J. MINEHAN: “Cash and Medical Practices: The One About Co-pays, Deductibles, PPACA”

Cash and Medical Practices: The One About Co-pays, Deductibles, PPACA

By John Minehan Of Counsel at MinardLaw, PLLC

“Once upon a time and a very good time it was,” (to quote James Joyce) Medical Practices did not have to worry very much about collecting cash.

Back in the mid-1990s, when HMO plans dominated the market and co-pays were $10.00 or so, practices were more concerned with billing (and doing the “prompt payment dance” with)¬†Medicare, the Part B Supplement carriers and commercial carriers/Managed Care Organizations. The need to deal with cash was fairly nominal.

That is not the case today.

Recently, there was an excellent article posted here about Concierge Medicine, Direct Primary Care and other types of cash-only practices ( and other types of cash-only medical practices nick-hernandez?trk=prof-post).

However, these emerging practice types are not the only ones learning once again how to deal with billing patients and handling cash.  Changing payment trends make all practices increasingly cash-based.

HMO plans today have higher co-pays (in amounts like $40.00 or more, rather than $10.00) which actually makes up a substantial portion of a practice’s total reimbursement for¬†treatment rendered.¬† In commercial plans, there is a growing emphasis on high deductible insurance plans.¬† The “Bronze Plans” offered by PPACA Exchanges tend to be high deductible plans, where it is often¬†likely the deductible is sufficiently high it¬†will not be met.¬† Preferred Provider Organization (“PPO”) plans, commercial or self-insured, tend to allow participants and beneficiaries to seek out-of-network treatment knowing the treating physician can balance bill them for the difference between what the plan pays in-network and the physician’s Usual, Customary and Reasonable (“UCR” or what’s ¬†on the Chargemaster) fee.

In short, cash is increasingly king even outside of Concierge Medicine and Direct Primary Care.   The following are a couple of considerations.

A medical practice should¬†consider engaging a collection agency or law firm knowledgeable in how to collect consumer debts in compliance with the Federal Fair Debt Collections Practices Act and the applicable state debtor-creditor¬†and general business law.¬† The advantage of a law firm is that they probably have greater facility for bringing small claims actions, if required, to collect these debts and can also prosecute such larger actions as may be required ¬†in courts of general¬† jurisdiction (NY State Supreme Court, for example)¬†against third-party payers who don’t pay or don’t timely pay.¬† In fee splitting law states, like NYS,¬†collections are a¬†rare situation¬†where a non-physician can be given a percentage of a doctor’s fee, because it is not a prospective splitting of the fee and the service was already rendered and the doctor’s judgment can’t be influenced.

Collection agencies or law firms also have the advantage of being separate from the practice itself and this distance may defuse any tendency of a patient who is unable to pay to bring a specious claim for medical malpractice or lack of informed consent as a smoke screen.

Practices may need to consider¬†accepting credit cards.¬† Credit cards allow the practice to be paid immediately, without having to “chase” the patient for the payment, especially where the patient may not have the money now.¬† However, not all merchant services companies are created equal.¬† Some have high fees or onerous terms of service.¬† Credit Card monthly billing ¬†documentation needs careful, timely ¬†review to detect fraud or errors, especially¬†since the practice of medicine is subject to such stringent state and federal regulation and oversight.¬† Perhaps the first people a practice should talk to¬†about merchant services¬†is its own local ¬†bank or credit union.

Things like cash accountability need emphasis. Many things common in retail, like counting out the cash drawer and doing end-of-day reconciliation paper work, need to be considered and refined.  Along that line there will be certain other decisions that resemble those made by retail businesses such as whether or not to accept payment by check or to take payment over the phone by debit card.

Given the larger co-pays now common with HMO plans, that comprise a¬† larger amount of a physician’s reimbursement, it is important to collect them at the time services are rendered.¬† With Federal Health Care Programs (Medicare, Medicaid, Tri-care, basically all of them less the Federal Employee Health Benefit Program [FEHBP]) a waiver of a co-pay without ascertaining financial need can be seen as a Kickback under the¬†Federal Anti-kickback Statute (“AKS”)¬†or¬†a violation of the¬†Federal Stark Amendment (“Stark”) and any analogous state statues.

Along that line, there likely will be a need to consider returning to the old¬† “sliding fee scale” doctors had before insurance was so prevalent.¬†¬† As with Federal Healthcare Programs some kind of due diligence should be conducted before a doctor waives his UCR.

While these changes do make cash king, there will still be a need to do manual or electronic billing, where the patient will be filing an insurance claim, as with a PPO plan or under PPACA where a deductible has been met or a covered diagnostic service is provided.

“O brave new world,That has such¬† . . . [payment and billing practices] . . . in ‚Äôt!”¬† Shakespeare, The Tempest Act 5, Scene 1


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