Physicians must be careful when offering to waive co-pays or deductibles as a professional courtesy

Criminal prosecutions and private insurance fraud actions are possible outcomes of violating the professional courtesy prohibition.

Criminal prosecutions and private insurance fraud actions are possible outcomes of violating the professional courtesy prohibition.

The law is not new but it is always good to be reminded that enforcement of healthcare rules and regulations is a focus of the federal government and its aggressive approach to ensuring everything is billed correctly for any services paid in part or in full with federal funds and what is paid by insurance. According to the Department of Health and Human Services (HHS), Office of Inspector General (OIG), “It is unlawful to routinely waive co-payments, deductibles, coinsurances or other patient responsibility payments.[i]” If however, there is no insurance or Medicare claim connected with healthcare service, and the doctor is not receiving any federal or insurance reimbursement the doctor is free to offer reduced or unpaid services at their discretion.

Professional courtesy in the healthcare profession is a common practice.

Professional courtesy is an age-old tradition and common practice among physicians and their families. It has been common for Doctor A to visit Doctor B who either reduces or does not charge for healthcare services for Doctor A and his family members. If there is a portion of services Doctor B can get paid for by Medicare or insurance, of course Doctor B would submit for reimbursement. Professional courtesies are also common in the other learned professions including law.

Is there a disparate impact on the economy or society if Doctor B waives the co-pay or deductible for Doctor A? The argument can be that if healthcare services are essentially free, assuming a professional courtesy arrangement exists, the beneficiary of that deal will use healthcare services without limitation, and the more frequent visits will burden Medicare or insurance.

Criminal prosecutions and private insurance fraud actions are possible outcomes of violating the professional courtesy prohibition.

The good news is that there are not many reported instances of physician indictments for violations of the federal fraud or abuse laws such as the Anti-Kickback Statute or the False Claims Act. Meanwhile, private insurers may be more likely to pursue private claims against physicians who do not extend the same discounts or waivers to the insurer as they do the beneficiary of a professional courtesy in billing.

The co-pay waivers may be treated as Medicare overcharges. If Medicare agrees to pay 80 percent of the cost of a service and the patient pays 20 percent, and the charge is $1,000 then the Medicare portion is $800. When the co-pay is waived, Medicare is actually paying 100 percent of the service, even if the 80 percent based on the listed cost of service is being billed to Medicare. There are legal and proper methods for offering waivers of co-pays and deductibles based on patient hardships. If the physician allows a legally permitted hardship waiver, it is important to make an accurate record of the instance to back up the propriety of the transaction if necessary.

Diligence and auditing billing procedures and policies is an important aspect of healthcare practice.

Michael V. Favia & Associates has represented healthcare providers in matters involving Medicare and insurance claims and medical billing and procedures, generally. Michael V. Favia recommends healthcare providers routinely review and audit their business and billing practices to make sure they are compliant with laws and regulations, which are often updated.

Michael V. Favia & Associates’ offices are conveniently located in the Chicago Loop, Northwest side and suburban meeting locations, you can schedule a discrete meeting with an attorney at your convenience and discretion. For more about Michael V. Favia & Associates’ professional licensing work, please visit and feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter.


[i] 67 Fed. Reg. 72,896 (Dec. 9, 2002)


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