In most cases, Medicare does not pay for 100% of covered medical items or services. Most commonly, Medicare covers only 80%. The remaining 20% must be paid by the Medicare beneficiary as a form of co-insurance or co-payment. Medicare beneficiaries might have supplemental insurance policies that pay for part or all of this 20% obligation, but even supplemental insurance policies usually have their own co-payment or deductible obligations.
The result is that Medicare beneficiaries almost always have some payment obligation when receiving a covered item or service.
One common form of Medicare fraud is to waive these payment obligations on a routine basis. Provider A essentially says to a patient, “If you use me instead of my competitor, Provider B, I will not charge you that co-payment or deductible.” By doing so, Provider A offers an illegal discount – a kickback — to the patient in exchange for using his or her services.
Waving co-pays and deductibles is fraudulent for two reasons.
First, it gives the patient a financial incentive or kickback to choose Provider A instead of Provider B. Patients should be able to make decisions based upon quality of care, rather than on which provider pays a kickback.
Second, by waiving co-payments and deductibles, Provider A lies to the government about the amount charged for its services. Provider A tells the government it is charging $100 to the patient, when in reality Provider A is charging only $80.
This is fraud. HHS has opined that “[r]outine waiver of deductibles and copayments by charge-based providers, practitioners or suppliers is unlawful because it results in (1) false claims, (2) violations of the anti-kickback statute, and (3) excessive utilization of items and services paid for by Medicare.” Publication of OIG Special Fraud Alerts, 59 Fed. Reg. 65372, 65374 (Dec. 19, 1994). “When providers, practitioners or suppliers forgive financial obligations for reasons other than genuine financial hardship of the particular patient, they may be unlawfully inducing that patient to purchase items or services from them.” Id. at 65375. HHS continues to maintain this position. See Medicare Claims Processing Manual, ch. 23, § 80.8.1 (rev. Feb. 6, 2015) (“Physicians or suppliers who routinely waive the collection of deductible or coinsurance from a beneficiary constitute a violation of the law pertaining to false claims and kickbacks.”).
As one court explained:
Once approved as a provider, a DME supplier may be reimbursed 80% of the allowed amount for qualified equipment it provides to Medicare beneficiaries. The beneficiary is required to pay the remaining 20% of the allowed amount, and the DME supplier may not represent to a potential beneficiary that the DME is free. The only exception to the copayment requirement is when the beneficiary can prove, based on detailed financial information, that he or she cannot afford it.
See United States v. Turner, 561 F. App’x 312, 315 (5th Cir. 2014). In Turner, a case where the provider “rarely collected the required 20% copayment,” the court found the evidence sufficient to sustain a conviction for conspiracy to commit health care fraud. Id.
If you know about a healthcare provider that engages in a practice of routinely waiving co-payments and deductibles, you may be able to bring a qui tam whistleblower case. Contact our attorneys for a free consultation.
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