Why Waiving Patient Copays Is A Bad Idea

Jun 10 | , , , , , , , , ,


Carol A. Wilcox

 PREFERRED Therapy Providers, Inc.

If you’ve ever been tempted to waive or discount patient copays or deductibles, you might want to think twice about that (and then read this article through to the end).

Copays (flat fees a patient pays at the time of care), are a common part of the U.S. health insurance system. Over the last few years, there has been a steady, upward increase of copays and deductibles, often leading to non-payment at the time of service or resulting in patients avoiding treatment altogether.


According to an article from Lexology, providers may sometimes waive copays and deductibles to help out a patient, or out of professional courtesy or as a marketing tactic. Providers might also feel that they’ll lose business if they don’t waive certain collectible fees out of the fear that patients may not come to their practice for treatment.

Physical therapists are, at their core, compassionate caregivers. Some clinic owners have been known to be embarrassed or reluctant to collect copays even though they’re entitled to those fees. While compassion is a noble trait, nobility won’t pay the bills. Practices are businesses and therapists are business owners who are ultimately responsible for the way their clinic operates and prospers – or not.

If there’s no income, there’s no business, not to mention that waiving copays can get you and your practice into some serious hot water with Medicare and private commercial insurance carriers.


Arguably, when most healthcare providers think of fraud and abuse, they’re thinking about multi-million dollar penalties that CMS has imposed on hospitals or large practices for violations such as Medicare fraud, taking bribes, kickbacks or filing false claims. But more and more small private practices are being scrutinized – including physical therapy practices – for violations that clinic owners often don’t even realize they’re committing.

Why? Because many physical therapy practice owners don’t fully understand what fraud and abuse really means. According to an article in PT in Motion, many think of fraud and abuse as what happens when there is a deliberate action to defraud the health care system. They don’t realize they could be guilty by making billing, collecting, coding, and documentation errors that could easily be prevented with a better understanding of these regulations (and no, you can’t use ignorance of the law as an excuse).

But perhaps the most important reason why copays should never be waived is because Medicare and Medicaid consider the practice, in most instances, to be fraudulent. Waiving copays, coinsurance and deductibles is prohibited because it may be construed as influencing a patient to receive services from you.

If your practice doesn’t accept Medicare and Medicaid, you’re still not out of the woods. Waiving these fees for patients with private health insurance can increase the risk of a false claims violation or a violation of the federal Anti-Kickback statute, because in essence, you are misrepresenting charges to the payer and can discourage utilization; thereby potentially increasing payer costs. Other state laws may also prohibit the practice of waiving collectible fees for government programs and/or private health insurance programs.


If you’re waiving copays and deductibles because of patient financial hardship, you should be aware that significant documentation justifying the hardship is required by both private and government programs.

The paperwork alone may discourage you from doing this. Patient documentation can include the collection of income verification (W-2 forms, pay stubs, tax returns), Medicaid eligibility, statements from employers or welfare agencies, assets, expenses, family size and the extent of the patient’s medical bills.

So before you waive payments for reasons of hardship, make sure to ask the advice of a legal professional to help you determine the criteria and documentation your clinic needs to legally accept hardship circumstances.


Don’t take unnecessary chances and hope you don’t get caught. You’ve worked hard to build your business – don’t put it at risk by not being pro-active. Here are a few steps you can take:

Create a documented patient collection plan. Develop procedures for the collection of patient fees including copays, deductibles, supplies and other non-covered services, and make certain these fees are collected at the time service is provided. The chance of collecting from a patient after they leave your clinic drops by 16%, resulting in a loss of revenue for your business.

Invest in the training of front office staff on best practices for collecting fees. If you work with a billing company, ask them for help with front office training resources. As a clinic owner, take the time to learn these best practices yourself, so that you’ll become more comfortable asking for payment of services from your patients while ensuring that your staff is doing the same.

Make it practice culture. Implementing policies and procedures that address the issue of copays and deductibles should become a part of your practice culture. Your entire staff should have regular training on fraud, waste and abuse. Make adherence to practice policies mandatory and have a policy in place for staff to safely report any known violation.

And finally, before implementing any policies, be sure to obtain the professional advice of your legal and compliance advisers.


About the Author:

Carol A. Wilcox is the staff writer and head of marketing communications at PREFERRED Therapy Providers, Inc. You can reach Carol here.

This article is brought to you by PREFERRED Therapy Providers Inc. PREFERRED is the nation’s leading payor management services network. Our expertise is working with physical, occupational and speech therapy practices – from single clinics to multiple clinic locations.


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