Chapter 35 Reimbursement From Patients
BILLING FOR NON-COVERED SERVICES………….. 35:2
Services Deemed Not Medically Necessary………….. 35:2
Other Non-Covered Services 35:2
A Recent Case that May Be Useful to Patients Whose Care is Not Covered 35:3
BILLING AND COLLECTING FROM PATIENTS………….. 35:4
Missed Appointments………….. 35:4
Missed Medicare Appointments.. 35:4
Timeliness of Bills………….. 35:5
Cash Payments 35:5
Collection Activities………….. 35:6
Collection Agencies………….. 35:7
Major Hospitals 35:7
Extending Credit to Patients. 35:8
Patients Billing Physicians for Time Spent Waiting. 35:9
WAIVER OF COPAYMENT……….. 35:9
Medicare Copayments………… 35:10
Nevada Law.. 35:10
Ethical Obligations………… 35:11
SAMPLE GENERAL NOTIFICATION OF NON-COVERED SERVICES………… 35:12
SAMPLE AGREEMENT TO PAY………… 35:12
This chapter addresses some of the more contentious issues involved in billing patients directly for medical services.
BILLING FOR NON-COVERED SERVICES
Physicians often ask whether they may bill a patient for non-covered services or for services which the plan deems not medically necessary. The rules discussed below apply when some aspects of a service or procedure are covered by a health plan but others are not. For a discussion of billing a Medicare patient for a service not covered by Medicare, see the chapter on Medicare.
Services Deemed Not Medically Necessary
A health plan contract generally restricts a physicians ability to bill a patient for services the plan deems medically unnecessary. Some require the physician to obtain a written agreement to pay from the patient before billing for such services (see sample, below). Others completely prohibit physicians from billing for services the plan deems not medically necessary. Therefore physicians should check their plans contracts, and, assuming that billing for these services is not prohibited, should obtain the patients written agreement to pay for these services even in the absence of a contractual requirement to do so.
Other Non-Covered Services
Physicians may generally bill their usual fees for non-covered services, but the physicians contract should be checked for any restrictions in this regard. Any such restrictions should be negotiated out of the contract, if possible.
A patient may be upset with a physician if the physician neglects to inform the patient that he is responsible for payment because certain services were not covered under the patients plan. Some managed care contracts contain a provision which requires such patient notification before non-covered services may be billed to the patient. The patient may have to agree, in advance and in writing, to pay for such services (see sample, below). These provisions should be negotiated out of the contract, if possible.
Regardless of contractual obligations, physicians can avoid needless patient frustration if, in advance of performing non-covered services, they use their best efforts to inform a patient that the patient will be fully responsible for payment. To reduce the risk of misunderstanding, a physician may wish to put a sign in his office or add a section to his patient information form which outlines some of the general non-covered services (see sample, below). Of course, physicians should also make it a policy to discuss the fact that certain services are not covered by health plans at the time the services are prescribed.
A Recent Case that May Be Useful to Patients Whose Care is not Covered
The following case, which was decided in 1997, may provide some useful information to physicians and to their patients who are faced with coverage denials. The case discusses how health plans need to respond when the plan denies coverage and payment for a patients care and the patient disagrees with the denial. See Booton v. Lockheed Medical Benefit Plan, 110 F.3d 1461 (9th Cir. 1997).
Marjorie Booton, who was covered by Lockheed Medical Benefit Plan, was kicked in the teeth by a horse. The injury left four of her front teeth hanging from the gums. The plan excluded ordinary dental work, but covered work required on account of accidental injury to natural teeth. Bootons dentist reset the teeth by splinting them to the back teeth, after performing some expensive procedures to prepare the back teeth to support the splint. None of the procedures, according to her dentist, were related to any condition she had before the accident.
Booton filed a claim for the work done to her teeth. Aetna, who administered the plan for Lockheed, denied payment for the work done on the back teeth, as they were not injured in the accident. Booton filed an appeal, explaining the connection between the injury and the work performed on her back teeth. Aetna again denied the claim, partly because the patient had no evidence of no prior problems with her back teeth, and Booton sued the Lockheed plan.
The federal court decided in favor of the patient and found that her claims were covered under the plan. The court said that under federal ERISA law (most employers paid health plans are ERISA plans), an ERISA plan must provide notice to a patient denied care which clearly states the specific reason for the denial as well as other required information. See 29 C.F.R. 2560.503-1(f). If benefits are denied, the reason for the denial must be stated in clear language, with specific reference to the plan provisions that form the basis for the denial. If plan administrators believe that more information is needed to make a reasoned decision, they must ask for it.
Patients should know that coverage decisions by ERISA Plan Administrators are usually entitled to substantial deference. However, as in this case, when a Plan Administrator denies a claim without an explanation and without obtaining relevant information about the claim, these factors constitute abuse, and the decision will not be a accorded substantial deference. An ERISA plan administrator cannot rely on a lack of information to support a denial of a claim when it does not inform the patient of the missing information so that the patient can provide it.
BILLING AND COLLECTING FROM PATIENTS
Unless a physician has entered into a contract with a payor that prohibits charging patients for missed appointments, a physician may charge a patient when he misses an appointment, or, if the patient gives notice, if the patient does not cancel in sufficient time to allow another patient to fill the appointment slot. The Current Opinions of the Council on Ethical and Judicial Affairs of the AMA addresses the issue as follows:
Appointment Charges. A physician may charge a patient for a missed appointment or for one not canceled 24 hours in advance if the patient is fully advised that the physician will make such a charge. The practice, however, should be resorted to infrequently and always with the utmost consideration for the patient and the patients circumstances. Opinion 8.01.
Physicians should be aware that their patients are likely to be personally responsible for charges for missed appointments, as payments for missed appointments are generally not a covered benefit under many health care service plans or insurance policies. In addition, physicians may be prohibited by the plans with which they have contracted from billing for missed or canceled appointments.
Missed Medicare Appointments:
Medicare does not provide any benefit for missed appointments. Nonetheless, because charges for failure to cancel an appointment in adequate time or missing an appointment are a non-covered benefit under the Medicare program, patients covered by Medicare may be personally billed for these occurrences. Medicare policy requires that patients must be notified in advance if these types of charges will be made, and these charges must apply to all patients and not be limited solely to Medicare patients. Written notification to patients of charges for missing or canceling appointments is recommended to assure patient understanding of these charges and as clear evidence of having given such notice, but written notification is not required.
Timeliness of Bills
Payment of bills by a patient is more likely if billing is prompt. Where no third party payor is involved, there is no law which requires that physicians bill patients within a certain period of time. However, your managed care contract may address this issue, and it should be consulted .
There are limits on when legal action may be taken if a patient does not pay. The statute of limitations for a debt varies depending on whether the debt is found to be based on an unwritten agreement or if the debt is based on a written agreement, as almost all are. Because statute of limitations are extremely dependent on the facts of each specific case, and may be extended or shortened depending on certain other legal principles, consultation with an attorney is recommended whenever there is any doubt as to whether a debt can be collected.
If a patient pays a physicians using large sums of cash, the Internal Revenue Code may be implicated. Under the Code, any person involved in a trade or business who receives more that $10,000 in cash in one transaction or related transactions must report the transaction to the IRS on Form 8300 (also know as the CTR or cash transaction report). This form must be filed within 15 days of the receipt of the cash. When the total cash payment of a series of related transactions exceeds $10,000 within one year of the initial cash payment, the total payment must be reported within 15 days of the receipt of the payment that causes the total to exceed $10,000. I.R.C. 6050I. In this context, cash includes U.S. currency and coins, foreign currency, and U.S. silver certificates, notes, and Federal Reserve notes. A penalty of $100,000 can be assessed for failure to comply with this regulation.
Rather than using collection agencies, many physicians have set up protocols within their own offices to attempt to collect overdue bills. Physicians and their staff may talk to the patient about an overdue bill during an office visit. A series of letters may encourage a patient to become current with his billing. Finally, subject to certain restrictions, a physician may telephone a patient to ask for payment. Although Nevada and federal law may heavily regulate collection activity, a well structured collection plan can prove extremely beneficial to a physicians practice.
Whenever a physician attempts to collect a debt, he is subject to a series of federal regulations. The federal Fair Debt Collection Practices Act prohibits debt collectors from engaging in unfair or deceptive acts or practices. Federal law limits the time, place, and manner under which debt collectors may communicate with consumers in connection with the collection of a debt. It prohibits certain harassing conduct by debt collectors and prohibits false, deceptive, or misleading representations or meanings in connection with the collection of a debt. Federal law also prohibits the following:
- a) Debt collectors may not communicate with consumers in connection with the collection of any debt: (1) at any unusual or inconvenient time or place; (2) if the debt collector knows the consumer is represented by an attorney; or (3) at the consumers place of employment if the debt collector knows or has reason to know that the consumers employer prohibits such communications.
- b) Debt collectors may not engage in any harassing, oppressive, or abusive conduct in connection with the collection of a debt.
- c) Debt collectors may not use any false, deceptive, or misleading representation or meanings in connection with the collection of any debt including, but not limited to, the following:
(1) the false representation of the character, amount, or legal status of the debt;
(2) the false representation or implication that any communication is from an attorney;
(3) threats to take action that cannot legally be taken or that is not intended to be taken;
(4) the failure to disclose clearly in all communications made that the debt collector is attempting to collect the debt and that any information obtained will be used for that purpose only; or
(5) the use of any business, company, or organization name other than the true name of the debt collectors business, company, or organization.
Although employing a collection agency is not expressly forbidden, it is especially critical that the physician not violate his patients confidentiality if he chooses to work with a collection agency.
Nevada law contains specific rules concerning the issuance of discounts for uninsured patients who make attempts to pay a medical bill, and also governs attempts to collect deductibles and copayments from certain Medicare patients. These rules apply only to major hospitals, defined as those hospitals in Nevada that have 200 or more licensed or approved beds, or any hospital in a group of affiliated hospitals in a county which has a combined total of 200 or more licensed or approved beds, that is not operated by a federal, state, or local governmental agency. NRS 439B.115.
Major hospitals are required to reduce or discount the total billed charge by at least 30 percent for hospital services provided to an inpatient who: a) has no insurance or other contractual provision for the payment of the charge by a third party; b) is not eligible for coverage by a state or federal health care program of public assistance that would provide for the payment of the charge; and c) makes reasonable arrangements within thirty days after discharge to pay his bill. NRS 439B.260. Within this context, reasonable arrangement is construed to mean the greater of a) twenty-five dollars a month, or b) five percent of the monthly gross cash income of the patients household or twenty-five percent of the monthly gross income of the patients household which exceeds 200 percent of the federal poverty level, whichever is less. NAC 439B.330.
Each major hospital that is required to reduce or discount the total billed charge for hospital services must provide each patient who informs the hospital that he does not have medical insurance with an approved written disclosure stating that the patient may be eligible for a discount and explaining how to apply for the reduction or discount. NAC 439B.325.
Major hospitals may not collect or seek to collect the deductible or copayment from an indigent patient who is covered by Medicare and who demonstrates that he is medically indigent. NRS 439B.265. (This provision is effective upon confirmation from the federal government that deductibles and copayments that a hospital is prohibited from collecting are deemed uncollectible under federal law.) The current regulations should be consulted to determine the definition of indigent for these purposes. NRS 439B.310. Further, a major hospital is required to reduce or discount the total billed charge of its outpatient pharmacy by at least 30 percent to a patient who is eligible for Medicare. NRS 439B.260.
Extending Credit to Patients
A physician generally may extend credit to his patients. Physicians who regularly extend credit are subject to extensive regulation under a federal law commonly called Regulation Z. Regulation Z applies to those physicians who extend credit by imposing a finance charge or allowing payment in four or more installments mor than twenty-five times per year. 12 C.F.R. 226.1 and following sections.
Physicians may also wish to consult a commercial credit reporting agency before extending credit to their patients. Credit reporting agencies can provide interested physicians with additional information about extending credit, as well as appropriate forms for patients to sign authorizing release of credit information. Physicians who wish to investigate patients credit themselves may be subject to the highly regulated practices of the credit reporting agencies.
Physicians who are interested in obtaining additional information about credit practices in the medical field can obtain the American Medical Associations publication entitled Medical Collection Study Course, which discusses the basics of collecting delinquent accounts. Further, the 1992 Current Opinions of the Council on Ethical and Judicial Affairs of the AMA discusses certain collection activities as follows:
Although harsh or commercial collection practices are discouraged in the practice of medicine, a physician who has experienced problems with delinquent accounts may properly choose to request that payment be made at the time of treatment or add interest or other reasonable charges to delinquent accounts. The patient must be notified in advance of the interest or other reasonable finance or service charge by such means as the posting of a notice in the physicians waiting room, the distribution of leaflets describing the office billing practices and appropriate notations on the billing statements. The physician must comply with state and federal laws and regulations applicable to the imposition of charges. The Council on Ethical and Judicial Affairs encourages physicians who choose to add an interest or finance charge to accounts not paid within a reasonable time to make exceptions in hardship cases.
Because credit and collection laws are highly regulated, and physicians could face criminal and civil liability for violating these laws, physicians should seek legal advice from an attorney if they at all question the appropriateness or legality of any practice.
Patients Billing Physicians for Time Spent Waiting
As some physicians are aware, patients may sometimes get angry if they spend long periods of time waiting for their physicians. Some physicians have received bills for patients for lost wages, mileage costs, or time spent waiting when the physicians were running behind schedule or missed appointments. There is no law requiring physicians to pay such bills. However such situations should be handled diplomatically and professionally, and patients should receive sincere apologies letting them know that the physician empathizes with their frustrations.
WAIVER OF COPAYMENT
The facts specific to each case will determine whether it is illegal to waive a patient copayment. The routine waiver of Medicare copayments for all patients is prohibited by Medicare Rule 5220. On the other hand, waiver of the copayment on an individualized basis is lawful in financial hardship cases. Recognizing the issues raised by the waiver of copayments, the Nevada legislature has attempted to address some of these concerns through legislation in the case of an indigent patient (see below).
Insurance policies are generally worded so that the insurers obligation to pay depends upon the patients payment of the copayment. Therefore insurance companies contend that they have no responsibility to pay a claim unless the physician collects the copayment. The Health Insurance Association of America (HIAA) takes the position that patients who waive responsibility for their portion of the health bill, also waive the insurance companys responsibility for the same portion. The HIAA also believes that knowing waiver of the copayment without disclosing that fact on the claims form constitutes insurance fraud.
However, the language of insurance contracts may not be so clear as to completely prohibit waiver of the copayment. Moreover, because all ambiguities in the contract are construed against the insurer, there are strong arguments that a physician has no obligation to the carrier unless there is an unambiguous prohibition of waiver of copayment. A physician also has no obligation to enter into a contract or agreement with an insurance carrier regarding collection of copayment amounts.
Physicians should be extremely cautious before routinely waiving copayments from Medicare patients. In many cases, Congress has enacted specific legislation to prohibit waivers of copayments. Physicians who offer or give anything of value to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence such individual to order or receive items or services are subject to severe penalties and fines. The waiver of coinsurance and deductible amounts (or any part thereof) are among the specific items of remuneration that trigger the statute. 42 U.S.C. 1320a-7a(a)(5).
However, Congress has provided a limited protection for certain waivers and incentives in certain circumstances. The waiver of Medicare coinsurance and deductible amounts will not be considered remuneration if:
1) The waiver is not offered as part of any advertisement or solicitation;
2) The physician does not routinely waive coinsurance or deductible amounts; and
3) The physician
- a) Waives the amounts after determining in good faith that the individual is in financial need;
- b) Fails to collect the amounts after making reasonable collection efforts; or
- c) Provides for any permissible waiver as specified in regulations to be issued by the Secretary.
As discussed above, Nevada law requires major hospitals to reduce or discount the total billed charge by at least thirty percent for inpatients who have no insurance, are not eligible for state or federal assistance, and make reasonable arrangements to pay their bills. Further, a major hospital is required to reduce or discount the total billed charge of its outpatient pharmacy by at least 30 percent to a patient who is eligible for Medicare. NRS 439B.260.
In addition, the law may require that major hospitals not attempt to collect a deductible from certain indigent patients. Major hospitals may not collect or seek to collect the deductible or copayment from an indigent patient who is covered by Medicare and who demonstrates that he is medically indigent. NRS 439B.265. ( Note: This provision is effective only upon confirmation from the federal government that deductibles and copayments that a hospital is prohibited from collecting are deemed uncollectible under federal law.) The current regulations should be consulted to determine the definition of indigent for these purposes, and to ensure the current applicability of the section. NRS 439B.310.
The American Medical Associations Council on Ethical and Judicial Affairs has issued the following opinion on waivers of insurance copayments:
Opinion 6.12: Forgiveness or Waiver of Insurance Copayments
Under the terms of many health insurance policies or programs, patients are made more conscious of the cost of their medical care through copayments. By imposing copayments for office visits and other medical services, insurers hope to discourage unnecessary health care. In some cases, financial hardship may deter patients from seeking necessary care if they would be responsible for a copayment for the care. Physicians commonly forgive or waive copayments to facilitate patient access to needed medical care. When a copayment is a barrier to needed care because of financial hardship, physicians should forgive or waive the copayment.
A number of clinics have advertised their willingness to provide detailed medical evaluations and accept the insurers payments by waiving the copayment for all patients. Cases have been reported in which some of these clinics have conducted excessive and unnecessary medical testing while certifying to insurers that the testing is medically necessary. Such fraudulent activity exacerbates the high cost of health care, violates Opinion 2.19 and is unethical.
Physicians should be aware that forgiveness or waiver of copayments may violate the policies of some insurers, both public and private; other insurers may permit forgiveness or waiver if they are aware of the reason for the forgiveness or waiver. Routine forgiveness or waiver of copayments may constitute fraud under state and federal law. Physicians should ensure that their policies on copayments are consistent with applicable law and with the requirements of their agreements with insurers.
SAMPLE GENERAL NOTIFICATION OF NON-COVERED SERVICES.
The following notification may be put on a sign in the physicians office or may be added to the patient information form:
NOTICE OF NON-COVERED SERVICES
The following services, among others, are generally not covered by managed care plans and insurance companies: plastic surgery; fertility treatments; birth control services and treatments; and services deemed experimental and/or investigational. However, you need to discuss with your insurer or plan whether treatment provided in this office is covered and therefore paid for by the plan. You are responsible for payment for services provided to you that are not covered by your health plan.
California Medical Association 1999. Reprinted with permission.
SAMPLE AGREEMENT TO PAY
Physicians who have provisions in their managed care contracts that require them to obtain advance written approval before billing a patient for non-covered services or services deemed not medically necessary should use a form similar to the sample agreement below.
PATIENT AGREEMENT TO PAY FOR NON-COVERED SERVICES
I, [Patients Name], understand that the [Service or Procedure] prescribed by my physician, is not covered by my insurer or health plan [because the plan does not feel that it is medically necessary]. Therefore, the service will not be paid for by my insurer or plan. I therefore agree, in advance, to pay my physicians usual and customary rate for providing such services to me.
Patients Signature Date
California Medical Association 1999. Reprinted with permission.