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Can a physician charge interest on outstanding deductibles and copayments?
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Orthopedics Today has been kind enough to ask me to blog about health care legal issues on a regular basis. This blog will cover a range of legal and policy related health issues, ranging from how to operate ancillaries to how you can try to help shape the health reform debate. Hopefully, some of these blogs will spur discussion and debate.
Today, rather than teeing up a discussion, I want to tell a story that highlights what will be a central theme in this blog: There is a great deal of contradictory information about the law, and it can be very difficult to know whom to trust. The highly regulated nature of the health care industry regularly requires that you turn to an expert. But can you rely on advice from a lawyer or consultant? What about an insurance carrier? The short answer is no. You must be a cynical consumer of all advice, because all experts, including the government (and me, for that matter), get it wrong on occasion. Here is a recent example:
Last month, WPS, the Medicare Administrative Contractor (“MAC”) for a number of states, sent a newsletter that indicated physicians may not charge interest on the outstanding balance of a patient’s deductible or co-payment. CIGNA, another MAC, has written a similar newsletter. The newsletters sounded very authoritative, and there was nothing in the discussion that would hint that the assertion appears to be legally incorrect. The newsletter cited a federal regulation that says a physician may “ … collect only the difference between the Medicare-approved amount and the Medicare Part B payment … any applicable deductible amount, and any applicable coinsurance amount for services for which Medicare pays less than 100% of the approved amount."
In essence, that regulation says “you can only collect the copayment and deductible.” But does that limitation mean that a physician can’t charge interest? I think the answer is no. Why? Because, CMS has issued a statement that permits physicians to charge a fee for missed appointments. That newsletter, Medicare Learning Network MM5613 says in relevant part
“The charge for a missed appointment is not a charge for a service itself (to which the assignment and limiting charge provisions apply), but rather is a charge for a missed business opportunity. Therefore, if a physician's or supplier's missed appointment policy applies equally to all patients (Medicare and non-Medicare), then the Medicare law and regulations do not preclude the physician or supplier from charging the Medicare patient directly.
Interest charges, like a charge for a missed appointment, are not a “charge for a service,” they are a charge for a lost business opportunity. Legally, I believe it is appropriate for a physician to charge interest on an outstanding balance, as long as the interest charges comply with state usury laws and, in some situations, Truth-In-Lending disclosures. (Since the state usury laws and Truth-In-Lending disclosure can be complicated, you should check with legal counsel to make sure you understand the applicable rules.)
What is the lesson of this story? If someone tells you something is illegal, make them show you the rule. Then, make your own independent decision about whether the person is right. Some of the people citing a rule will have an incentive to misrepresent the rule. Others may just be cautious by nature. Earning a living as a physician is hard enough right now; you want to make sure that you aren’t following a made-up rule.
This blog will likely be a source of some debate. Please read it with an open mind. If you think my analysis is wrong, tell me. If you think something is against the rules, please let us know what authority you are relying on.
I look forwarding to responding to your questions and comments over the coming months!