Prison For Failure To Collect Medicare Co-Payments?

md.jpgMedicare is not supposed to be free medical care. Medicare rules require an annual deductible and a 20% co-payment by patients for services under Medicare Part B. The co-payment is in part to defray costs and to hold down costs under the theory that if patients are paying some part of the fee out-of-pocket they are more inclined to scrutinize and object to excessive or unnecessary services or procedures.
In many instances however, in sort of a wink and a nod, providers either do not charge a co-payment due to “financial hardship” or bill patients for co-payments but fail to aggressively collect the payment.
The Office of Inspector General (OIG) has previously issued guidance stating that the routine waiver of co-payments is a kickback and leads to fraud: Routine 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.
A provider, practitioner or supplier who routinely waives Medicare co-payments or deductibles is misstating its actual charge. For example, if a supplier claims that its charge for a piece of equipment is $100, but routinely waives the co-payment, the actual charge is $80. Medicare should be paying 80% of $80 (or $64), rather than 80 percent of $100 (or $80). As a consequence of the provider’s misrepresentation, Medicare program is paying $16 more than it otherwise should for this item.
In certain cases, a provider, practitioner or supplier who routinely waives Medicare co-payments or deductibles also could be held liable under the Medicare and Medicaid anti-kickback statute, 42 U.S.C. 1320a-7b(b), which makes it illegal to offer, pay, solicit or receive anything of value as an inducement to generate business payable by Medicare or Medicaid. 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. Check out this HHS OIG Fraud Alert regarding this practice.
prison.jpgThe routine waiver of co-payments is difficult to prove if the provider makes some effort, however nominal, to collect those fees. The failure to collect co-payments is rarely charged as a crime, but has been the subject of whistleblower actions. Nevertheless, it is substantially easier to prove a crime if, like nine Podiatrists in the New York area, a provider specifically advertises in subways, billboards and on flyers that Medicare beneficiaries can get free services. Three of those nine providers were convicted and sentenced to prison recently for Health Care Fraud in part due to the failure to collect overpayments. To read more, click here.