Answering the question: Can I provide discounts to patients who can’t afford to pay?
In February 2004, the Centers for Medicare and Medicaid Services and the Office of Inspector General (OIG) issued guidance entitled “Hospital Discounts Offered to Patients Who Cannot Afford to Pay Their Hospital Bills.” *
The guidance concludes providers CAN provide discounts to uninsured and underinsured patients who cannot afford their bills and to Medicare beneficiaries who cannot afford their Medicare cost-sharing obligations.
Uninsured who cannot pay
The federal Anti-kickback Statute does not prohibit discounts to uninsured patients unable to pay their bills, as long as they are not linked to business payable by Medicare or Medicaid.
Providers cannot submit bills or requests for payment to Medicare or Medicaid for amounts substantially more than their usual charges.
However, the OIG has never excluded or attempted to exclude any provider or supplier for offering discounts to uninsured or underinsured patients. Presently, providers do not need to consider such discounts in their “usual charges” calculation.
Reductions/waivers of cost-sharing due to financial hardship
The fraud and abuse laws permit the waiver of all or part of a Medicare cost-sharing amount for a financially needy beneficiary. However, routine waiver of Medicare co-insurance and deductibles can violate both the Anti-kickback Statute and the False Claims Act.
Providers may forgive a Medicare co-insurance or deductible amount in consideration of a patient’s financial hardship when the party offering the waiver:
- Is not acting in response to an advertisement or solicitation
- Does not routinely waive co-insurance or deductible amounts
- Determines in good faith that the individual is in financial need or reasonable collection efforts failed
What constitutes a good faith determination of “financial need” is circumstantial and may depend on factors such as:
- Local cost of living
- Patient income, assets and expenses
- Patient’s family size
- Scope and extent of medical bills
Uniformly apply a reasonable set of financial need guidelines based on objective criteria appropriate for the locality. Also recheck (and document) a patient’s eligibility at reasonable intervals to ensure continued financial need.
To obtain the guidance document, click here. (PDF)
A June 18, 2007 Addendum to the OIG Guidance is also available here. (PDF)
Obtain a legally binding advisory opinion from the OIG here.
* Although this guidance was issued for hospitals, it should apply equally to physicians. Therefore, the word “hospital” has been replaced with “provider” where possible.
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