Pharmacy providers who administer immunizations may be tempted to waive patient co-pays or deductibles.
Pharmacy providers who administer immunizations may be tempted to waive patient co-pays or deductibles. This may be done as a goodwill gesture, a marketing tactic, or a courtesy to the patient. However, many providers are unaware that doing so violates fraud and abuse laws and/or commercial payer contract terms.
The Office of Inspector General oversees and prevents inefficient and illegal operations on behalf of the Department of Health and Human Services, stating that any provider waiving a co-pays misrepresents its actual charges. Payers require co-pays for 2 reasons: to discourage overutilization of health care services and to reduce overall costs. By allowing co-pay waivers, the disincentive for utilization is diminished, leading to increased payer costs. As a result, federal and state laws, as well as payer contracts, prohibit the waiver of co-pays unless there is patient financial hardship. As a matter of federal law, co-pay waivers for government program beneficiaries implicates the Anti- Kickback Statute (AKS),1 monetary penalty laws, and, possibly, anti-referral laws.
The AKS prohibits knowingly and willfully offering, paying, soliciting, or receiving remuneration to or from any person to induce that person to order or receive any items or service for which payment may be made under a federal health care program, unless the arrangement fits within a regulatory safe harbor.1 The OIG has interpreted the statute to apply to waiving patient cost-sharing amounts if one purpose of the waiver is to induce or reward federal program business, a difficult standard to defend against.2 Violations may result in a 5-year prison term; a $25,000 criminal penalty; a $50,000 administrative penalty; treble (ie, triple) damages; and exclusion from Medicare and Medicaid.3,4
OIG has warned against: 1) advertisements that state, “Medicare Accepted as Payment in Full,” “Insurance Accepted as Payment in Full,” or “No Out-of-Pocket Expenses”; 2) advertisements promising “discounts” to Medicare beneficiaries; and 3) routine use of “financial hardship” forms that state the beneficiary is unable to pay the coinsurance/deductible where there is no reasonable attempt to determine the beneficiary’s financial condition.
CIVIL MONETARY PENALTIES
In addition, the federal Civil Monetary Penalties Law (CMPL) prohibits offering or transferring remuneration to federal program beneficiaries if the provider knows, or should know, that the remuneration is likely to influence the beneficiary to order or receive items or services payable by federal or state healthcare programs from a particular provider.5 Violating CMPL provisions may result in penalties of $10,000 per item or service provided; treble damages; repayment of amounts paid; and exclusion from federal payer programs.6 The CMPL specifically defines “remuneration” to include waivers of co-pays and deductibles.7
FINANCIAL HARDSHIP EXCEPTION
The OIG will not enforce the AKS and CMPL against providers who waive co-pays or deductibles due to genuine patient financial hardship.
With respect to AKS, OIG has stated:
The federal Anti-Kickback Statute does not prohibit discounts to uninsured patients who are unable to pay their hospital bills. However, the discounts may not be linked, in any manner, to the generation of business payable by a federal health care program. Discounts offered to underinsured patients potentially raise a more significant concern under the Anti-Kickback Statute, and hospitals should exercise care to ensure that such discounts are not tied directly or indirectly to the furnishing of items or services payable by a federal health care program.2
Similarly, the CMPL excludes from the definition of “remuneration” co-pay and deductible waivers if the following conditions are met: the waiver is not offered as part of any advertisement, the person does not regularly waive coinsurance or deductible amounts, and the person waives coinsurance and deductible amounts after determining that the individual is in financial need or is not able to collect coinsurance or deductible amounts after making reasonable collection efforts.8
Private payer provider manual and contract terms typically require that the provider collect co-pays and deductibles. Not doing so likely violates the payer’s contract terms and makes pharmacists subject to claims for breach of contract and recoupment of payments. Of course, financial need might always be available as a valid defense.
Pharmacies should review their policies and train staff regarding the waiver of co-pays and deductibles to make sure they are compliant. They should have an appropriate documentation trail when it comes to hardship waivers and understand the terms their payers will tolerate when it comes to foregoing collection of co-pays or deductibles. Preventing this noncompliance will help ensure avoidance of costly adverse claims.
1. Anti-Kickback Statute. 42 USC § 1320a-7b (1972).
2. Hospital discounts offered to patients who cannot afford to pay their hospital bills. Department of Health & Human Services Office of Inspector General website. oig.hhs.gov/fraud/docs/alertsandbulletins/2004/fa021904hospitaldiscounts. pdf. Published February 4, 2004. Accessed July 21, 2017.
3. Civil monetary penalties. 42 USC § 1320a-7a.
4. Criminal penalties for acts involving federal health care programs. 42 USC § 1320a-7b.
5. Civil monetary penalties. 42 USC § 1320a-7a (as amended) (originally part of the Social Security Act of 1935).
6. Civil monetary penalties. 42 USC § 1320a-7a(o)(5).
7. Civil monetary penalties. 42 USC § 1320a-7a(i)(6).
Ned Milenkovich, PharmD, JD, is chair of the health care law practice at Much Shelist PC in Chicago and vice chair of the Illinois State Board of Pharmacy. He can be reachedat (312) 521-2482 or at firstname.lastname@example.org.