When it comes to physical therapy billing, our clients often ask about offering discounts to patients who pay cash, and writing off or waiving copayments, coinsurance and deductibles. This is a sticky area and even the best of intentions can land you afoul of federal, state and local regulations. We always recommend that you have your legal counsel review your practice policies in these areas to ensure you are in compliance with the myriad of rules and regulations that govern billing and collections practices. As a starting point for developing your policies there are two pieces of advice we offer.
The first piece was offered by Jerry Henderson in his recent blog post on Fees Schedules and Allowed Reimbursement, and that is to use one fee schedule for all patients regardless of who will be paying the bill. Offering lower rates to one or a group of insurance payers or self-pay patients, routinely waiving co-pays, etc. can trigger the Federal False Claims Act, state false claims acts, and state anti-discrimination provisions.
That doesn’t mean you cannot accept “discounted” payments from self-pay patients or occasionally waive amounts otherwise due from the patients. This is where our second piece of advice comes in – understand where it is okay and then proceed with caution. Generally, there are two situations where it may be okay to accept discounted payments:
- The first is when a patient is paying cash at the time of service. Cash payments allow providers to save on billing related expenses, so the actual charge for the services rendered can be reduced for these potential savings. It is important to quantify and document the cost savings, and to remember that because cash discounts reduce the actual charge to the patient, the reduced charge must be accurately stated on claims submitted to Medicare and other payers.
- The other situation where it may be okay to waive some or all of the usual charges is for a documented financial hardship. In this case developing and rigorously adhering to a written financial hardship policy is extremely important. As with discounts for cash payments, waiving some or all of the usual charges reduces the amount of the actual charge to the patient, and this must be reflected on any claims submitted to Medicare or other payers.
Remember, this is a complex area in physical therapy billing and business. We strongly encourage you to have your legal counsel review your policies before implementing and regularly review them with your staff to ensure compliance.