Some of my clients are charging extra fees on top of copays that are due. I keep telling them this may be insurance fraud, but they just don't listen. What do you think? I'm pretty sure this is a common practice and should be addressed.
Bert Lurch, President of E Central Medical Management
The short answer is, you are correct Bert, that charging an extra administrative fee on top of a co-pay may be insurance fraud. For the extra charge to be legitimate, a Practice would have to have certain policies promulgated. Because a co-pay is determined by contract between a third-party payor and the patient, the amount is fixed and is to be collected as a fixed rate to represent the patient responsibility for those services rendered and billed to the third-party payor. Failure to collect the co-pay would mean that the only payment received by the Practice would be the amount paid by the third-party payor, which would represent 100% of reimbursement. Typically the patient is responsible for at least 15% of reimbursement as their proportionate share of the cost of services. What we have here is the opposite situation, where the Practice is charging more than the agreed-upon co-payment amount. The amount in excess of the co-payment, if not disclosed as such, would also alter the patient's responsibility and change the amount of money reimbursed for services rendered. As such, the amount "billed" to the third-party payor would not be representative of the correct percentage for services rendered, due to the excess money received. Such activity would effectively result in a misrepresentation to the third-party payor and constitute insurance fraud as well.
So, how do you charge for administrative fees on top of a co-pay? The answer is simple. The Practice must have policies promulgated, easily accessible and provided to patients explaining what fees they are being charged and that such fees are not a portion of their co-payment, but a separate administrative fee. For those providers who are participating providers, for those patients who are in-network, the Practice should provide advance notice that an additional fee is being charged for services that are not covered within their plan. Also, the Practice should keep in mind that the relationship between a third-party beneficiary if they are a participating provider is governed by contract. As such, any additional fees for such patients may be prohibited by contract and failure to adhere to such provisions would be tantamount to breach of contract.