By Daniel J. Schulte, J.D.
MDA Legal Counsel
Published in the June 2004 issue of the Journal
Dear Dan Schulte: There are certain situations in which I wish to offer my patients discounts and/or waive their co-payment or deductible obligations. For example, I am considering: (1) offering discounts to local clergy and my family members and the family members of my staff; (2) offering discounts on services that amount to “redos” of previous treatment that I have provided; (3) discounting what I deem to be less involved and/or less complicated procedures; (4) offering a 5 percent discount to patients who pay in cash in advance for their treatment; and (5) waiving patient co-pays and deductibles on a case by case basis.
Answer: Subject to the constraints described below, dentists are free to determine the amount of fees that they will charge for their services and to determine what discounts they will offer to their patients.
The first set of constraints would be contained in any participation agreement or other agreement between the dentist and a managed care plan or other insurer. Such agreements often restrict dentists’ ability to charge the full amount of their fee, discount their fee, waive co-payment and deductible obligations and to bill the patient for the difference between the normal fee and the maximum fee the plan or insurer offers as reimbursement. All such agreements must be very carefully reviewed prior to offering any of the above described discounts or waivers.
The second constraint is contained in Michigan’s Health Care False Claim Act (the “False Claim Act”). The False Claim Act makes it illegal for a person to submit a claim for payment to a health care corporation (e.g., Delta Dental and Blue Cross Blue Shield of Michigan) or a health care insurer that contains a statement of fact or that fails to reveal a material fact that misleads the health care corporation or health care insurer. Discounting a fee for a patient covered under a policy issued by a health care corporation or health care insurer or waiving such patient’s co-pay or deductible obligation without disclosing this fact could constitute the submission of a claim that fails to reveal a material fact. In the absence of the disclosure it will appear to the health care corporation or health care insurer that the dentist’s fee for the services provided was more than what was actually charged. Therefore, the claim may be deemed “deceptive” and “false” under the False Claim Act.
The False Claim Act also prohibits the “rebate” of a dentist’s fee if the rebate is given by the dentist to the patient in consideration of that patient providing a referral(s) to the dentist of other patients.
A violation of the False Claim Act is a felony punishable by imprisonment for not more than four years or by a fine of not more than $50,000, or both.
The third constraint is contained in the Combined Codes of the MDA Standards of Ethics and Code of Professional Conduct and the ADA Principles of Ethics and Code of Professional Conduct (the “Code”). Section 4.E. of the Code prohibits dentists from accepting or tendering “rebates.” Section 5.B.1. states that a dentist who accepts payment in full from an insurer without collecting the full co-payment obligation from the patient is engaged in over-billing.
The failure to disclose the waiver of the patient’s co-payment obligation makes it appear to the insurer that the dentist’s fee is higher than the fee actually charged. The Code deems this to be deceptive and misleading to the insurer in the absence of a disclosure of the waiver of the co-payment obligation.
The final constraint would be applicable to dentists who treat Medicare and Medicaid patients. In a 1991 fraud alert, the federal Department of Health and Human Services (“HHS”) took the position that the routine waiver of Medicare co-payments and deductibles by health care providers could be a violation of the federal False Claims Act and the federal Anti-Kickback statute. HHS’ theory was that if the waiver of the patient’s co-payment and/or deductible was based upon any reason other than the patient’s financial hardship (e.g., referrals of patients by the patient whose deductible or co-payment had been waived) violations of these federal statutes would likely be deemed to have occurred.
In the guidance issued by HHS since 1991, HHS has made it clear that only the “routine” Medicare and/or Medicaid co-payments and de-ductibles would subject the health care provider to HHS scrutiny for violation of these federal statutes.
To the contrary, waivers of Medicare and/or Medicaid co-payments and deductibles made on a case-by-case basis due to a finding of patient’s financial hardship would not subject the health care provider to such scrutiny.
Submit questions for publication to “Dentistry and the Law,” Journal of the Michigan Dental Association, 230 N. Washington Square, Suite 208, Lansing, MI 48933-1392. Names of letter-writers remain confidential.