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May 28, 2020
Many insurance companies require patients to make a copay when the insurance pays for certain medical bills. Co-pays can be burdensome for patients. But the government views them as an important part of Medicare. As a result, routine copay waiver is illegal and results in criminal and civil penalties. Routine co-payment waiver also violates the False Claims Act, and the government and whistleblowers can recover millions of dollars for this practice.
What Is A Copay?
Medication and treatment should be a relief, not a burden. Patient Advocate Foundation's Co-Pay Relief program exists to help reduce the financial distress patients, and their families face when paying for treatment. We believe that no patient should go without life changing medications because they cannot afford them. We are here to help. If we do not have funding for your type of cancer, our co-payment specialists will provide you with information about other patient assistance programs, support services and additional resources that may be helpful. 866-55-COPAY (866-552-6729) information@cancercarecopay.org. For example, if a patient has a 10 percent co-pay, the insurance company pays $90 on a $100 bill. But if the health care provider waives the copay, the patient’s bill is only $90 total, not $100. Financial Hardship. If a patient suffers financial hardship, physicians may choose not to collect debts from them without risking allegations of.
Waving copays will also slow the spread of the virus, because delaying care often means delaying self-quarantine. Don't worry that insurers will be bankrupted by foregoing copays and deductibles.
Copay is short for copayment. It is a portion of a medical bill that the patient is responsible for paying directly to the provider. The amount of a co-pay is set by the insurer. For example, the copay under Medicare Part B, which covers doctor visits and most out of hospital services, is 20% of the total approved charge.
Copays are not charged for all procedures. For example, the Affordable Care Act, also known as Obamacare, requires that certain preventative procedures must be covered without any cost sharing.
Copayments, coinsurance and deductibles are collectively referred to as patient cost sharing. The Government views them as an integral part of the Medicare and Medicaid programs. It believes that requiring patients to share some costs makes them better health care consumers. This is a hotly debated issue in health policy. Recent proposals to reform health care, including most Medicare for All proposals, entirely eliminate patient cost sharing.
What Is A Copay Waiver?
Patient Copay Assistance Programs
Copay waiver occurs whenever a health care provider or supplier is paid by an insurer but chooses not to collect a copay. Co-pay waiver can take several forms. These include:
- Billing but not collecting a copayment.
- Writing-off copayment amounts.
- Discounting products and services and applying the discount only to copayment amounts.
- Product and Drug Manufacturers offering copay cards to pay copayments charged by pharmacists and equipment vendors.
- Third-party charities paying patients’ copayment amounts.
When Is It Illegal To Waive Copays?
It is important to remember that not all copay waivers are illegal. Only routine co-pay waivers designed to induce additional business that violate the law. For example:
Routine Copay Waiver Violates The Law
It is not illegal to write off a patient’s copay balance if the provider makes a good-faith attempt to collect. However, when a provider has a policy of not attempting to collect copays that becomes illegal. Health and Human Services, Office of Inspector General, identified several suspect behaviors that indicate illegal routine copay waiver.
- Advertisements that state that Medicare will be accepted as payment in full.
- Advertisements that promise discounts to Medicare beneficiaries.
- Routine use of financial hardship forms without attempt to determine patient’s financial situation.
- Collection of copayments only where patient has supplemental insurance that pays for copays.
- Charging more to Medicare beneficiaries to offset the waiver of coinsurance.
- Sham insurance programs that offer to cover copays but have insignificant premiums.
Sham Patient Assistance Programs Violate The Law
It is entirely appropriate for providers, practitioners or suppliers to forgive the copayment if the patient has a demonstrable financial hardship. Similarly, a legitimate Patient Assistance Program (often referred to as PAP) is entirely legal. However, the provider must make an individualized determination of patient need. When a provider regularly waives copays due to financial hardship without actually evaluating patients’ needs, it violates the law.
The government has recently been cracking down on a sophisticated version of this fraud. Large companies help establish independent Patient Assistance Programs. Those charities, in turn, pay co-payments for customers of the company’s product. The government recognizes this as illegal copay waivers and, along with whistleblowers, has obtained millions of dollars in settlements. These include:
- Our case against US WorldMeds LLC was the first successful whistleblower False Claims Act case based on patient assistance fund. In 2019, US WorldMeds, agreed to pay the United States $17.5 million and entered into a five year Corporate Integrity Agreement. The whistleblowers, including our client, received a $3.15 million share.
- In 2018, Pfizer agreed to pay $24 million and enter a corporate integrity agreement to resolve claims that it used a foundation as a conduit to pay the copays of Medicare patients taking three Pfizer drugs, in violation of the False Claims Act. Pfizer then made “donations” to the foundation to cover the copays.
- In December 2017, United Therapeutics paid $210 million to resolve allegations that it violated the False Claims Act by paying kickbacks to Medicare patients through a purportedly independent charitable foundation.
Misuse of Copay Coupons Violates The Law
Pharmaceutical manufacturers offer copayment coupons to insured patients to reduce or eliminate patients’ out-of-pocket costs for their branded drugs. Sometimes, manufacturers may contract with coupon vendors to create and administer coupon programs on their behalf. A manufacturer may offer a coupon for a branded drug to reduce the copay below its competitors. Sometimes, the coupon eliminates the copayment altogether.
Copay coupons are legal for patients covered by private insurance, but illegal for Medicare Part D recipients. Nevertheless, in 2014, HHS-OIG found that 6%-7% of Medicare recipients reported using copay coupons. When sponsors of these programs do not take sufficient care to exclude Medicare recipients, they can violate the law.
Why Is Routine Copay Waiver Illegal?
Routine waiver of deductibles and co-pays violates the law for two reasons. First, it violates the Anti-Kickback Statute. Second, it causes Medicare to pay more than it should in violation of the False Claims Act.
Why Does Routine Copay Waiver Violate The Anti-Kickback Statute?
The Anti-Kickback Statute prohibits medical providers from offering, soliciting, paying, or receiving anything of value in exchange for referrals of Government Health patients. Discounts are a form of kickback under the Anti-Kickback Statute. Therefore, when a provider regularly waives copays in order to make his services seem cheaper to potential customers, he is offering a thing of value and violates the Anti-Kickback Statute.
Moreover, providers and manufacturers often use copay waivers to induce doctors to prescribe their drugs or products instead of cheaper generic competitors. The Anti-Kickback Statute also prohibits offering discounts to induce prescriptions or referrals of your product.
Why Does Copay Waiver Generate False Claims?
The False Claims Act forbids anyone from submitting a false or fraudulent claim to the government. Routine waiver of copays leads to false claims for two reasons.
First, the Government does not pay for claims induced by illegal kickbacks. Thus, claims induced by violation of the Anti-Kickback Statute are false under the False Claims Act.
Second, a provider that routinely waives copays or deductibles is lying to the government about the cost of the drug. Medicare typically pays 80 percent of the reasonable charge for a good or service. Generally, Medicare will not pay more than the customary charge or the highest prevailing charge.
So, when a provider tells the government that the “actual charge” is $100, Medicare is willing to pay $80. But, when the provider routinely waives the $20 copayment, the actual charge is $80. The provider inflated his actual cost by $20, and if Medicare had known the truth, it would only have paid 80% of that or $64.
What Are Penalties For Routine Copayment Waiver?
Under the False Claims Act, a provider is liable for three times the damages plus False Claims Act penalties. In 2020, False Claims Act penalties range as high as $23,330 per false claim. Under the Anti-Kickback Statute, a provider can be liable for up to 5 years imprisonment and $25,000 per violation. In addition, OIG may also initiate administrative proceedings to exclude a person from Federal health care programs.
Examples Of False Claims Act Cases Involving Copay Waivers
- In 2018, Pharmaceutical company Actelion Pharmaceuticals US, Inc agreed to pay $360 million to resolve claims that it illegally used a foundation as a conduit to pay the co-pays of thousands of Medicare patients taking Actelion’s pulmonary arterial hypertension drugs, in violation of the False Claims Act.
- A compounding Pharmacy, Pentec Health, agreed in 2019 to pay the United States $17 million to settle allegations that it routinely waived copays.
- In 2019, DOJ announced that compounding pharmacy Diabetic Care Rx LLC, or Patient Care America (PCA), and executives agreed to pay over $21 million to settle a False Claims Act suit in part based on copay waivers.
- In 2020, DOJ announced a $500,000 settlement against SPR Specialty Pharmacy, Mead Square Pharmacies and their owner in part for waiving required co-payments.
Conclusion
While it seems like waiving copays is good for patients, the Government takes a different view. Routinely waiving copays can violate the Anti-Kickback Statute and the False Claims Act. These violations can lead to lawsuits worth millions of dollars to the government and whistleblowers. If you are aware of a provider that routinely waives copays, Whistleblower Law Collaborative can help.
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Crises reveal the best and worst of human character. The “better angels of our nature” show up in ways that are inspirational, life-affirming, and difference-making: health care workers put their...Karen Taylor had been coughing for weeks when she decided to see a doctor in early April. COVID-19 cases had just exceeded 5,000 in Texas, where she lives.
Cigna, her health insurer, said it would waive out-of-pocket costs for “telehealth” patients seeking coronavirus screening through video conferences. So Taylor, a sales manager, talked with her physician on an internet video call.
The doctor’s office charged her $70. She protested. But “they said, ‘No, it goes toward your deductible and you’ve got to pay the whole $70,’” she said.
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Policymakers and insurers across the country say they are eliminating copayments, deductibles and other barriers to telemedicine for patients confined at home who need a doctor for any reason.
“We are encouraging people to use telemedicine,” New York Gov. Andrew Cuomo said last month after ordering insurers to eliminate copays, typically collected at the time of a doctor visit, for telehealth visits.
But in a fragmented health system — which encompasses dozens of insurers, 50 state regulators and thousands of independent doctor practices ― the shift to cost-free telemedicine for patients is going far less smoothly than the speeches and press releases suggest. In some cases, doctors are billing for telephone calls that used to be free.
Patients say doctors and insurers are charging them upfront for video appointments and phone calls, not just copays but sometimes the entire cost of the visit, even if it’s covered by insurance.
Despite what politicians have promised, insurers said they were not able to immediately eliminate telehealth copays for millions of members who carry their cards but receive coverage through self-insured employers. Executives at telehealth organizations say insurers have been slow to update their software and policies.
“A lot of the insurers who said that they’re not going to charge copayments for telemedicine ― they haven’t implemented that,” said George Favvas, CEO of Circle Medical, a San Francisco company that delivers family medicine and other primary care via livestream. “That’s starting to hit us right now.”
One problem is that insurers have waived copays and other telehealth cost sharing for in-network doctors only. Another is that Blue Cross Blue Shield, Aetna, Cigna, UnitedHealthcare and other carriers promoting telehealth have little power to change telemedicine benefits for self-insured employers whose claims they process.
Such plans cover more than 100 million Americans — more than the number of beneficiaries covered by the Medicare program for seniors or by Medicaid for low-income families. All four insurance giants say improved telehealth benefits don’t necessarily apply to such coverage. Nor can governors or state insurance regulators force those plans, which are regulated federally, to upgrade telehealth coverage.
“Many employer plans are eliminating cost sharing” now that federal regulators have eased the rules for certain kinds of plans to improve telehealth benefits, said Brian Marcotte, CEO of the Business Group on Health, a coalition of very large, mostly self-insured employers.
For many doctors, business and billings have plunged because of the coronavirus shutdown. New rules notwithstanding, many practices may be eager to collect telehealth revenue immediately from patients rather than wait for insurance companies to pay, said Sabrina Corlette, a research professor and co-director of the Center on Health Insurance Reforms at Georgetown University.
“A lot of providers may not have agreements in place with the plans that they work with to deliver services via telemedicine,” she said. “So these providers are protecting themselves upfront by either asking for full payment or by getting the copayment.”
David DeKeyser, a marketing strategist in Brooklyn, New York, sought a physician’s advice via video after coming in contact with someone who attended an event where coronavirus was detected. The office charged the whole visit — $280, not just the copay ― to his debit card without notifying him.
Patient Not Paying Copay
“It happened to be payday for me,” he said. A week earlier and the charge could have caused a bank overdraft, he said. An email exchange got the bill reversed, he said.
With wider acceptance, telehealth calls have suddenly become an important and lucrative potential source of physician revenue. Medicare and some commercial insurers have said they will pay the same rate for video calls as for office visits.
Patients Not Paying Copays Without
Some doctors are charging for phone calls once considered an incidental and non-billable part of a previous office visit. Blue Cross plans in Massachusetts, Wyoming, Alabama and North Carolina are paying for phoned-in patient visits, according to America’s Health Insurance Plans, a lobbying group.
“A lot of carriers wouldn’t reimburse telephonic encounters” in the past, Corlette said.
Catherine Parisian, a professor in North Carolina, said what seemed like a routine follow-up call with her specialist last month became a telehealth consultation with an $80 copay.
“What would have been treated as a phone call, they now bill as telemedicine,” she said. “The physician would not call me without billing me.” She protested the charge and said she has not been billed yet.
What Happens If You Don't Pay A Copay
By many accounts, the number of doctor encounters via video has soared since the Department of Health and Human Services said in mid-March that it would take “unprecedented steps to expand Americans’ access to telehealth services.”
Medicare expanded benefits to pay for most telemedicine nationwide instead of just for patients in rural areas and other limited circumstances, HHS said. The program has also temporarily dropped a ban on doctors waiving copays and other patient cost sharing. Such waivers might have been considered violations of federal anti-kickback laws.
At the same time, the CARES Act, passed by Congress last month to address the COVID-19 emergency, allows private, high-deductible health insurance to make an exception for telehealth in patient cost sharing. Such plans can now pay for video doctor visits even if patients haven’t met the deductible.
Dozens of private health insurers listed by AHIP say they have eliminated copays and other cost sharing for telemedicine. Cigna, however, has waived out-of-pocket costs only for telehealth associated with COVID-19 screening. Cigna did not respond to requests for comment.
Teladoc Health, a large, publicly traded telemedicine company, said its volume has doubled to 20,000 medical visits a day since early March. Its stock price has nearly doubled, too, since Jan. 1.
With such a sharp increase, it’s not surprising that insurers and physicians are struggling to keep up, said Circle Medical CEO Favvas.
“It’s going to be an imperfect process for a while,” he said. “It’s understandable given that things are moving so quickly.”
Abbie VanSickle, a California journalist, wanted her baby’s scheduled wellness visit done remotely because she worried about visiting a medical office during a pandemic. Her insurer, UnitedHealthcare, would not pay for it, the pediatrician told her. Mom and baby had to come in.
“It seems like such an unnecessary risk to take,” VanSickle said. “If we can’t do wellness visits, we’re surely not alone.”
A UnitedHealthcare spokesperson said that there was a misunderstanding and that the baby’s remote visit would be covered without a copay.
Jacklyn Grace Lacey, a New York City medical anthropologist, had a similar problem. She had to renew a prescription a few weeks after Cuomo ordered insurers to waive patient cost sharing for telehealth appointments.
Patient Copay Responsibility Letter
The doctor’s office told her she needed to come in for a visit or book a telemedicine appointment. The video visit came with an “administrative fee” of $50 that she would have had to pay upfront, she said — five times what the copay would have been for an in-person session.
Patients Not Paying Copays For A
“I was not going to go into a doctor’s office and potentially expose people just to get a refill on my monthly medication,” she said.