Caution: Are you waiving copayments and deductibles?

Horizon Blue Cross Blue Shield of New Jersey alleges in lawsuits that the routine waiver of coinsurance is fraud

by Legal and Regulatory Affairs Staff

September 29, 2009 — Psychologists in New Jersey recently received a letter from Horizon Blue Cross Blue Shield of New Jersey (Horizon) warning them against the routine waiver of copayments and deductibles. The letter further states that Horizon has filed suit against nonparticipating providers alleging that the routine waiver of coinsurance is fraud.

As reflected in the Good Practice magazine content from the APA Practice Organization ("Using a Sliding Fee Scale," Spring 2008, attached in .pdf at the end of this article), we have cautioned psychologists to avoid this practice.

Courts have held that health care providers who routinely waive copayments and deductibles misrepresent their actual charge. As explained in various court cases, a health care provider's claim includes a price for his or her services of $X, of which the insurer will pay 80 percent (or will pay 80 percent of the allowable charge); the patient is obligated to pay the remaining 20 percent as a copayment.

When a health care provider waives the 20 percent copayment, his or her actual charge isn't really $X. Rather, the actual charge is $X minus 20 percent, because that is all that the provider expects to collect. Including on the claim the full price of $X is a misrepresentation when the health care provider really intends only to collect $X minus the copayment amount.

The APA Practice Directorate is aware of two lawsuits instigated by Horizon on this issue, one against a hospital and the other against an ambulatory surgery center (Horizon v. East Brunswick Surgery Center, 623 F.Supp. 2d 568 (April 2009)). In both cases, Horizon alleges that the providers are using the routine waiver of copayments and deductibles as an incentive to induce the public to use their services.

Again, the APA Practice Directorate encourages psychologists to be cautious when considering waiving copayments and deductibles. If a practitioner intends to waive a copayment, the waiver should be made on an occasional basis only, based on financial need and should not be advertised.

PLEASE NOTE: Legal issues are complex and highly fact-specific and require legal expertise that cannot be provided by any single article. In addition, laws change over time and vary by jurisdiction. The information in this article should not be used as a substitute for obtaining personal legal advice and consultation prior to making decisions regarding individual circumstances.