As patients grow increasingly savvy about researching healthcare prices, they’re more likely to ask practices for discounts that apply to anything from office visits and radiology services to surgeries and dental procedures. As many practices are aware, not all discounts are created equal—some are legal, while others are not. Fortunately, prompt pay discounts are allowable with some payers, but only if you know the OIG’s rules.
To stay compliant with the prompt pay discount regulations, take a close look at which types of discounts are permitted and which could land you in hot water.
Differentiate Prompt Pay From Self-Pay Discounts
If your practice is considering implementing a prompt pay discount, it’s important to know that these types of discounts are completely different from self-pay discounts. Here’s why:
- Prompt pay discounts occur when the practice offers the patient a discounted rate if they pay within a certain time limit (such as the day of service or within 30 days after, for example).
- Self-pay discounts occur when the practice gives the patient a discounted rate by bypassing insurance completely and charging the patient a lower cash rate than they would charge the insurance company. These are also offered to patients who have no insurance at all.
In both cases, it’s a good idea to talk to your practice’s attorney to determine when a discount is allowable and when it’s crossing a line, but there are some general features of prompt pay discounts that every practice should know.
Master the OIG’s Prompt Pay Discount Rules
The Office of Inspector General (OIG) has said prompt pay discounts are permitted if:
- The amount of the discount relates to the cost the practice would incur to collect the amount.
- The discount is offered to all patients for all services and items, regardless of their diagnosis, length of stay/treatment, etc.
- The prompt pay discount is not advertised in advance.
- The costs are not shifted to Medicare, Medicaid or other government programs.
- Private payers are notified.
Anticipate Private Payer Responses
Although the OIG has noted its position on prompt pay discounting when it comes to patients under federal healthcare programs like Medicare and Medicaid, private payers may not follow the same guidance, so it’s important to check with your insurers to get their prompt pay discount regulations in writing.
For instance, private payers may take the position that such discounts affect your “usual and customary charges” under your contracts with them, which could create headaches down the line. So it’s essential that you think through how you’ll be implementing your discounts with these payers ahead of time.
Take These Key Steps Before Offering Discounts
Once your practice has made the decision to offer prompt pay discounts, follow these three steps to ensure that you don’t run afoul of the regulations:
- Check with a healthcare attorney before offering any prompt pay discounts
- Get each insurer’s prompt pay discount policy in writing before moving forward.
- Maintain documentation about what you’re spending to collect balances to justify the use of a prompt pay discount.
By taking these essential steps up front, you’ll avoid government scrutiny and the ensuing fines and penalties that come with violation accusations.
It’s important to stay on the right side of the law. To ensure that you remain compliant, listen in as expert Heidi Kocher, BS, MBA, JD, CHC offers best practices during the 60-minute online training, “Stop Huge Penalties for Innocent Balanced Billing Law Violations.” Sign up today!
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