Getting Patients to Pay Their Copay

Nancy R. Terry


March 31, 2009

"How do you respond to patients who refuse to pay their copayments?" asks an internist on Medscape's Physician Connect (MPC), a physician-only discussion group. The internist explains that he practices in an area where many of his colleagues waive coinsurance payments, and his patients expect him to do the same. "The culture of nonpayment," he says, is "squeezing physicians like me out of business."

A pediatrician comments that, like the internist, she has many patients who expect her to waive their out-of-pocket charges. She adds that one woman, in particular, complained angrily about having to pay a separate copayment for each of her children who had back-to-back appointments. "In certain communities," adds another MPC contributor, "the word gets around that they don't have to pay."

Dr. Michael O. Fleming, past president of the American Academy of Family Physicians, reported to the New York Times in 2003 that the tendency for physicians to waive copayments was most prevalent in "areas that are saturated by managed care," such as the Northeast, South Florida, the West Coast, and the upper Midwest. Said Fleming, ''Doctors are waiving coinsurance payments for several reasons, analysts say: to recruit patients who would otherwise go to doctors on a health plan's preferred list, to help people struggling with the cost of care, and to reduce their own costs for processing insurance paperwork and dunning patients who are slow to pay."

Whatever the reason, the tendency to waive copayments and coinsurance causes inflation of provider-billed charges, interferes with health plan insurers' relationships with network providers, and fosters overutilization of medical services. In the end, everyone pays.

"The copay is designed to discourage overutilization and give the patient a stake in the medical care," comments an endocrinologist. "Some [insurers] technically require me to report patients who fail to pay their copay after 3 or 4 billing requests." If nonpayment becomes burdensome, offers another contributor, "You could put a stop to this with one phone call to the payor."

"If you waive the copay," adds a primary care physician, "you'll get more visits, your patients will get the benefit of more encounters, and the insurance company will end up taking it in the shorts because they still have to pay their portion of the (increased) encounters. You may think that's entirely justified, but I don't think they'll see it that way."

In fact, a pattern of waived copayments may be considered to be fraud. The American Medical Association's Compliance Guide for Medical Practice[1] states that when a medical practice waives a coinsurance amount, yet bills the remaining portion of the service to the insurer without disclosing the waiver, a false claim is generated. This is because the charge for the service has been misrepresented. According to the Compliance Guide, "The waiver of copayments and deductibles and the provision of free services, except in limited situations due to the patient's financial or medical indigence, may be viewed as a violation of law or a violation of the physician's participation agreements with insurance companies." In addition, waiving Medicare and Medicaid patients' coinsurance obligations may violate federal and state antikickback statutes, and could subject physicians to criminal sanctions.

"I can see it as fraud if the copay is waived on everyone as an inducement to gain patients," says a pediatrician. "However, if a physician decides to cut an individual some slack or shows some consideration to clergy or families of military personnel serving overseas, that shouldn't be an insurance company's business. I take great umbrage at the notion that an insurance company should have the right to sanction me for trying to help someone in need."

A family medicine physician explains that the habit of waiving copays, even if the intention is charitable, might be viewed as actionable. "Waiving an occasional copay for legitimate reasons will not land you in trouble," comments the physician. "Not collecting copays as a matter of routine is indeed fraud, a violation of your contract, and unethical."

"You have the right to cut slack to whoever you wish," says another MPC contributor. "However, that would mean you should not commit to any insurance contract that expressly forbids you from doing that. On the other hand, no insurance company is going to hassle you if you give someone a deserved break once in a while."

Several contributors point out that, although some patients are legitimately in need, others are not above devising scams to get out of paying. "For those who claim poverty," says an oncologist, "I ask for either a copy of their tax return or a letter from their priest, hospital social worker, or someone similar. That usually brings out the checkbook."

Comments another contributor, "Some practices may have uniquely poor patients. But this is likely the exception to the rule. It is the rare person who can't afford $5 or $10."

Insurance companies, although they accept a waiver on the basis of financial hardship, typically want documentation that the patient is indigent. "If they [patients] are unable to pay due to financial difficulties, have them sign a paper stating that payment of $x amount would cause undue financial hardship," says a family medicine physician. He comments that it is useful to request a photocopy of a valid credit card and to inform the patient his or her credit card will be billed for any outstanding balance after 90 days. "They are forewarned. This also gives them the opportunity to call your office to discuss the bill if they are experiencing financial difficulties. Then you are able to 'forgive' with the appropriate documentation. If they ignore repeated bills, as many do, well, you won't be hung out to dry."

"I would collect the copay as the patient signs in to see the physician," says a pediatrician. "Patients who refuse to pay cannot be seen. I would post a sign that says that the copay must be paid at the time of the visit, as mandated by law. Anyone who still gives you a hard time about this should take a hike. You don't need those people in your practice."

View these and other discussions in Physician Connect (physicians only; click here to learn more).


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