Doctors have a long history of providing professional courtesy to each other. Hippocrates, the Greek "father of medicine," exhorted his students to share their livelihood with their teachers and their family members 2000 years ago.
"To hold my teacher in this art equal to my own parents; to make him partner in my livelihood; when he is in need of money to share mine with him; to consider his family as my own brothers, and to teach them this art, if they want to learn it, without fee or indenture."
The American Medical Association's (AMA) Judicial Council first endorsed professional courtesy as an ethical obligation in 1847. It reaffirmed the practice in 1967 "as a noble tradition that is adaptable to the changing scene of medical practice." The opinion clarified that under some conditions, physicians may consider charging for their services such as when their colleagues visit them repeatedly or have insurance. It also urged physicians to extend professional courtesy to colleagues experiencing financial hardship.
More recently, the AMA has changed its position regarding professional courtesy. The current AMA code of ethics says that physicians should "extend professional courtesy at their discretion, recognizing that it is not an ethical requirement and is prohibited in many jurisdictions."
Meanwhile, the practice was very popular among physicians as recently as 1993. Nearly all doctors in one New England Journal of Medicine survey that year said they provided free or discounted care for each other and relatives. They believed doing so solidified bonds between physicians and was sound business practice.
Yet nearly 30 years later, only about one in three doctors in a 2022 Medscape poll said that they granted professional courtesy by waiving or discounting fees for other doctors.
What Has Changed?
Physicians who waive or discount fees for a patient with health insurance could risk running afoul of payer contracts and federal and state anti-fraud and abuse laws.
The US Department of Health and Human Services (HHS) in 1994 began issuing Special Fraud Alerts alerting physicians that routinely waiving portions of their fees, such as Medicare or Medicaid copayments, are, in effect, submitting false claims.
The HHS emphasized that physicians forgiving financial obligations for reasons other than genuine financial hardship, and without "good faith" attempts to collect those obligations, may violate the Anti-Kickback Statute.
In addition, waiving copays and deductibles could establish a financial relationship with referring physicians that would also violate the federal Physician Self-Referral Law, commonly known as the Stark Law, according to Jeffrey Miller, senior counsel at Saxton and Stump.
In light of these restrictions, some healthcare organizations have warned doctors to stop offering professional courtesy rather than risk getting into trouble with insurers and violating federal laws.
"I used to give professional courtesy to other physicians, but we had to cut it out. We knew it could violate federal laws and be considered fraud and abuse," said Theresa Rohr-Kirchgraber, MD, professor of medicine at the Augusta University/University of Georgia Medical Partnership.
She didn't recall seeing written policies banning professional courtesy but said that it came up in discussions with auditors as far back as the 1990s when she worked at hospitals in Ohio and New York.
"Our lawyers explained that we could potentially violate our payer contracts, so it was just easier for our institutions to tell us to stop doing it," said Rohr-Kirchgraber.
Other healthcare organizations, including HCA Healthcare and the Charleston Area Medical Center, allowed physicians to continue giving professional courtesy discounts but issued written policies outlining exceptions granted by the Stark Law for Medicare and Medicaid patients.
Breaking Payer Contracts and Laws
Failure to collect a copayment, deductible, or other billable fees can violate the terms of physician contracts with commercial insurers, said Miller, who specializes in healthcare.
"These failures are often considered to be breaches of their contracts, resulting in potentially steep consequences — insurers can refuse to pay the associated claims, and/or they can deselect the providers from participation in their plans," he said.
Doctors who accept Medicare, Medicaid, and other federally funded insurance programs also risk violating federal laws, said Miller.
"The federal Anti-Kickback Statute basically says you can't give anything to anyone to persuade them to use your services or provide you with referrals that involve federally funded health insurance. The courts have interpreted the law broadly to include a physician or referral source waiving copayments or other fees," said Miller.
The penalties for violating the Anti-Kickback Statute are up to 5 years in prison and a $25,000 fine, he said. Civil penalties up to $50,000 may also apply under the Civil Monetary Penalties Law.
Physicians who violate the anti-kickback law may also break other federal laws. This includes fraudulent billing under the False Claims Act (FCA), which can result in large civil penalties that can be up to three times the insurance programs' loss plus $11,000 per claim filed. Under the FCA, fines can add up quickly because each item or service billed to Medicare/Medicaid counts as a claim, according to HHS.
Civil penalties for violating the Stark Law can also be steep and include: refunding any Medicare/Medicaid reimbursement for illegally referred services; liability under the FCA; civil fines of up to $15,000 for each referred service (when someone knowingly violates the law), and civil assessment of up to three times the amount claimed, according to the American Society of Anesthesiologists.
Physicians who violate these federal laws can also be banned from participating in federal health insurance programs, said Miller.
How to Avoid Legal Trouble
There are ways physicians can minimize the risks associated with professional courtesy. One of them is to meet the criteria spelled out in the exceptions to the Stark Law by doing the following:
Establish a clear written policy that is approved in advance by the entity's governing body. Miller recommends that the policy address every aspect of your approach to professional courtesy. Have a lawyer review and approve the policy for federal and state law requirements.
Offer professional courtesy uniformly to all physicians in the same practice or institution.
Do not offer it because the doctor is sending you referrals or any other business.
Grant professional courtesy only for services that you routinely provide.
Do not provide professional courtesy for government program beneficiaries unless you can document a financial need. Review the federal poverty guidelines to determine financial need and keep records.
Miller also recommends the following:
Check the terms of your commercial insurance contracts first. Consider waiving the entire fee for a physician or family member rather than just a copay or deductible.
Do not advertise that you give professional courtesy. This is not a marketing tool.
"If a physician accepts no patients participating in federal insurance plans, the practice of professional courtesy may be less challenging under federal law. That said, very few physicians and organizations would qualify. Additionally, states have their own laws which would need to be examined before anyone could be assured that the practice was legal," said Miller.
Christine Lehmann, MA, is a senior editor and writer for Medscape Business of Medicine based in the D.C. area. She has been published in WebMD News, Psychiatric News, and The Washington Post. Contact Christine at clehmann@medscape or via Twitter @writing_health.
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Cite this: What Can Go Wrong When Doctors Grant Professional Courtesy? - Medscape - Mar 08, 2023.