We frequently get medical billing questions from out of network providers (non-contracted) especially for referral-based facilities like imaging center billing, laboratory billing, and ASC billing is whether they can waive patient balances. Following is the second part to the article about the rules and regulations surrounding waiving patient balances that may help your practice.
Out of Network PPO
We are not aware of any federal laws requiring balance billing in full. Current efforts are predominantly focusing on the opposite – preventing balance billing in full in order to protect patients.
There do not appear to be any state laws requiring patient balance billing in full. While for many years there has been a rumor of a law for New York state that requires balance billing, neither we nor our attorneys have uncovered any such law to date. However, most states have both general fraud statutes and insurance fraud statutes. Many attorneys have posited that that there is some risk of being charged with fraud since an OoN provider who submits a claim for a fee schedule with the anticipation of routinely waiving the patient portion would effectively be misrepresenting their fee schedule since they do not intend to collect all of it. While the fraud statutes vary significantly state to state, they all enumerate that it is a crime to knowingly misrepresent an insurance claim. Since these are general fraud statutes and it is not clear whether it would be specifically illegal to waive part or all of a patient balance. In order to find out how they would be applied, one might next look at each state Attorney General (AG) opinion on this issue if there are any or any case law that is established from adjudication of a court case.
The Texas Attorney General stated in an opinion that it would be “advised to represent to a client or prospective client that a deductible or copayment will be waived in order to induce that individual to use the healthcare provider’s services”.
California’s Attorney General stated that it would not be a crime to waive copays and would not be fraud, even if it was a contracted in network provider. While this opinion is from 1981, interestingly there has not been any more recent guidance that would contradict this.
New York’s attorney general does not seem to have generated an opinion although the general counsel for the State Department of Insurance issued an opinion that stated that “A group that waives insured patients’ co-payment amounts on a regular basis (regardless of the patients’ financial hardship), charges its uninsured patients lower rates than it charges its insured patients for the same services, or charges its patients who pay by cash lower rates than it charges patients who pay by credit card, for the same services may be in violation of N.Y. Penal Law § 176.05(2).”
There are too many states to go through them all one by one, but many states AGs have taken a position on this. However, even if a state attorney general were to generate a written opinion that this would be considered fraud or a penal code violation, it would still have to be prosecuted and then decided by the courts. Criminal fraud is notoriously hard to prosecute according to attorneys because it requires showing intent, which apparently is quite difficult to prove.
There may be additional state agencies like Department of Insurance (DOI), Department of Managed Health Care (DMHC), etc. that have issued legal opinions on whether balance billing can be waived, although these do not seem to have carried much legal weight. For example, the California DMHC issued an opinion that the routine waiver of patient balances was not permitted, but the CA DMHC does not create laws and has no ability to enforce laws.
Case law is treated separately since these are civil and not criminal and will be covered in a future article.
The routine waiver of patient balances out of network is very common for ASC billing, laboratory billing, and imaging center billing. This has been almost the standard for many years in large part because of the complexities of attracting patients to OoN facilities, as discussed in another article. We saw a dramatic rise in this practice during the mid to late 2000’s as ambulatory surgery centers were exploding, again in the late 2000’s and early 2010’s with the boom in toxicology laboratories and molecular diagnostics and genetic laboratories. As stated previously, attorneys will remind providers that just because something is widely practiced does not make it necessarily legal.
What You Can Do
- Make sure you have good healthcare legal representation to help identify regulations and laws that impact on your decision.
- Get a strong medical billing company that specializes in the facility billing for out of network practices like radiology, laboratory, and ASC billing and that is not only familiar with the laws, but is capable of developing and implementing complex solutions to help support your medical billing model.
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Legal disclaimer: Apache Health is engaged in the business of healthcare revenue cycle management analytics. We offer information about regulations, rules, and industry practices relating to compliance. Apache has researched that subject and has set forth the results of that research herein. Apache Health is not a law firm and we do not offer legal advice. Apache does not guarantee the completeness nor the accuracy of its research. You should consult with your qualified healthcare attorney.