"Time of Service" Discounts?

[Christy]

What's the deal with "time of service" discounts?

For example, a psychologist bills her cash patients $50 and for the same service to another patient, bills insurance $100? Then, the individual insurance carriers break it down to their contracted fee.

Many providers have similar cash dicounts, but what is the legality of it all?

thanks!

[PMRNC]

It really isn't illegal as long as the cash patient is not billing a diff rate to an insurance carrier. I've seen providers who provide this discount and then give patient a superbill with the regular contracted rates to which they submit and get MORE back. THAT is illegal on both provider and patient's part.   Providers can indeed give a cash discount, they just have to show it on the bill as a courtesy cash payment and they also have to adhere to ONE policy in their office financial policy. For example they can't just charge Mrs. Smith $50 (no insurance, cash pay) and then charge Mr. Black $40 (also no insurance cash pay)   ONE policy for all cash pay discounts.

[RichardP]

... they also have to adhere to ONE policy in their office financial policy.

It is not clear whether this statement refers to the percentage discount the doctor gives, or whether it refers to the cash price for a particular procedure.

Is this a Federal requirement?  State requirement?  Requirement of individual insurance carriers, based on the doctor's contract with them?  If doctor is a non-participating provider, he can charge any amount he wants.  What the patient bills their insurance is of no concern to the doctor.  That is, I think the answer to the original question is more along the lines of "it depends" - on whether the doctor is a non-participating provider, and what his contract is with the insurance carrier if he is a participating provider.

[Edit]  I'm thinking that, if a doctor is a non-participating provider, the insurance carrier cannot regulate what he charges or what discounts he gives.  And if a doctor is a participating provider, I'm thinking that cash discounts would be regulated very heavily by the insurance carrier.

A link or reference to a regulation or insurance carrier requirement on this issue would be useful.

[PMRNC]

... they also have to adhere to ONE policy in their office financial policy.

It is not clear whether this statement refers to the percentage discount the doctor gives, or whether it refers to the cash price for a particular procedure.

Is this a Federal requirement?  State requirement?  Requirement of individual insurance carriers, based on the doctor's contract with them?  If doctor is a non-participating provider, he can charge any amount he wants.  What the patient bills their insurance is of no concern to the doctor.  That is, I think the answer to the original question is more along the lines of "it depends" - on whether the doctor is a non-participating provider, and what his contract is with the insurance carrier if he is a participating provider.

[Edit]  I'm thinking that, if a doctor is a non-participating provider, the insurance carrier cannot regulate what he charges or what discounts he gives.  And if a doctor is a participating provider, I'm thinking that cash discounts would be regulated very heavily by the insurance carrier.

A link or reference to a regulation or insurance carrier requirement on this issue would be useful.

Again, I'm just one of those stubborn people who live by "better safe than sorry" so no I don't have a link or reference.   I do know that if an office has a financial policy in their office (AS THEY SHOULD) swaying from that policy because maybe they like one patient over another is flat out unethical, not sure of law, but it being unethical would be enough for the doctor to get himself into some hot water.   NOW what I did not mention, that's worth mentioning is that a case by case discount can be done ethically with a hardship case. This is why we have our providers HAVE financial office policies, so there are no questions. If I get such a question from my clients my FIRST plan of action is to consult his office financial policy. If it's done right it will HAVE a policy on what to do with patients who might need an "extra" break or discount. Insurance or not it's just ethical to have ONE policy in place and then you don't HAVE an issue of favoritism. I deal with pediatricians and believe me patient's talk.. MOMS will def talk about their pediatricians and I've seen problems where Mrs Jones got upset because Mrs. Smith was getting a better discount. Not a good situation.    So that's why I don't bother with legal references. It's not ethical period.

[RichardP]

I was just wondering - becausemy clients generally stick to a consistent percentage discount.  But they don't hesitatate to vary from that when the patients circumtances call for it.  But that is generally only when they are not PPO for the patient's insurance.

[PMRNC]

I was just wondering - becausemy clients generally stick to a consistent percentage discount.  But they don't hesitatate to vary from that when the patients circumtances call for it.  But that is generally only when they are not PPO for the patient's insurance.

And that is fine, what I was trying to say is that if they have a financial policy in place and want to make an exception on case-by-case basis they can but IMHO those should be documented as financial hardships and the office policy will state those circumstances. Then you never have to second guess yourself (as a physician).   
 

[Billergirlnyc]

Linda pretty much answered this question. I'm not a healthcare lawyer, but I have one. So know these are ONLY my opinions and no I won't go find cases or laws, that's for anyone who needs this info to do. I mean no offense, just wanted to preface my comments.

As to the this whole "time of service discount" - it's  tangled web, and while I didn't want to write a book, MY opinions are below:

This is huge now and has been since the recession. It's such a real thing to stay on top of because federal and state laws. Some states have requirements, some plans the providers are PAR with have these "most favored nation" clauses, some states consider it a kickback so it's prohibited in states with kickback laws, some states have anti-discrimination laws which essentially says you can't charge a certain amount of payers differently than you would the next. I could go on and on. My attorney required I attend a webinar they gave for those in the admin side of healthcare (billers, administrators, etc) before they would sign me on as a client. Then, of course, you have financial hardships they could sign, but even that's tricky. Then you have Medicare and Medicaid rules concerning this as well as concerning financial hardships - they want thorough documentation of financial hardship. As my attorney always says he tells his physician clients: Exercise extreme caution because things can go bad really quick when you factor in the anti-inducement provision of HIPPA, the Medicare exclusion provision, state anti-kickback statutes, and state insurance anti-discrimination provisions/laws. I also remember him telling me that he considers any discount a doctor gives to a patient some sort of kickback, because the doctor is returning a portion of his/her fee to the patient. 

Not here to debate the law. I only add of this to show how slippery this is and every provider we sign on should have provisions in place to ensure they're not violating any laws that prohibit them (because of a plan their in, or whatever reason) from offering "time of service discounts", and by default their billing and admin staff should understand the rules, regulations, and policies in place to ensure everyone's on the same page and following protocol. I know plenty of doctors who think if it's a non-covered charge then they don't have to heed to any law or regulation, but even this isn't true. The same goes for NON-PAR providers (aka out-of-network providers). I always tell clients when they ask me about this. I can tell you what I know, but call your lawyer too. What's your policy on financial hardships? Why are you giving this patient a discount?. Just because I may not be billing the patient's insurance doesn't mean you shouldn't be following protocol, which must be set by the client. I need them to stay in business so I do too. Not just that, again, you'll have a provider who will collect monies from a patient then tell you to bill what they collected and it's less than what they would normally charge the carrier. No, we need a system in place before this happens, or before you eat someone's deductible, or waive a copayment (which we know are part of the doctor's payment too).

Some things go above the idea of me or my billing company getting trouble and land directly on trying to keep my clients in business. So the more informed I am about potential issues, the better for us all. That's how I look at most things in life and in business.

[RichardP]

The original question was: what is the legality of it all?

Personal opinion does not answer this question.  References to ethics does not answer this question.  Either I don't know, or links to relevant regulations, would answer the question.

Linda, you said ... an office has a financial policy in their office (AS THEY SHOULD) ...  I'm not trying to be difficult here.  Your readers deserve an answer.  WHERE is the regulation that leads you to believe that they should have a financial policy?  You obviously believe that a financial policy is a protection against something.  What is that something, and where is it defined.

Billergirlnyc, you said ... As my attorney always says he tells his physician clients: Exercise extreme caution because things can go bad really quick when you factor in the anti-inducement provision of HIPPA [Federal], the Medicare exclusion provision [Federal], state anti-kickback statutes [state], and state insurance anti-discrimination provisions/laws [state].  That's a better start, because it gives the reader something concrete to research on his own.

However, price discrimination by physicians and hospitals is legal.  The Robinson–Patman Act of 1936, an amendment to the Clayton Antitrust Act, prohibits price discrimination - but only for commodities.  It does not prohibit price discrimination for services.  And hospitals and insurance companies and doctors do engage in price discrimination - all quite legally.  For those interested in more information, Google on "price discrimination" + healthcare (or 'doctors').

Billergirlnyc, because price discrimination is legal for doctors, I take issue with this statement in your response:  I also remember him (healthcare attorney) telling me that he considers any discount a doctor gives to a patient some sort of kickback, because the doctor is returning a portion of his/her fee to the patient.  There is no legal requirement anywhere that I am aware of that a doctor must post his prices so potential patients can comparison shop.  In fact, the criticism of the health-care industry is just the opposite:  there are no price lists for doctor or hospital fees such that potential patients can comparison shop.  And because of this, there is no competition.  And because there is no competition, prices are higher than they would otherwise be.  All of this leads to the following fact:  the doctor's fee is what he charges his patient.  The charge given to the patient sets his fee for that patient.  The fact that he might charge someone else 10% more or 20% more has no bearing on what his fee is for this particular patient.  The doctor's fee is what he charges the patient.  Your lawyer may be erring on the side of caution, but he is making an economically-incorrect (and probably legally incorrect) statement to say the doctor is returning a portion of his fee to the patient - because there is no law that says a doctor or hospital has to charge the same fee (and publish a list of fees) for the same service to every patient.  Google and read as I recommended above and you will see that this is not just my opinion.

Even though the law allows a doctor and a hospital to charge whatever they want to whomever they want (for services rendered), this freedom is constrained in certain circumstances.  And Billergirlnyc points to some areas where these constraints might kick in; e.g., a doctor's contract with an insurance carrrier (including Medicaid and Medicare), HIPAA and ACA requirements, and any state regulations.  But these regulations only constrain price discrimination in pre-defined circumstances - they don't prohibit price discrimination in all circumstances.  Therefore, it is to a doctor's benefit to consult with a health-care attorney who knows which state and Federal regulations will constrain that particular doctor's practice.  And if this is what Linda meant by having a financial policy in place, then I agree with her - it makes sense to have the lawyer's finding compiled into a format that can be readily accessed and looked through re. what regulations constrain that particular practice with regard to price discrimination.

[PMRNC]

Linda, you said ... an office has a financial policy in their office (AS THEY SHOULD) ...  I'm not trying to be difficult here.  Your readers deserve an answer.  WHERE is the regulation that leads you to believe that they should have a financial policy?  You obviously believe that a financial policy is a protection against something.  What is that something, and where is it defined.

I'm having a hard time thinking anyone is going to think it's incorrect or wrong to say the provider should have an office policy. Is it a law? Dang if I know but whether it's a law or not is MOOT/IRRELEVANT as I have never and most likely will NEVER encounter a provider who will say "No, I don't want an office financial policy, I don't want to be protected from accusations of playing favoritism or other mis-doings. "     I DO believe a financial policy IS protection against some things as long as it's adhered to. Example:   Dr. Smith knows Mrs. Jones husband just lost his job. She is one of his long standing clients. She used to get a 20% discount (NO insurance, cash pay), but has asked if she could receive a further discount.  Mr. Smith does NOT have to look to his own empathy or compassion, instead he can approach it from a business stand point and tell her, well let's take a look at what we can do, give her the form to complete for financial hardship (the ones my client gives out have an agreed time limit to which can be reviewed for extension later, this allows the provider to be mr/mrs. nice guy/gal and give patient a break but when their situation improves they can review additional extensions or discounts.)   This also allows Mrs. Jones to see that Dr. Smith has a clear policy, is also in business and is also suffering from cut backs with the rest of the country, and that he has taken the time to implement a uniform and FAIR policy for all patients."    Now if any provider needs a legal definition on said requirements of this policy, I won't look it up, I will not waste my time.   That is no different than you asking me for the legal source of a pizza shop's requirement of purchasing Pizza dough.  A law might NOT exist that says a pizza shop owner must have pizza dough, but by golly what a mistake it would be not to have pizza dough in the pizza shop.     I'm sure I can come up with many many more REALISTIC and maybe NOT legally required instances on how an office and financial policy would be advantageous to an office so unless you have some examples or instances where it would HURT the practice, I suggest we use the time more wisely talking about creating better work ethics to help our clients out instead of looking for laws that don't exist or should be replaced with downright common sense and ethics huh?  If that does not suffice I give the following disclaimer:

"The opinions and responses, expressed here, by me are those of the authors and do not necessarily reflect the positions of any US or State regulatory body, organization, group or agency. If you disagree, feel free to do your own research or speak with your own legal counsel."


Billergirlnyc, you said ... As my attorney always says he tells his physician clients: Exercise extreme caution because things can go bad really quick when you factor in the anti-inducement provision of HIPPA [Federal], the Medicare exclusion provision [Federal], state anti-kickback statutes [state], and state insurance anti-discrimination provisions/laws [state].  That's a better start, because it gives the reader something concrete to research on his own.

Well, is there a "reader" here who feels they need to research the legalities of an office/financial policy?  or the plain fact that Dr. Smith giving Mrs. Jones an additional % off and straying from his own financial policies is a good idea? (legal or not)   Again, I deal with pediatrician's and moms DEF do talk about their pediatricians to other moms. It's a REGULAR occurrence. It's NOT unusual for me to get a call from one mom asking why her friend came in and only paid the doctor $10  when she had to pay $20 (YES it happens all the time)   

 

All of this leads to the following fact:  the doctor's fee is what he charges his patient.  The charge given to the patient sets his fee for that patient.  The fact that he might charge someone else 10% more or 20% more has no bearing on what his fee is for this particular patient.  The doctor's fee is what he charges the patient.  Your lawyer may be erring on the side of caution, but he is making an economically-incorrect (and probably legally incorrect) statement to say the doctor is returning a portion of his fee to the patient - because there is no law that says a doctor or hospital has to charge the same fee (and publish a list of fees) for the same service to every patient.  Google and read as I recommended above and you will see that this is not just my opinion.

Great.. we understand you have no problem with the doctor just making random and arbitrary arrangements with patients. Your job is then easier, but let us do what we feel in the best interest of our clients. We, no, I'll speak for myself, would rather air on the side of caution and add COMMON SENSE to the mix, and spend my time much more efficiently that working with providers who are not interested in right and wrong unless I legally prove it to them. If I had a client that was randomly giving away the farm to some and not others, didn't have an office/financial policy, and didn't care enough to put his business first, then, I'm not needed and my time is better spent with clients who do want to do the plain ol "RIGHT" thing.   I do feel better your picking on others and not just me <g>

And if this is what Linda meant by having a financial policy in place, then I agree with her - it makes sense to have the lawyer's finding compiled into a format that can be readily accessed and looked through re. what regulations constrain that particular practice with regard to price discrimination.

That is ONE of reasons yes, but mainly again, my interests serve my client. If he doesn't have to be Dr. Good Guy all the time at the risk of his revenue and has a PLACE to go and use to fall back on that keeps him from being the evil or unfeeling doctor, that's another reason.  I have clients who tell me that their office and financial policies have saved them from their bleeding hearts many times over.  I've not had one argue a reason not to have one or challenge any legality of not having one.

[Billergirlnyc]

The original question was: what is the legality of it all?

Personal opinion does not answer this question.  References to ethics does not answer this question.  Either I don't know, or links to relevant regulations, would answer the question.

Billergirlnyc, you said ... As my attorney always says he tells his physician clients: Exercise extreme caution because things can go bad really quick when you factor in the anti-inducement provision of HIPPA [Federal], the Medicare exclusion provision [Federal], state anti-kickback statutes [state], and state insurance anti-discrimination provisions/laws [state].  That's a better start, because it gives the reader something concrete to research on his own.

Excuse me a "better start" ? Listen, sir, I will contribute to any topic I feel like. So, thanks for the advice, but NO thank you on how I should've started it. And everything I stated is a starting point for anyone who knows how to sift through comments and gather the meat. If my comments don't pass your test, then by all means, scroll right past them. I contribute like everyone else and the only standard I will beholden too are the forum's. No where do the owners require someone to put a million links or case studies. If that's what you like doing then by all means do it, but please don't try to dictate how I respond to a topic. Thank you.

Also, I've yet to meet someone who is an attorney on here and even if I did, they too, would put up a disclaimer. My personal opinions are also my professional opinions. I don't need to defend my responses or my experience. My comments are always meant as a stepping stone, a point of entry. If someone needs to be sure I know what I'm talking about then I suggest they go and do their own research, because I'm not going to debate ANYONE about the legalities of anything, because it's beyond the SCOPE of my knowledge, and NO ONE should be taking anyone's word on a public or even private forum at face value. Even if there are links, I STILL ask my attorney, thus me prefacing my comments.

However, price discrimination by physicians and hospitals is legal.  The Robinson–Patman Act of 1936, an amendment to the Clayton Antitrust Act, prohibits price discrimination - but only for commodities.  It does not prohibit price discrimination for services.  And hospitals and insurance companies and doctors do engage in price discrimination - all quite legally.  For those interested in more information, Google on "price discrimination" + healthcare (or 'doctors').

Did you even read what I said? I said "state insurance anti-discrimination provisions" - NO WHERE do I say it's illegal, and nowhere did I state that MY attorney says it's illegal HE SAID "exercise extreme caution" on all the aforementioned matters. Please READ what I said. Please consult your attorney if you want to debate this, he/she has the license and scope of training to do that. I'm not a lawyer and don't dole out legal advice. If anyone else has a question, please consult your attorneys or AN attorney (including the anti-kickback laws in your state and in reference to doctors). Don't ever just take my word or anyone else's word at face value, and certainly don't think because someone throws-up case studies or links that's all you have to do. Some things really do require us to spend money for an expert and not just consult google or a forum ALONE.

I've contributed what I could and I stand by everything in my original comment. I implore all who read my comments to source facts for yourselves. And I will continue to respond to any topic I feel like I can with personal and professional opinions, if that's not good enough for you, then by all means ignore and or scroll past mines. I won't be offended.

[Billergirlnyc]

Great.. we understand you have no problem with the doctor just making random and arbitrary arrangements with patients. Your job is then easier, but let us do what we feel in the best interest of our clients. We, no, I'll speak for myself, would rather air on the side of caution and add COMMON SENSE to the mix, and spend my time much more efficiently that working with providers who are not interested in right and wrong unless I legally prove it to them. If I had a client that was randomly giving away the farm to some and not others, didn't have an office/financial policy, and didn't care enough to put his business first, then, I'm not needed and my time is better spent with clients who do want to do the plain ol "RIGHT" thing.   I do feel better your picking on others and not just me <g>

LOL @ picking on someone else. Since you opened-up this part up, let me state I don't feel "picked-on" we all have a right to challenge someone's comments, and those who are challenged have a right to set the parameters in which they will respond. I know what I know and there are some things I don't feel like I have to defend. But, I refuse dictation of any kind (meaning no one and I do no one will tell me how I should or should've responded to a topic when I'm essentially following forum policies) that's just plain silly. Saying you disagree with what I'm saying is one thing. Saying HOW I should respond is another. This is a public forum that requires us to register to respond. You don't have to respond to any topic or comment that doesn't appease your personal standards and you should always do your own research (and consult outside this forum) no matter who responded or how many links or case laws they throw-up.

[PMRNC]

I wonder if all the people who want legal references realize this is the US and anyone can take anyone to court for anything.  You don't have to be wrong to be served a supena. In this industry common sense prevails and I don't deal with physicians who want me to PROVE something with legal references when I'm just doing my job to protect them.

[RichardP]

I understand that guys communicate differently than gals.  But I think that has no bearing on my point, which was:  when someone asks specifically about something, it is useful to the questioner when someone actually addresses the question asked.  I was not saying anybody's comments were wrong.  I was simply saying they did not address the question asked.  I was not saying that people cannot comment however they please.  I was just pointing out that the comments up to that point did not address the question asked.  Which was:  what is the legality of it all?

That question required a reference to relevant laws and regulations in any answers given, or an "I don't know".  Since most of us (all of us?) here can't know the specific answer to this person's question (without the questioner giving us more information), pointing the questioner to the doctor's health-care attorney for answers would have been about the only proper response to the actual question.  This comment stands by itself and is not meant to address the issue of whether adding in personal opinion would benefit the questioner.

I have sometimes asked questions on forums and received many responses, none of which actually addressed my specific question.  So I tend to be a bit sensitive to this issue.

You gave some good  responses to my comments.  The original questioner will benefit from that.  There is much meat to sort through.  I think that is a good thing, not a bad thing - given that this site exists to educate its readers.

[PMRNC]

I think the ISSUE was def addressed with opinions to which go with our experience. I will admit it was THIS part that may not have been addressed:

Many providers have similar cash dicounts, but what is the legality of it all?

I guess if we are going to nit pick I'd say this would be a better question on a forum with attorney's then.

Personally, I don't think this NEEDED a legal reference because common sense prevails.

[RichardP]

I'm trying to be helpful here, not mean.

The question asked:  ... but what is the legality of it all?

The answer given:  Providers can indeed give a cash discount, they just have to show it on the bill as a courtesy cash payment and they also have to adhere to ONE policy in their office financial policy. For example they can't just charge Mrs. Smith $50 (no insurance, cash pay) and then charge Mr. Black $40 (also no insurance cash pay)   ONE policy for all cash pay discounts.

Linda, that is what started my comments.  I'm not picking on you.  I'm pointing out to you and to anyone else who reads this that your answer is wrong - if you are actually answering the question asked - which is what it seemed you were doing.  You did not begin your answer by saying I don't know about legal, but this is what I require of my clients.  If you had, I would not have responded at all.

By not qualifying your answer, you gave the impression that it was the legal answer to to the question what is the legality of it all.  For example, you say they can't just charge Mrs. Smith $50 (no insurance, cash pay) and then charge Mr. Black $40 (also no insurance cash pay).  Without a qualification of some sort, readers will think that is a legal requirement.  It is not.  As I pointed out in a post above, doctors and hospitals are free to discriminate in the pricing of their services, except where contrained by state and Federal regulations, and by their contracts with the insurance carriers.  For a doctor who is seeing cash patients, as in your example, the constraints are (almost?) non-existant (I phrase it that way, because I do not know the regulations in every state).  That is, for a non-medicare cash patients, the doctor can legally charge each patient a different price.

I have clients in Beverly Hills who routinely price their services to non-medicare cash patients based on the way the patient is dressed.  That may be distasteful to you, but it is not illegal.