Prompt pay? How about no pay? A specialty hospital that refuses to bill Medicare patients for their copayments or deductibles, regardless of their ability to pay or the availability of other insurance coverage, technically violates federal antikickback statutes, according to a nine-page advisory opinion that HHS' inspector general's office issued last week. But the agency said it wouldn't sanction the hospital because its policy benefits society and doesn't result in an overuse of hospital services.
The advisory opinion, in the works for four years, didn't identify the hospital. But Modern Healthcare has confirmed that it's 161-bed Deborah Heart and Lung Center in Brown Mills, N.J.
"We think it is good news and very positive support of our ongoing practice of never billing a patient," said Bret Bissey, Deborah's chief compliance officer. "Our motto is `There should be no price tag on a life.' We believe (the advisory opinion) supports what we do."
Don't expect the advisory opinion to lead to a lot of hospitals waiving Medicare copayments and deductibles. Only a handful of hospitals do waive such payments, among them 54-bed St. Jude Children's Research Hospital in Memphis, Tenn., which received its own inspector general's blessing in a 1999 advisory opinion.
Most hospitals simply can't afford to waive the fees, said healthcare attorney Kathleen McDermott of the Washington office of Blank, Rome, Comisky & McCauley.
"As a prudent business practice, most hospitals shouldn't be waiving those payments, from a fiscal perspective as well as a fraud and abuse perspective," McDermott said. "These charity and indigent-care advisory opinions have very narrow application for most hospitals, which won't be able to take advantage of them."
Medicare copayments and deductibles for fiscal 2000 totaled $38 billion out of total Medicare benefit spending of $238 billion. Patients make a copayment of $792 per inpatient hospital stay under Medicare Part A and have a $100 annual deductible plus pay 20% of costs under Medicare Part B for physician and laboratory services.
Before the widespread prevalence of commercial and government health insurance in the 1960s, Deborah never charged for treatment. The hospital began accepting insurance and waiving Medicare copayments and deductibles in the 1960s, more than 40 years after the hospital was founded as a tuberculosis sanitarium in 1922. The private not-for-profit teaching hospital now specializes in the diagnosis and treatment of heart, lung and vascular diseases in adults and congenital heart defects in children.
To cover the costs of charity care and the revenue lost to waivers, the hospital relies on donations. The Deborah Hospital Foundation, founded in 1974, includes a grass-roots staff of 70,000 volunteers through 280 chapters, soliciting donations around the country. It raised nearly $14 million in 2000, $9.5 million of which went to offset uncollected insurance deductibles and copayments and uncompensated care. Deborah lost $1.4 million in 2000 on total revenue of $102 million.
Deborah sought the advisory opinion in 1997, shortly after the passage of the Health Insurance Portability and Accountability Act of 1996, Bissey said. A provision of that sweeping healthcare law created an advisory opinion process for providers wanting HHS to review the legality of a proposed business arrangement.
"Management felt it was time to bless the billing processes here that have gone on for 75 years, and the passage of HIPAA afforded institutions for the first time the possibility of obtaining guidance," Bissey said, adding that St. Jude, too, sought an advisory opinion about the same time.
Deborah officials knew the practice of waiving payments might raise legal questions. The antikickback provisions of the Medicare and Medicaid fraud and abuse statutes bar any form of remuneration to induce the referral of Medicare or Medicaid patients.
Waivers of Medicare co-insurance constitute an inducement to beneficiaries to use services in exchange for something of value, such as forgiveness of a financial obligation, like a copayment or deductible, the inspector general wrote in an opinion made public July 2.
But the agency won't sanction the hospital because the insurance-only billing practice "is a vestige of Hospital A's charitable origin and continuing mission ... (that) predates the Medicare and Medicaid programs by decades and has at all times been applied uniformly to all patients. Hospital A views the insurance-only billing policy as an integral component of (its) continuing, extraordinary commitment to free and charitable care."