Let’s start with the bad news. (Spoiler alert!) Patient discounts aren’t anywhere near as straightforward as we’d all like them to be. Getting a hard-and-fast rule from every commercial payer and state government—or even from CMS—can be harder than keeping up with the gossip in a highschool cafeteria. So, naturally, the discounting situation is less “he said, she said” and more “they said, they said, they said, and they said.” It’s hard to know what you need to do to stay out of trouble when a whole bunch of “theys” say a whole bunch of conflicting things. After all, the rules for charging self-pay patients are different than the rules for charging insured patients, which are different from the rules for charging financial hardship patients, and so on and so forth.
The good news is that while it’s tough to stay on top of all the latest rules (and hot goss), you can still be totally discount savvy—or at least, more in the loop so you’re better equipped to sidestep the ethical and legal taboos that could tank your professional career.
Disclaimer: I am not a lawyer, and I strongly recommend seeking legal counsel (preferably with an attorney who specializes in health care) to ensure that your practice is compliant if you choose to offer patient discounts.
Are there any discounts that are explicitly A-okay?
I wouldn’t go so far as to say that any one discount or price differential is A-okay and 100% acceptable across the board. But, there are definitely a couple discount situations that are typically in the legal clear—though therapists have to walk a fine line to keep out of trouble.
Varied Payer Service Rates
In 2015, the APTA published an article that endorsed charging payers different service rates if it helped keep a practice in business: “APTA's Judicial Committee reviewed this issue and concluded that such a method is ethical, as long as all fees charged are reasonable. Some insurers reimburse at rates below the physical therapist's costs. This means the physical therapist must charge other payers more if the practice is to be financially viable.”
In that same article, the APTA cautioned therapists to be mindful that it’s not always feasible to discount services, because in some cases (like with certain Medicaid programs) therapists must bill what the payer will pay—rather than the therapist’s “usual charge.” Additionally, the APTA stated that if payers decline to foot the whole bill, the remaining charge would become the patient’s responsibility—and the discounts must stop there. “Legally, if the physical therapist does not make a reasonable effort to collect a patient's coinsurance payment, an insurer could view that as fraud.”
Patient Financial Aid
On an average day, there’s one ironclad rule about waiving and discounting patient copays and deductibles: don’t. According to law firm Baker Donelson (and rehab therapy compliance expert Tom Ambury), waiving copays is an all-around no-no, and waive-happy providers could potentially face fraud accusations. But on a less-than-average day, this is one of the rules you can (tentatively) bend for patients who really need a helping hand. Providers can occasionally waive or discount patient deductibles and without significant legal risk if, and only if:
- The provider has determined “in good faith” that the patient is in financial need;
- The waivers and discounts are not routine; and
- The waivers or discounts are not advertised.
Harry Nelson, JD, a managing partner in the Nelson Hardiman law firm, recommends taking further steps to safeguard your practice if you work with financially challenged patients. Nelson suggests:
- Creating a clear written financial hardship policy,
- Setting a sliding discount scale based on your local poverty levels, and
- Providing easily accessible financial hardship applications at your office.
Nelson even suggests collecting proof of income from patients who submit a hardship application—though he recognizes that many providers are hesitant to do so.
What kinds of discount restrictions are out there?
When it comes to discount restrictions, there are more than a few roadblocks to look out for—and few (if any) of those restrictions are clear-cut. The tricky part here is detangling the interactions between individual state laws, national laws (i.e., Medicare laws), and payer rules. What might fly with BCBS patients in California could be expressly forbidden with UHC patients in Idaho. Generally, the best rule of thumb is to stick to the strictest rules that apply to your region and follow them doggedly.
Medicare’s discount restrictions are surprisingly straightforward. CMS is okay with providers offering patient discounts to those who are experiencing financial hardship—and that’s about it. Offering discounts to Medicare beneficiaries who aren’t experiencing financial hardship is a surefire way to violate the Anti-Kickback Statute (AKS), which can quickly land you in a ton of legal trouble (read: fines).
But, that’s not all. Check out this nugget from the Baker Donelson law firm: “Another compelling reason to avoid the routine waiver of patients’ copayment obligations under Medicare is that the practice can lead to reduced Medicare reimbursement and a potential government investigation.”
What this basically means is that if CMS discovers you’ve been offering discounts, it’ll assume that it has been overpaying you, and it’ll reprocess your claims by reducing the overall charge by the discounted amount, additionally reducing “the current customary charge screen by 20 percent.” Then, CMS will send in the Office of Inspector General and Department of Justice for further legal scrutiny and action. Talk about a big yikes!
Each state has its own state practice act and therefore, its own set of laws regarding discounts and waivers. So, whether you’re interested in prompt-pay (a method of heavily discounting patient copays and deductibles if patients immediately pay a percentage of their overdue balance) or discounting uninsured cash-pay patients, you’re at the mercy of your state. And unfortunately, the state laws can vary pretty wildly.
California, for example, expressly allows prompt-pay discounts and discounts for non-insured cash-pay patients. But, Idaho forbids prompt-pay discounts, and New York has only offered vague guidance about cash-pay discounts, stating that providers “may be in violation of N.Y. Penal Law” if they offer different rates for the same service.
The party don’t stop until you consult with your payers. Even if your state is totally cool with prompt-pay plans and discounts for cash-pay patients, your contracted payers might feel a little ruffled (i.e., litigious) if you begin handing out discounts without first checking in with them. According to this article from MiraMed, some payer contracts include clauses that actually bar providers from undercutting pre-negotiated rates with cash-pay patients.
If you’re an out-of-network therapist, you’re not completely off the hook. This source from Fox Rothschild, LLP, Attorneys at Law, advises out-of-network providers to reach out to payers and actively disclose “your intent to offer the discounts to patients. Based on recent case law, if a payor is aware of the out-of-network provider’s intent to offer discounts to patients, the payor is less likely to have a case for fraud against the provider.”
So, can you charge different rates for the same service?
The short answer is…sometimes. The laws, regulations, and rules discounters must follow vary from payer to payer and from state to state, so it’s a little tough to give a straight “yes” or “no” answer—but you may be able to offer some discounts so long as you’re willing to jump through a regulatory hoop or two. Don’t let this intimidate you, though! Just because discounting and charging multiple rates for the same service is complex, that doesn’t mean it’s not worthwhile. It can help bolster your practice’s financial health and help you foster stronger relationships with your patients.
The most important thing to do is to protect yourself and your practice from legal trouble. If you run into any legal or compliance-related pickles, don’t hesitate to seek legal counsel or a compliance expert.