Waiver of Co-Payments

Professional courtesy or other practices that involve waiving co-payments or other cost-sharing amounts raise concerns. Where the recipients of such waivers are Medicare beneficiaries, the waiver of co-payments and deductibles can be viewed as a violation of the Federal False Claims Act. This is because Medicare regulations require providers to bill Medicare no more than the "actual charge" for the service rendered. When a provider waives the Medicare copayment, he or she is actually providing the service for a lower cost than what is being reported to Medicare. For example, if the actual charge of the service is reported as $100 and the co-payment is $20, then waiving the co-payment will result in an actual charge of only $80. A provider who misrepresents the actual charge like $100 could be charged with violating the False Claims Act.

Because the Health Insurance Portability and Accountability Act (HIPAA) extends the reach of the Federal False Claims Act to claims submitted to all payers, the practice of waiving co-payments could also result in violations for non-Medicare patients where a private health plan places the same type of "actual charge" limitation on payment. State laws and private insurance contracts may also prohibit waiver of co-payments for private pay patients.

In addition, waiver of co-payments, especially to the extent it is advertising to beneficiaries, potentially violates the prohibition on providing inducements to a patient to generate business payable by a federal health care program and can subject a provider to civil monetary penalties.