When professional courtesy could get physicians in trouble

More likely than not, a physician or a dentist has at one point provided discounted or free healthcare services to some patients by waiving all or part of a fee or the copayment and/or coinsurance obligations as a “professional courtesy.” According to the Office of Inspector General’s (OIG) Compliance Program For Individual and Small Group Physician Practices guidelines, however, this practice may expose a physician to an investigation.

To be sure, not all professional courtesy discounts or free services are taboo. The OIG’s guidelines provide that, in general, whether a professional courtesy arrangement runs afoul of the fraud and abuse laws is determined by two factors:  (i) how the recipients of the professional courtesy are selected; and (ii) how the professional courtesy is extended.  The OIG specifies that:

If the recipients are selected in a manner that directly or indirectly takes into account their ability to affect past or future referrals, the anti-kickback statute [criminal statute]–which prohibits giving anything of value to generate Federal health care program business-may be implicated. I the professional courtesy is extended through a waiver of copayment obligations (i.e.,“insurance only” billing), other statutes may be implicated, including the prohibition of inducements to beneficiaries. Claims submitted as a result of either practice may also implicate the civil False Claims Act. [citation omitted]

While the OIG’s guidelines were published over a decade ago, recommending that even small physician group practices or individual providers develop a compliance plan to demonstrate a practice’s commitment to adhering to applicable laws and regulations, the importance of the OIG’s guidelines is by no means diminished by the passage of time.  In the current age of increased scrutiny from federal and state investigative and auditing agencies, physicians should be on alert to avoid any appearances of impropriety — even when they are doing a good deed like waiving all or part of their fees. The OIG offered the following observations by which physicians could measure their conduct:

to avoid running afoul of federal (and state) laws and regulations, a physician’s decision to provide free or discounted services, including the waiver of copayments and coinsurance, may not take into account directly or indirectly any group member’s ability to refer to, or otherwise generate Federal health care program business for a physician.

The OIG was clear, however, that a physician offering to waive a copayment to a Federal health care program beneficiary who is not financially needy may run afoul of the Civil Monetary Penalties Law. That law prohibits offering payments to a Medicare or Medicaid beneficiary that a physician knows or should know is likely to influence the beneficiary to obtain services from that particular physician.

In sum, when offering professional courtesy discounts, physicians should make sure that their good deeds also comply with applicable laws.

Deniza Gertsberg is an attorney who represents healthcare providers in compliance-related matters in New York and New Jersey. 

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