Physiatry Practice Management Resources

Professional courtesy, the practice among many physicians and other professionals of providing free or discounted services to their fellow professionals, their employees and to others, has long been a respected tradition. The practice of professional courtesy has been commonplace, even conventional. Once an American Medical Association ethical requirement, in the more than 200 years that physicians have actively practiced professional courtesy, the practice has become recognized as one of the hallmarks of professionalism and collegiality among physicians and other health care professionals. (Diane M. Gianelli, Rethinking Professional Courtesy, American Medical News, March 8, 1999).

A 1996 W.B. Saunders Company poll estimated that 97 percent of physicians offer some type of professional courtesy in their practices. However, due to an upsurge in government's efforts to ensure accurate billing of claims, new federal laws addressing physician referral and patient relationships and the novel application of existing laws, the legality of this well-honed tradition has been called into question. Perhaps even more unfortunate, due to the complexity of the laws surrounding professional courtesy and possibly the popularity of the tradition, no one clear viewpoint has arisen as to its continuing legal viability. This article will attempt to provide physicians and other professionals with some information on this modern dilemma through review of the three primary federal laws that are applied to professional courtesy, and some insight into the arguments the government appears to advocate.

The Government's Historical Position on False Claims
The False Claims Act (Act) provides that any physician who knowingly submits or causes to submit a false or fraudulent claim for payment to the government can be fined triple the government's damages, plus $5,000 to $10,000 per claim, plus administrative penalties. Moreover, the Act specifically authorizes private individuals such as employees and patients to initiate lawsuits against possible transgressors, and if the lawsuits are successful, to obtain up to 30 percent of the lawsuits' proceeds. In addition to the False Claims Act, there are other, similar false-claims related statutes that provide other penalties if they are violated, including criminal statutes.

Under the Act, the government has taken the position that physicians who waive their fees through providing free or discounted care submit false claims because they misrepresent their actual charges to government programs. This argument is voiced by the Department of Health and Human Services, Office of Inspector General (OIG) in its 1991 Special Fraud Alert, where is emphasizes that the "routine" waiver of co-payments and/or deductibles is equivalent to misstating the actual charge. A similar sentiment is asserted in section 5220 of the Medicare Carriers Manual, which states that Carriers should investigate physicians' waivers of co-payments and deductibles where those waivers are provided "routinely and consistently."

The Government's Historical Position on the Anti-kickback Statute
The federal Anti-kickback Statute (Statute) prohibits the knowing and willful solicitation, receipt, offer or payment of anything of value in exchange for or to induce a referral of business for which payment may be made by a federally funded health care program. This is a criminal statute, and violations can result in fines of up to $25,000, five years imprisonment, or both. Administrative fines can also be assessed. In its 1991 Special Fraud Alert, the OIG emphasized that physicians who forgive financial obligations for reasons other than genuine financial hardship of particular patients, or without "good faith" attempts to collect applicable debts, may violate the Statute by unlawfully inducing patients to purchase items or services from them, or physicians to refer business to them.

The Government's Historical Position on the Civil Monetary Penalties Law
The Civil Monetary Penalties law (CMPL) provides that the waiver of co-insurance and deductible amounts, the provision of free services or the provision of discounted services for or to beneficiaries of federal health care programs is unlawful if physicians "know or should know" that their actions are "likely to influence such individuals" to seek the services of those physicians. The only current exception to this general rule is where (1) the waivers are not advertised; (2) the waivers are not routine; and (3) there are good faith determinations of financial need or reasonable collection efforts. Violations of this law can result in monetary penalties including up to three times the payment amounts claimed, plus exclusion from participation in federal and state health care programs.

The OIG recently published regulations relating to the CMPL. Responding to an inquiry about professional courtesy in the commentary that accompanied its regulations, the OIG stated that: "with respect to ‘professional courtesy', we note that traditionally the term means free care (i.e., no charge is made to anyone), not care provided on an ‘insurance only' basis. Generally, a routine practice by a physician of waiving the entire fee for services provided to other physicians without regard to the potential for referrals is not a problem under [the CMPL] or the anti-kickback statute. However, waivers of Medicare or other federal health care program co-payments for non-indigent persons, whether physicians or any other groups, are problematic"