Physician's Guide to Medicine - Fees

Is it permissible to waive copayment?
Is it permissible for a physician to have different fees for the same service?
What is fee splitting?

Is it permissible to waive copayment?

According to the Office of the Inspector General of the Department of Health and Human Services, routine waiver of copayments or deductibles under Medicare is impermissible, and the conduct is subject to both criminal and civil penalties. Copayment waiver may violate the law if the physician knows at the time he or she renders the billing that he or she does not intend to collect the full fee, and if the practice of waiver of copayment is routinely or customarily done. It is not illegal, however, if it is done on a non-routine basis.

Physicians should also be aware of insurance fraud regarding this issue. For example, a physician charges ten dollars for a procedure, but agrees to waive two dollars, the physician may commit fraud if he or she bills the health insurance carrier ten dollars, since he never expected the patient to pay ten dollars.

Is it permissible for a physician to have different fees for the same service?

There is no express prohibition, aside from managed care or governmental programs in which the physician may participate, against a physician having different fees for the same service. As a matter of fact, most physicians have different fees for the same service because different payors compensate at different rates for the same service.

What is fee splitting?

There is no definition of exactly which business arrangements constitute "fee splitting," and determinations vary depending on the facts of each case. A few recent decisions addressing fee splitting are illustrative:

Case No. 1: In this case, Dr. A examined a patient at the office of a referring primary physician. Dr. A billed the patient for his services, and paid the referring primary physician an hourly fee for the examining rooms. The arrangement was found to constitute a kick-back and fee splitting, particularly since the rent was related to the number of patients who were referred to the physician, rather than being a flat monthly amount.

Case No. 2: In this case, Dr. A owned a corporation which operated a medical clinic. The corporation leased the building to a number of other physicians for their offices. The physician leasees were to work as independent contractors, but their patients were to be considered patients of Dr. A's corporation. The corporation was to bill patients for services, and the independent contractor physicians would then be paid by the corporation on a fee-for-service basis pursuant to a fee schedule. The independent contractor physicians were required to encourage patients to use other physi- cians under contract with Dr. A´s corporation. This arrangement was determined to constitute fee splitting, since the corporation billed patients for services provided by the corporation, for services provided in area hospitals, and because the corporation retained part of the fee after referring patients to the independent contractor physicians.

Case No. 3: In this case, a clinic was to provide office space, supplies, and nursing and clerical support to Dr. A. Dr. A was an independent contractor who was to set his own fees and provide services. The clinic was responsible for billing for services to patients Dr. A treated as a result of his association with the clinic. Dr. A was to receive a percentage of the fees collected by the clinic, and the clinic was to receive a percentage of the fees as payment for the office space and support services. The arrangement was found to constitute fee splitting. Of particular note was the fact the payments to Dr. A and the clinic were based solely on the amount of billings and bore no relationship to the cost of the provision of services to Dr. A by the clinic. Another factor considered was that the clinic was to receive a portion of billings for services performed outside the clinic.