare coinsurance and deductible, their explanation of why this would be a false claim is relevant to any payer since it induces the payer to overpay and incorrectly calculate patient share, as explained here:

"if a supplier claims that its charge for a piece of equipment is $100, but routinely waives the copayment, the actual charge is $80. Medicare should be paying 80 percent of $80 (or $64), rather than 80 percent of $100 (or $80). As a result of the supplier's misrepresentation, the Medicare program is paying $16 more than it should for this item....Studies have shown that if patients are required to pay even a small portion of their care, they will be better health care consumers, and select items or services because they are medically needed, rather than simply because they are free. Ultimately, if Medicare pays more for an item or service than it should, or if it pays for unnecessary items or services, there are less Medicare funds available to pay for truly needed services."

 

[orthobiller2017]

I understand the idea...but what if the insurance company doesn't use the physician's allowance. The claim is being processed by the insurance as out of network and there are using their own allowance which is a % of Medicare. Therefore the insurance allowance is less than $150.00 or 120, its actually closer to $90? Wouldn't then the physician be able to decide if he chooses to balance bill the patient the difference between the allowed amount and billed charge or portion of the balanced billed amount?

 

[thomas7331]

Wouldn't then the physician be able to decide if he chooses to balance bill the patient the difference between the allowed amount and billed charge or portion of the balanced billed amount?

Doing this could still be considered a false claim violation because the physician is representing a higher charge to the insurance company on the claim when in reality he is willing to accept a lower amount as payment in full. This is acceptable if the practice has made an attempt to collect the balance and the patient demonstrates a financial hardship that makes them unable to pay, but balances cannot be forgiven routinely.

From a compliance standpoint, the best practice is to set the fees, write a policy for exceptions (e.g. due to financial hardship, self pay status, prompt payment, services for employees, professional courtesy, etc.), have the practice lawyer approve it as compliant and stick to it. Giving discounts or waiving balances for patients outside of any established policy potentially puts a practice at risk.