Fam Pract Manag. 1999 Mar;6(3):54.

Discounting self-pay patients


When can a physician discount a fee for self-paying patients? Are there any legal or tax ramifications?


Generally speaking, there is no prohibition against a physician discounting a fee for a self-paying patient (that is, a patient who pays out-of-pocket and is not covered by a health plan, including Medicare or Medicaid).

However, there are some considerations to keep in mind when using any discount program. First, physicians should be aware that Medicare law prohibits you from submitting Medicare claims that contain charges substantially in excess of your usual charges. This provision could apply to a doctor who regularly discounts charges to self-paying patients while submitting higher charges to Medicare. We generally advise clients to limit discounts for non-Medicare patients to less than 30 percent of their total business, which should avoid any allegation that the discounted charges are, in reality, the doctor's usual charges.

Second, if ever questioned, a physician should be prepared to defend the self-pay discount on some legitimate basis, such as decreased paperwork and administrative expense compared to insurance or government billing, prompt pay considerations or the ability of an individual to pay full charges.

Balance billing HMO patients


Can non-HMO physicians bill HMO patients for the balance due when the HMO does not reimburse at the usual and customary rate?


Non-HMO doctors do not have a contractual obligation to the HMO. A fee for service is sometimes paid to the “out-of-network” provider at a lower rate (this discourages out-of-network visits). Since the non-HMO physicians are not under contract, they can balance bill HMO patients unless there is some written or other arrangement prohibiting them from doing so.

Practicing in a strip mall


Our practice has grown beyond our office space and is looking for a new location. Our administrators are considering a move to a commercial retail development (i.e., a strip mall) with plans for a drug store, restaurant and child care center. Do you have any information on the success of practices or the level of patient satisfaction in such locations?


Our office is under the same roof as a large grocery store. We have found that the visibility has greatly increased our growth — people are more aware of who we are. Our patients seem satisfied because they can combine a trip to the doctor with shopping for groceries, getting their medications filled at the pharmacy or doing banking. And we never have complaints about parking problems anymore.

We do find that mishaps from next door are triaged to us, so you need to be ready to accept a few emergency walk-ins. I think the proposed mix sounds wonderful!

Waiving a co-payment


When can a co-payment be waived for insured patients and employees?


The answer can be divided into three parts:

  • Government-funded plans. Simply put, co-payments cannot be waived on any government-funded plans or programs such as Medicare, Medicaid, CHAMPUS or Medicare HMOs.

  • Commercially insured patients. If your practice participates with the patient's insurance company, waiving the co-payment is probably unacceptable under your contract with that insurance company. Look at the wording in your contract for clarification. If you receive approval from the insurance company to waive the co-payment for a patient or class of patients, get it in writing for your own protection.

    If you don't participate with the patient's insurance company, you can waive the co-payment. We advise that you notify the patient in advance of your nonparticipating status since the patient is likely to have more out-of-pocket cost.

  • Employees. Your employees should be treated as above — the same as your other patients. But their employment status adds a complication: Waiving co-payments for employees may present payroll tax and other employment law issues that should be discussed with your practice consultant, accountant or attorney.

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Copyright © 1999 by the American Academy of Family Physicians.
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