Are Your Efforts to Collect Co-pays and Deductibles “Reasonable”?

Healthcare providers are often required to collect co-pays, deductibles, or coinsurance payments from patients. These requirements may be imposed by participation agreements with commercial insurers or, in the case of Medicare and Medicaid, federal and state laws or regulations. It can be tempting to waive copays and other amounts due from patients because it improves patient relationships and may lead to more business. However, waiving copays and the like can implicate beneficiary inducement laws, the Anti-Kickback Statute, the Civil Monetary Penalties Statute, the False Claims Act, and other laws.

While there are some legitimate reasons to waive copays, in most cases, the provider must attempt to collect from the patients. Where a provider attempts to collect copays and other amounts from patients but is unsuccessful and there is no other legitimate reason to waive the copay, what collection efforts are providers required to use to comply with the laws listed above and avoid accusations of waiving copays?

In general, a healthcare provider must use “reasonable collection efforts” to collect copays and the like from patients. Some actions that a provider may consider are: sending multiple bills or invoices to the patient, collections or demand letters, phone calls to or personal contact with the patient, use of a collections agency, threats of litigation, drafts of litigation documents to send to the patient, and initiation of litigation against the patient. Some of these measures are draconian and may well cost more than the copay to be collected. While the size of the amount to be collected can be a factor in determining what collection efforts are “reasonable,” in nearly every case, the provider must make some attempt to collect. That is, a provider generally cannot refuse collection efforts simply because the amount due is small.  Further, a provider’s collection policy generally must be the same for all patients, regardless of the payor.

Determining what efforts are reasonable may also depend on the type of provider and precisely what it is trying to accomplish. For example, some hospitals can seek Medicare reimbursement for copays that patients fail to pay. These hospitals must first demonstrate significant “reasonable” efforts to collect from the patient before seeking Medicare reimbursement. On the other hand, for a provider attempting to collect very small copay amounts, possibly from indigent patients, an entirely different set of collection efforts may be “reasonable.” In some cases, a patient’s financial hardship may be a reason to waive the copay or not pursue collections. However, the provider must generally take certain steps to evaluate and document the patient’s financial hardship.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters. If you or your healthcare entity has any questions pertaining to a waiver of copay or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.