OIG: Pediatric Clinic Can Provide Routine Cost-Sharing Waivers

A pediatric clinic that provides medical, psychiatric and dental care to low-income children can waive cost-sharing amounts for patients in financial need, even though the arrangement does not meet the regulatory exception for permitted waivers of cost-sharing amounts under the Civil Monetary Penalties Law, according to an Advisory Opinion issued by the Health and Human Services Office of Inspector General.

In its request, the clinic noted that to be eligible for the waiver the patient must satisfy its financial need standard. To meet that standard, the patient must either participate in Medicaid, state insurance programs, or present evidence that the patient’s family income does not exceed 200 percent of the poverty level. The clinic is located just blocks away from a designated Medically Underserved Area with a large low-income population.

The clinic did allow for some eligibility exceptions. For example, it noted it has provided emergency services to patients who do not meet its financial need standard, but added that these services make up a small percentage (fewer than 50 in the past few years) of the aggregate care it provides.

Under the arrangement, the clinic waives applicable cost-sharing amounts, but bills and accepts payments from third-party payers, including federal healthcare programs. However, the clinic noted that a majority of its patients owe no cost-sharing amounts because they participate in state insurance programs.

Generally speaking, a patient who receives care would owe federal healthcare cost-sharing amounts only in connection with services paid for by federal healthcare programs such as Tricare or Medicare only if those services are not covered by one of the state insurance programs. However, the clinic noted that Tricare covers fewer than one percent of its patients and Medicare covers just a handful of patients at any given time, so very few of the clinic’s patient owe federal healthcare cost-sharing amounts.

The clinic noted that it does not offer waivers of cost-sharing amounts as part of any advertisements or solicitation, nor does it compensate providers or staff in a way that varies based on the volume or value of services performed or referrals made, which would be a violation of the Anti-Kickback statute.

In its analysis, the OIG noted that providers who waive cost-sharing amounts for reasons unrelated to individualized, good faith assessments of financial hardship may be liable under the Anti-Kickback statute because such waivers may constitute prohibited remuneration to induce referrals.

Because the clinic waives federal healthcare program costs sharing amounts for Tricare and Medicare beneficiaries who are not covered by a state insurance program, the OIG noted that the arrangement implicates the Anti-Kickback statute. However, because the CMP does not apply to that population, the implication is further limited only to Medicare beneficiaries, reducing the population of those affected even further.

By looking at a combination of factors, the OIG concluded that while the arrangement could potentially generate prohibited remuneration, the clinic’s cost-sharing waiver presents a minimal risk of fraud and abuse under the Anti-Kickback statute. And, for similar reasons the OIG determined that while the arrangement implicates the CMP, it was exercising its discretion and would not impose sanctions.

Because the clinic is located in an area designated as medically underserved, the OIG pointed out that it likely was more a lack of providers than its cost-sharing waiver that brings in patients.

As with all Advisory Opinions, this one is limited to the requestor with regard to the specific arrangements described within. If you have any questions about arrangements you are considering The Health Law Offices of Anthony C. Vitale can assist. Contact us for additional information at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.