AMARILLO, TX – In last week’s Medtrade Monday article, I discussed the fact that the United States intervened in a whistleblower lawsuit against Arriva Medical, LLC and Alere, Inc. I included the following quote from the Department of Justice’s press release:

Arriva…made no meaningful effort to collect copayments from beneficiaries for the meters or diabetic testing supplies subsequently purchased from Arriva for use in connection with the meters. The waiver of patient copays or provision of other benefits to induce patients to purchase a company’s items or services is prohibited by the Anti-Kickback Statute.

The DME supplier must make a “reasonable effort” to collect copayments. The supplier does not have to collect 100% of copayments, but it must make a reasonable attempt to collect as much of the copayments as possible. Failure to make a reasonable effort to collect copayments can result in violations of (i) the federal anti-kickback statute, (ii) the federal beneficiary inducement statute, and (iii) the federal false claims act.

It is important for DME suppliers to adopt…and follow…a formal copayment collection policy. The policy should set out the steps the supplier should take to attempt to collect copayments. Equally as important, the policy should set out the steps the supplier should take when deciding whether or not to reduce or waive a patient’s copayment. Set out below is the information that DME suppliers may wish to include in such a policy. Suppliers do not need to incorporate verbatim what is set out below, but much of the following information is certainly relevant. Note that the policy information, below, references an Attachment A and an Attachment B. These attachments are not included in this Medtrade Monday article.

Policy Statement

ABC, Inc. (“ABC”) is committed to complying with federal and state laws concerning accurate billing. At the same time, ABC is committed to providing access to high quality health care to all patients. ABC has encountered situations in which patients are unable to pay cost-sharing obligations because of financial hardships. In some situations, patients fail to pay cost-sharing obligations despite ABC’s good faith collection efforts. To address these situations, ABC will implement this Policy and Procedure for Patient Assistance.

Purpose

Except under certain circumstances, waivers of deductibles and copayments are unlawful because such waivers misrepresent ABC’s actual charge and may result in false claims. Also, the Office of Inspector General has indicated that such waivers may violate the Federal Anti-Kickback Statute. Accordingly, this policy sets forth procedures that ABC and all ABC employees will follow before any cost-sharing obligation is waived. Under this policy, ABC may waive a patient’s cost-sharing obligation only after the patient demonstrates a financial hardship. Otherwise, ABC will employ good faith efforts to collect copayments and deductibles.

Definitions

• Application – The form entitled, “Economic Assistance Request,” which a patient must complete to request a financial hardship waiver. The application is attached as Attachment A.
• Cost-Sharing Obligations – Payment obligations, including copayments, deductibles, and coinsurance, required under a patient’s arrangement with the patient’s third-party payor.
• Family – All persons residing in a patient’s home who are related to the patient by birth, marriage, or adoption.
• Federal Poverty Guidelines (FPGs) – Often referred to as the “federal poverty level,” FPGs are measures of poverty issued yearly by the Department of Health and Human Services in the Federal Register. The current FPGs are listed in Attachment B.
• Financial Hardship Waiver – Waiver of a cost-sharing obligation provided to a patient because the patient demonstrated a financial need.
• Gross Family Income – Gross family income refers to the total yearly value of the family’s income from all sources prior to any tax deduction.
• Manager – Under this policy, the Manager is responsible for reviewing applications and determining whether to grant a financial hardship waiver. _________________ will serve as the Manager under this policy. S/he may delegate his/her responsibilities under this Policy to any employee of ABC.
• ABC – In this policy, references to ABC include all employees and representatives authorized to act on behalf of ABC.

Procedure

• Private Insurance Companies.
  • Contractual Requirements. ABC will comply with all contracts in place with insurance companies. In the event a contract conflicts with this policy, the contract will take precedence over this policy.
  • Notice of Waivers. When ABC waives the cost-sharing obligation related to the patient’s private insurance, ABC will notify the affected insurer.
  • Statements Regarding Waivers.
  • Communications with Clients and Referral Sources. ABC will not advertise or otherwise promote the waiver of deductibles or copayments. No ABC employee may tell the patient or the patient’s representative that the patient does not need to pay the cost-sharing obligation unless the patient has submitted an application and the Manager has authorized a waiver.
  • Informing the Patient. At the time ABC provides services to a patient, ABC representatives will provide to the patient an estimate of the patient’s cost-sharing obligation. At that time, ABC representatives may inform the patient of the availability of a financial hardship waiver and the application process.
  • Documentation on Invoice. ABC will document any waiver provided to a patient on the patient’s invoice or receipt for service.
  • Financial Hardship Waivers.
    • Application Required. When a patient requests a financial hardship waiver, ABC will require the patient to complete and submit an application entitled, “Economic Assistance Request.” If the patient requests an application for patient assistance, ABC representatives may email, fax, mail, or hand deliver the application to the patient. Alternatively, at the patient’s request, ABC representatives may receive the information verbally and complete the application on behalf of the patient. Any application completed in this manner will be mailed to the patient for the patient to sign and return. The patient will also be required to supplement an application completed verbally with evidence of financial hardship pursuant to Section 4.3.3.
    • Up to Date Information. Upon receipt of the application, ABC will inform the patient of the patient’s responsibility to notify ABC of any changes to the patient’s situation. ABC may rely on the documentation submitted by the patient for 12 months, unless the patient notifies ABC of any changes to his or her situation. At the expiration of the 12 month period, ABC will request that the patient completes a new application. ABC’s policy to rely on the documentation for 12 months will not be shared with the patient.
    • Documentation Supplementing the Application. ABC need not request documentation to support the patient’s statements on the application in every case. ABC will require supplemental documentation for applications completed verbally. Also, in the event the Manager has any doubts regarding the accuracy and validity of an application, ABC will require the patient to submit documentation evidencing a financial hardship. In such events, ABC will request a copy of the patient’s tax return and/or other evidence of the patient’s financial need, which may include evidence of:

1. Homelessness;
2. Enrollment in Women, Infants, and Children (WIC) programs;
3. Receipt of food stamps;
4. Participation in a subsidized school lunch program;
5. Participation in an unfunded state or local assistance program;
6. Residence in low income, subsidized housing; or
7. Other evidence of financial need, such as pay stubs or medical bills.

• Eligibility Criteria for Financial Hardship Waivers. The Manager will review the submitted documentation and determine whether the patient meets the criteria for a financial hardship waiver. The basis for any determination will be documented and kept in ABC’s records. The eligibility criteria for financial hardship waivers are as follows:

1. Full Waiver. The patient is eligible for full waiver of the patient’s cost-sharing obligation if the patient’s gross family income is less than or equal to the applicable FPG. Under such circumstances, the patient may receive a full waiver. However, the Manager is not required to grant a full waiver; the Manager may determine that a partial waiver is appropriate.
2. Partial Waiver. If the patient’s gross family income is greater than the applicable FPB, but less than or equal to two times the applicable FPG, ABC may reduce the patient’s cost-sharing obligations. The amount waived will depend upon the particular patient’s circumstances. If the patient’s gross family income is greater than two times the applicable FPG, ABC will presume that the patient is not eligible for patient assistance unless (i) the patient’s family has unreimbursed medical expenses that exceed twenty percent (20%) of its gross family income or (ii) the patient demonstrates the existence of other extraordinary circumstances that justify a financial hardship waiver. Under such circumstances, the Manager may grant a partial waiver of the patient’s cost-sharing obligation. The Manager has the authority to grant a full waiver in the event the Manager determines that such a waiver is justified by the patient’s financial situation. The basis for any determination shall be thoroughly documented in ABC’s records.

• Provision of Financial Hardship Waivers. If the patient meets the eligibility criteria, ABC may provide a financial hardship waiver unless the Manager determines that a financial hardship waiver is unnecessary or inappropriate in a particular case. For example, the Manager may decide that a financial hardship waiver is inappropriate because the patient falsified documentation or because the evidence of financial need is unreliable. ABC will promptly notify the patient of the Manager’s determination regarding the patient’s application.
  • Documentation. ABC will maintain copies of all applications and supplemental documentation submitted by patients. ABC will document and maintain records concerning (i) the amount of a waiver provided to a patient and (ii) the basis for ABC’s decision.
  • Yearly Review of Financial Hardship Waivers Granted. Each calendar year, the Manager will evaluate the number of patients receiving financial hardship waivers from ABC. If the number of such patients is approximately ten percent (10%) or more of the patient population served by ABC in that year, then the Manager will take steps to ensure that ABC is not unnecessarily waiving cost-sharing obligations. For example, the Manager may retrain staff on this policy and require supplemental documentation for all applications before ABC grants a financial hardship waiver.
  • Waivers Following Good Faith Collection Efforts.

ABC may write off the cost-sharing obligation of a patient who does not qualify for a financial hardship waiver only if (i) the patient’s cost-sharing obligation remains unpaid after 120 days and (ii) ABC exercised and documented the following collection efforts:

• Initial Invoice. After ABC provides services to a patient, ABC will issue to the patient an invoice detailing the amount of the patient’s cost-sharing obligation.
• Second Invoice. If the patient fails to pay the cost-sharing obligation within 30 days, ABC will send to the patient a subsequent statement detailing the patient’s outstanding balance.
• Telephone Contact and Third Invoice. If the cost-sharing obligation remains unpaid after 60 days, ABC will send a third billing statement. Within 10 days following the date of the letter, ABC will contact the patient by phone. Phone calls will be made until affirmative contact is established with the patient or the patient’s representative. During the phone call, an ABC representative will (i) collect information concerning the reason for non-payment, (ii) solicit an agreement for a specific payment plan, and/or (iii) offer to provide an application for patient assistance. If the patient submits an application, ABC will promptly notify the patient of the Manager’s determination. If the application is denied, or the patient does not submit an application, ABC will continue efforts to collect the patient’s cost-sharing obligation.
• Fourth Invoice. If the patient’s obligation remains unpaid after 90 days, ABC will send a fourth billing statement.

All invoices, telephone and in-person contacts regarding the patient’s cost-sharing obligation will be documented in the patient’s billing file. If a patient’s cost-sharing obligation remains unpaid after 120 days, the Manager will review the documentation regarding ABC’s collection efforts. The Manager may then direct an ABC representative to continue collection efforts, turn the account over to a collection agency, bring a collection lawsuit, refuse to provide products and services to the client in the future, or write off the obligation. The Manager may write off the obligation as long as the good faith collection efforts listed above are clearly documented in the patient’s file.

Audits

The billing and waiver procedures of ABC will be audited from time to time. Findings from such audits shall be submitted in writing to ABC’s officers and directors. ABC’s officers and directors may also engage an outside party to conduct an audit of ABC.

AAHomecare’s Retail Work Group

The Retail Work Group is a vibrant network of DME industry stakeholders (suppliers, manufacturers, consultants) that meets once a month via video conference during which (i) an expert guest will present a topic on an aspect of selling products at retail, and (ii) a question and answer period will follow. The next Retail Work Group video conference is scheduled for March 28, 2019, at 11:00 a.m. Central. Jeff Baird, Brown & Fortunato, P.C., will present “Diving Deeper into the Legal Aspects of Retail.” Participation in the Retail Work Group is free to AAHomecare members. For more information, contact Ashley Plauché Manager of Government Affairs, AAHomecare ([email protected]).

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or [email protected].