Can a Physician Charge Administrative Fees?
In recent years, as physicians experience the ever increasing administrative burdens that are ancillary to the rendering of patient care and treatment, while at the same time experiencing declining reimbursement, there has been a trend for some physicians to charge patients for services that are not generally covered by the patient’s health insurance plan, or services that are considered “administrative”. Examples of these types of administrative services include forms for school or employment, sports or camp forms, forms for life insurance or disability insurance purposes, and forms for Family and Medical Leave Act purposes. Physicians also point to the complex administrative services that are required by third party payers such as pre-admission certification and other preauthorization procedures that are a condition for payer coverage.
Generally, health plans do not pay physicians for these administrative services, and physicians have asked for guidance whether it is legally and contractually permissible to charge patients for these services when the patient’s health plan does not. Generally, physicians and other health care professionals may have the ability to charge patients for administrative services that are not otherwise covered or reimbursable under the terms of the patient’s health plan. The much more difficult questions are what types of administrative services are covered under the patient’s health plan? The types of administrative services that are covered or reimbursable varies with each health plan.
I. Concierge Fees
Some physicians have sought to charge a fixed annual fee for more personalized or “premium” services. These services are often referred to as “retainer” or “concierge services”. Physicians may offer these services to patients as enhancements to the basic services covered under an enrollee’s subscriber contract. Examples of “premium” services covered under a concierge fee may include:
· Guarantee 24 hour coverage;
· Better and more comfortable waiting rooms;
· Case Management.
a. Office of the Inspector General, HHS
A concierge fee arrangement may raise legal problems if it is not carefully structured with guidance of qualified private counsel. The Office of the Inspector General of the US Department of Health and Human Services (OIG) issued an Alert on March 31, 2004 which warned that Medicare participating physicians face potential liabilities if they bill Medicare patients that are already covered by Medicare. The OIG stated that Medicare participating physicians may charge Medicare beneficiaries extra for items and services that are not covered by Medicare. But, when participating physicians request payment (other then Medicare deductibles and co-insurance) for covered services from Medicare patients they are liable for substantial penalties and exclusion from Medicare and other Federal health programs, warned the OIG.
The OIG stated that while the physicians have characterized some services as “not covered” by Medicare, the OIG alleged that some of the services were already covered and reimbursable by Medicare. Among these services identified in the OIG alert included “coordination of care”, “comprehensive assessment and plan for optimum health” and “extra time” spent on patient care.
The OIG warned that non-participating physicians may also be subject to penalties for overcharging beneficiaries for covered services. If the non-participating physician accepts assignment for a given service, then the charges of the concierge fee may violate the assignment agreement because the physician may not request the beneficiary to pay any additional fee for already covered services, other than the coinsurance or deductible amount. Even if assignment is not accepted in the case, the concierge fee may result in the physician’s charge exceeding the Medicare limiting charge.
The OIG Alert is found at:
b. New York State Department of Health Warning Letter
In a letter dated April 16, 2004, the New York State Commissioner of Health similarly warned that a fee for concierge services may raise legal concerns. The Commissioner of Health stated that some providers were describing concierge services as “enhancements” to the basic services covered by the enrollee’s subscriber contract, but, the Department of Health believed that, in reality, many of the services were not enhancements but were already covered under the enrollee’s HMO subscriber contract. For example, the letter stated that the guarantee for 24 hour coverage and case management are covered services under the HMO subscriber contract. “Billing members for services covered under the terms of a currently effective subscriber contract would constitute impermissible double billing of an enrollee who has already paid a premium for such covered services”. The Commissioner of Health warned that a participating network physician may not solicit a health plan member to pay an additional charge for services that are already “covered” services. The New York State Department of Health HMO and IPA Provider Guidelines require the inclusion in the agreement between the health plan (or Independent Practice Association, “IPA”) and the health care professional of a provision prohibiting the billing of enrollees for covered services.
DOH said that it does not permit the charging of a concierge fee by a participating physician because it appears that concierge fees may duplicate services required to be covered under the comprehensive services plan.
Twenty-Four Hour Coverage – DOH stated that a primary care physician who is charging an additional amount in exchange for 24-hour coverage is not offering an expanded service. There is an obligation on the part of the health plan to assure access to such service.
Case Management – DOH stated that inclusion of case management as a concierge service is duplicative of the managed care comprehensive care already expected and required to be provided by an HMO pursuant to a subscriber agreement, and, accordingly, “case management cannot be promoted as an “enhanced” or “concierge” service.
Coordination of Necessary Referrals – A managed care model anticipates that a primary care provider will coordinate the necessary referrals for his/her patients. Therefore, coordination of referrals is not an “enhanced” or “concierge” benefit.
Expedited Appointments – DOH states that making an individual wait longer for an appointment based on source of payment, and not on the patient’s medical needs, would be viewed as discriminatory. Regulations of the New York State Department of Health prohibit discrimination on the basis of race, color, sex, age, religion, national origin or source of payment.
Better Waiting Rooms – Having enrollees wait in areas where quality and comfort decrease according to source of payment would likewise be considered to be discriminatory.
Department of Insurance Issues
Even if a physician is able to avoid the legal issues raised by the Office of the Inspector General of HHS or the New York State Department of Health, a concierge practice could run into problems with the New York State Department of Insurance. If a physician established a program whereby patients would be charged a flat monthly fee in exchange for a package of prepaid medical services, the Department of Insurance could view the arrangement as constituting the business of insurance without a license in violation of New York Insurance Law section 1102.
II. “A-la-carte” Approach
An alternative to charging a concierge fee is to charge only on an “a-la-carte” basis, and charge the patient a fee only for an “uncovered service”. This approach is not without its risks. It may not be a simple matter to identify services that are not “covered” services under the terms of the patient’s subscriber agreement. There may be disagreements between the physician and the health plan whether a particular service is an uncovered service, or whether the service is part of or associated with a covered service that is “bundled” or included in the payment for the covered service. The participation agreement that a physician signs with a health plan generally includes a provision whereby the physician must accept the health plan’s payment as payment in full. The physician is prohibited from billing the patient for any “covered” service other than any co-payment or deductible amount, if any. A contract dispute may arise if the physician attempts to bill the patient for a service the physician believes is “uncovered” but the health plan determines is part of a covered service.
The problem is compounded by the fact that the rules vary from health plan to health plan. Each health plan may have a differing interpretation whether a particular “administrative service” is “bundled” with a covered service. The safest approach is for the physician to contact each health plan and request the health plan to confirm whether specified services believed by the physician to be “uncovered” are also determined by the health plan to be “uncovered”.
As an illustration, recently, a physician requested clarification from United Healthcare regarding the intention to charge a fixed flat administrative fee to United Healthcare subscribers. The physician identified a range of administrative services that the physician believed were uncovered administrative services. United Healthcare responded that the physician could not charge the flat administrative fee because “many or most” of the services identified by the physician were in fact determined by United Healthcare to be covered services. United Healthcare warned the physician that charging the administrative fee to United members would be regarded by United as a breach of the physician’s participation agreement with United. The physician requested the assistance of MSSNY’s Office of General Counsel to obtain clarification from United Healthcare.
MSSNY’s Office of General Counsel wrote to United Healthcare and clarified that in lieu of a flat administrative fee, the physician only intended to charge the patient for discrete administrative services that were not covered services or reimbursable under the terms of United Healthcare’s subscriber agreement. The Office of General Counsel letter reminded United that while the participation agreement between the physician and United precludes the physician from billing the patient for covered services (other than applicable co-payments or deductible amounts, if any), the participating agreement does not preclude the physician from billing the patient for uncovered services. The Office of General Counsel letter asked United Healthcare to be more specific regarding which services United Healthcare asserted were covered services, and which services United agreed were uncovered services. The letter asked United to respond specifically regarding each of the following discrete “administrative” services:
· Telephone Consultations – Telephone consultation initiated by a patient that is connected with an office visit. Telephone consultation initiated by patient that is unconnected with an office visit;
· Refilling a prescription outside of an office visit;
· Completing health insurance claim forms;
· Disability forms;
· Completing letters or narrative reports required by an employer;
· Camp forms, sports participation forms;
· Email consults initiated by patient’s connected with an office visit; email consults unconnected with an office visit;
· Patient no shows – Fee charged to a patient if patient fails to keep a medical appointment and fails to provide timely notice (e.g. 24 hours);
· Preauthorization and other complex administrative services required by the health plan.
A copy of the written communications between MSSNY’s Office of General Counsel and United Healthcare’s response is available upon request. It is strongly cautioned, however, that these letters are offered for illustration purposes only regarding procedures that may be followed to obtain clarification. The response provided by United to MSSNY may not be applicable to the specific terms of each particular participating physician agreement. United Healthcare’s response to MSSNY was in general terms only. United Healthcare would not discuss with MSSNY the specific terms of any particular participating physician agreement. For a physician or medical group considering the “a-la-carte” approach, the better practice is for the medical practice to directly contact United Healthcare, (or other health plan with which the physician or medical group has entered into a participation agreement) and to request clarification of the billing issues with specific reference to the particular participation agreement entered into by the physician or medical group. The physician or medical group should consider the assistance of legal counsel to review the participation agreement and the health plan’s response.
In seeking clarification from the health plan, the physician can attempt to urge the health plan that these services are viewed as convenient and efficient for patients. For example, patients may have health related questions that can be answered without the need for the patient to make an appointment for an office visit. The patient may prefer to pay the physician a nominal fee to obtain the telephone consultation.
Patient Notification and/or Acknowledgment
In addition to seeking clarification from the health plan regarding whether the specific “a-la-carte” services are considered to be covered services by the health plan, it is also advisable for the physician to ascertain whether the health plan participation agreement or its policies, procedures or rules may require the physician to provide the patient with any specific notice or to receive a written acknowledgment from the patient regarding the charge. For example, it is possible that a health plan may require a physician to obtain written acknowledgment from the patient that (i) the patient understands that the health plan will not pay the service, (2) the patient agrees to assume responsibility for the payment, and (3) the patient agrees not to submit the bill to the health plan.
Even if the notification or patient acknowledgment is not required by the health plan, the better practice is to provide advance notification to patients regarding the administrative fees charged by the medical practice. Many patients are not accustomed to pay for these services and patients should know in advance regarding the fees that they will be expected to be personally responsible to pay.
Physicians may have the ability to charge patients directly for certain administrative services that are not otherwise considered reimbursable under the terms of the patient’s health plan. The better practice is for the physician to contact each health plan with which the physician has contracted, and obtain clarification concerning whether specific administrative services are determined by the health plan to be covered or reimbursable. It may be necessary to review the health plan’s policies and procedures and rules and regulations. Even if the participation agreement does not preclude the physician from directly charging the patient for certain administrative services, it is recommended that prior notice be given to the patient, and that the physician explain why it is necessary for the physician to charge the patient for the administrative services.