Let me start by saying that it is likely a breach of contract with the insurances you par with to write off copays or extend "professional courtesy".
Here's a bit about coinsurances and deductibles that you may find interesting if it's applicable, but as for your question about self-pay...you can do anything you want--discount-wise--when there is no insurance in play. You are not required to collect your full-charge amount for self-pay patients.
Now for the other stuff:
What Are Medicare Deductible and Copayment Charges?
The Medicare ``deductible'' is the amount that must be paid by a
Medicare beneficiary before Medicare will pay for any items or services
for that individual. Currently, the Medicare Part B deductible is $100
``Copayment'' (``coinsurance'') is the portion of the cost of an
item or service which the Medicare beneficiary must pay. Currently, the
Medicare Part B coinsurance is generally 20 percent of the reasonable
charge for the item or service. Typically, if the Medicare reasonable
charge for a Part B item or service is $100, the Medicare beneficiary
(who has met his [or her] deductible) must pay $20 of the physician's
bill, and Medicare will pay $80.
Why Is it Illegal for ``Charged-Based'' Providers, Practitioners and
Suppliers to Routinely Waive Medicare Copayment and Deductibles?
Routine waiver of deductibles and copayments by charge-based
providers, practitioners or suppliers 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.
A ``charge-based'' provider, practitioner or supplier is one who is
paid by Medicare on the basis of the ``reasonable charge'' for the item
or service provided. 42 U.S.C. 1395u(b)(3); 42 CFR 405.501. Medicare
typically pays 80 percent of the reasonable charge. 42 U.S.C.
1395l(a)(1). The criteria for determining what charges are reasonable
are contained in regulations, and include an examination of (1) the
actual charge for the item or service, (2) the customary charge for the
item or service, (3) the prevailing charge in the same locality for
similar items or services. The Medicare reasonable charge cannot exceed
the actual charge for the item or service, and may generally not exceed
the customary charge or the highest prevailing charge for the item or
service. In some cases, the provider, practitioner or supplier will be
paid the lesser of his [or her] actual charge or an amount established
by a fee schedule.
A provider, practitioner or supplier who routinely waives Medicare
copayments or deductibles is misstating its actual charge. For example,
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.
In certain cases, a provider, practitioner or supplier who
routinely waives Medicare copayments or deductibles also could be held
liable under the Medicare and Medicaid anti-kickback statute. 42 U.S.C.
1320a-7b(b). The statute makes it illegal to offer, pay, solicit or
receive anything of value as an inducement to generate business payable
by Medicare or Medicaid. When providers, practitioners or suppliers
forgive financial obligations for reasons other than genuine financial
hardship of the particular patient, they may be unlawfully inducing
that patient to purchase items or services from them.
At first glance, it may appear that routine waiver of copayments
and deductibles helps Medicare beneficiaries. By waiving Medicare
copayments and deductibles, the provider of services may claim that the
beneficiary incurs no costs. In fact, this is not true. 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
One important exception to the prohibition against waiving
copayments and deductibles is that providers, practitioners or
suppliers may forgive the copayment in consideration of a particular
patient's financial hardship. This hardship exception, however, must
not be used routinely; it should be used occasionally to address the
special financial needs of a particular patient. Except in such special
cases, a good faith effort to collect deductibles and copayments must
be made. Otherwise, claims submitted to Medicare mat violate the
statutes discussed above and other provisions of the law.
What Penalties Can Someone Be Subject to for Routinely Waiving
Medicare Copayments or Deductibles?
Whoever submits a false claim to the Medicare program (for example,
a claim misrepresents an actual charge) may be subject to criminal,
civil or administrative liability for making false statements and/or
submitting false claims to the Government. 18 U.S.C. 287 and 1001; 31
U.S.C. 3729; 42 CFR 1320a-7a). Penalties can include imprisonment,
criminal fines, civil damages and forfeitures, civil monetary penalties
and exclusion from Medicare and the State health care programs.
In addition, anyone who routinely waives copayments or deductibles
can be criminally prosecuted under 42 U.S.C. 1320a-7b(b), and excluded
from participating in Medicare and the State health care programs under
the anti-kickback statute. 42 U.S.C. 1320a-7(b)(7).
Finally, anyone who furnishes items or services to patient
substantially in excess of the needs of such patients can be excluded
from Medicare and the State health care programs. 42 U.S.C. 1320a-
Indications of Improper Waiver of Deductibles and Copayments
To help you identify charge-based providers, practitioners or
suppliers who routinely waive Medicare deductibles and copayments,
listed below are some suspect marketing practices. Please note that
this list is not intended to be exhaustive but, rather, to highlight
some indicators of potentially unlawful activity.
Advertisements which state: ``Medicare Accepted As Payment
in Full,'' ``Insurance Accepted As Payment in Full,'' or ``No Out-Of-
Advertisements which promise that ``discounts'' will be
given to Medicare beneficiaries.
Routine use of ``Financial hardship'' forms which state
that the beneficiary is unable to pay the coinsurance/deductible (i.e.,
there is no good faith attempt to determine the beneficiary's actual
Collection of copayments and deductibles only where the
beneficiary has Medicare supplemental insurance (``Medigap'') coverage
(i.e., the items or services are ``free'' to the beneficiary).
Charges to Medicare beneficiaries which are higher than
those made to other persons for similar services and items (the higher
charges offset the waiver of coinsurance.)
Failure to collect copayments or deductibles for a
specific group of Medicare patients for reasons unrelated to indigency
(e.g., a supplier waives coinsurance or deductible for all patients
from a particular hospital, in order to get referrals).
``Insurance programs'' which cover copayments or
deductibles only for items or services provided by the entity offering
the insurance. The ``insurance premium'' paid by the beneficiary is
insignificant and can be as low as $1 a month or even $1 a year. These
premiums are not based upon actuarial risks, but instead are a sham
used to disguise the routine waiver of copayments and deductibles.
D. Special Fraud Alert: Hospital Incentives to Physicians
(Issued May 1992)
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