Here’s Your Sign…
Shannon O. DeConda, CPC, CPMA, CEMA, CPA-EDU
August 30, 2024
I recently visited a new provider’s office and noticed two prominent signs posted everywhere—one about a $100 no-show fee and another offering B-12 shots for cash. Surprisingly, the compliance issue isn’t with the no-show fee but with the B-12 cash service. Let’s break down why this can be problematic and why practices should tread carefully.
The Issue with Cash Payments for Covered Services
Some practices offer cash payment options to avoid insurance billing, hoping to reduce administrative burden or boost revenue. However, charging cash for services that could be billed to a patient’s insurance raises serious compliance concerns. Federal law and insurance contracts generally prohibit this practice because it undermines the healthcare payment system and can lead to regulatory violations.
Why This Is a Problem: Insurance Contract Obligations
When physicians sign contracts with insurance companies, including Medicare, they agree to specific terms, typically outlined in what’s called a “participation agreement.” One key obligation is to submit claims to the insurer for any covered services provided to patients.
If a practice accepts cash for a service that could be billed to insurance, this can violate the participation agreement. Regardless of whether the patient prefers to pay out of pocket, the practice is contractually required to file a claim. Failing to do so could result in penalties, including termination of the provider’s insurance contract.
Legal Implications: Anti-Kickback Statute and Fraud Risks
Charging cash instead of billing insurance may also lead to violations of federal fraud and abuse laws. The Anti-Kickback Statute prohibits offering financial incentives to induce referrals for services covered by Medicare, Medicaid, or other federal programs. Letting patients bypass insurance might be viewed as such an incentive, which could trigger compliance issues.
Additionally, bypassing insurance billing could violate the False Claims Act, which prohibits submitting false or fraudulent claims to the government. While skipping the insurance claim process might seem like a way to avoid issues, it can actually raise red flags if it looks like the practice is trying to dodge its legal responsibilities.
Medicare and Medicaid Rules: Why They Matter
Medicare and Medicaid come with strict billing regulations. The Medicare Mandatory Claim Submission Rule, providers are required to submit claims for all covered services, even if the patient wants to pay out of pocket. Failing to do so not only violates this rule but can also result in civil monetary penalties.
Additionally, patients covered by Medicare or Medicaid usually cannot pay cash for covered services if they’re seeing a participating provider. The only exception is when an Advance Beneficiary Notice (ABN) is in place, which informs the patient that the service won’t be covered by Medicare. Without such a notice, charging cash may be illegal.
Record-Keeping and Transparency: Potential HIPAA Violations
Charging cash instead of billing insurance could also lead to documentation issues under HIPAA. HIPAA requires that all patient encounters be properly documented. Skipping insurance billing might result in incomplete medical records, creating transparency issues that could harm patient care.
In addition, many states have similar requirements for accurate record-keeping, ensuring that patients benefit from their insurance coverage for any covered services.
The Risk of Enforcement: OIG Work Plan
The Office of Inspector General (OIG) regularly audits healthcare practices for compliance with federal laws. One area of focus is improper billing practices, such as charging cash for services that should be billed to insurance, particularly for Medicare and Medicaid patients. Practices found engaging in such activities may face fines, exclusion from federal healthcare programs, and even criminal charges in severe cases.
Impact on Patients
Allowing patients to pay cash instead of using their insurance can have unintended financial consequences for them. Insurance exists to protect patients from high medical costs, and bypassing it may result in higher out-of-pocket expenses. Patients could lose access to follow-up care or fail to meet their deductibles, ultimately paying more in the long run.
Conclusion: Compliance and Transparency Are Key
Physician practices need to carefully navigate their obligations when dealing with insurance. Charging cash for services that could be billed to insurance isn’t just a financial decision; it’s a significant compliance risk that can lead to legal penalties, contract violations, and ethical concerns. Prioritizing compliance and transparency protects both the practice and its patients, especially in an era of increasing regulatory scrutiny.
Authoritative Sources:
- Anti-Kickback Statute (42 U.S.C. § 1320a–7b(b)) – Prohibits remuneration to induce referrals for services under federal healthcare programs.
- False Claims Act (31 U.S.C. §§ 3729–3733) – Prohibits knowingly submitting false claims for federal payment.
- Mandatory Claim Submission Rule (SSA 1848 (g)(4)– Requires Medicare providers to submit claims for all covered services.
- Office of Inspector General (OIG) Work Plan – OIG oversight of healthcare fraud and billing compliance.
- CMS Medicare Claims Processing Manual – Guidelines for billing and claim submission under Medicare.
About Ms. DeConda:
Ms. DeConda has spent her entire career in healthcare. She started as a check-in receptionist and worked her way through respiratory therapy school. She has worked in various roles in healthcare including medical assisting, respiratory therapy, practice management, billing and denials support, practice liaison, and in-office practice coding, auditing, and educating.
Ms. DeConda established NAMAS, the National Alliance of Medical Auditing Professionals in 2007. It was the first organization to formally educate and certify medical auditors. Today, she is the president of NAMAS, which is a division of DoctorsManagement. Ms. DeConda has been with DoctorsManagement since 2005 and is an Equity Stakeholder in the company.
Have you been charging cash and have concerns? Need clarification on a specific circumstance for your practice? We can help!
Contact us at NAMAS@NAMAS.co.
