The Answer: Yes, you can charge your self-pay patients less, as long as you don’t break federal Medicare laws when doing it. Knowing how and when to apply a discount and write-off for a self-pay patient is essential to your practice. It can reduce your risk of violating Medicare and other federal laws – including the Anti-Kickback Statute (see box below).
Document as Unusual Occurrences
In every aspect of your billing processes, you must show that you always charge a self-pay patient the same amount you charge Medicare – or more – with very few exceptions. You should treat each adjustment to a self-pay patient as an unusual event.
When you need to adjust a self-pay patient charge or balance, carefully document the unique circumstances that prevented you from collecting an amount that is at least equal to your Medicare fee for the same services.
Include in your documentation the reasons the total balance is a hardship for the patient, along with other information that went into your decision to discount or write off the debt from a self-pay patient visit. Keeping detailed notes as part of your official billing records can save the day if your billing triggers an audit.
Make Reducing Fees the Exception self-pay patient
Whether you offer a discount to a self-pay patient upfront or perform a write-off later, your billing records should reflect that you started with the intention of billing each patient your full, regular fee.
Use the scenario and compliant responses below to help you compliantly provide self-pay patient fee adjustments and write-offs.
Example Scenario: An existing patient shows up for her appointment to have an infected splinter removed from her hand. Your normal fee for this type of service is $150. At check-out, the patient explains that she recently lost her job and no longer has health insurance. She’ll need to pay for the appointment and wondered if there is any discount for paying the amount due.
- Reduced fee no write-off: You input the appointment at the reduced rate of $99 and document that the $51 reduction is a hardship discount because the patient lost her job.
- Reduce fee with write-off: You input the appointment at the total rate of $150 and then reduce it to $99 and write off the $51 difference.
- No discount with payment plan: You do not offer the patient a discount to their rate. Instead, you allow the patient to pay off the total amount due over three payments: $50 today, $50 in 30 days, $50 in 60 days. The patient pays the appointment off in full on this schedule. You document the offer of the payment plan to the patient to help her since she recently lost her job.
- No discount with payment plan and write-off: Your response is the same as option 3, except the patient fails to pay the last installment. Over several months you unsuccessfully make multiple attempts to collect the remaining balance. Finally, you write off the final $50 that was due. You document the reason for offering the payment plan and include why you wrote off the final amount due.
Being careful about write-offs is not enough without documentation, and documentation alone will not save you if your practice gives an across-the-board discount to all self-pay patients. The bottom line: You must be judicious about discounts and carefully document each one.
You can mitigate your risk further by signing up for the online training, Head Off Massive Financial Penalties for Innocent Self-Pay Billing Errors, presented by healthcare regulatory and compliance attorneys Daphne Kackloudis, JD, and Ashley Watson, JD. This online training will break down the most common mistakes practices make when billing a self-pay patient and walk you through how to avoid them. This expert-led training will help you protect your practice from fines, investigations, and reduced future Medicare reimbursements.
Don’t wait! Register for this immediately available online training today.
Anti-Kickback Statute Violations
There will always be shysters who purposely violate Anti-Kickback Statute(AKS)laws and end up in prison. But more commonly, practices make innocent mistakes that can lead to serious and costly consequences.
The AKS protects the federal government from being overcharged – willfully or inadvertently. Unfortunately, no matter how hard you try to do everything right, you can still accidentally violate the AKS if you routinely charge Medicare more than your other patients (including those that self-pay).
The Office of the Inspector General (OIG) enforces AKS. Mismanaging how you discount patient rates or write off amounts due can trigger an audit. If an audit identifies AKS violations, your practice can face various consequences, including financial penalties and future reduced Medicare reimbursement rates.
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