Because I get so many unusual questions, I really should not have been surprised by this one. After all, many doctors believe that it is perfectly acceptable to have different fee schedules for different kinds of patients. As I asked questions, and learned more about them, it seemed this practice had what they called a "time of service discount". If a patient is without insurance coverage at all, this discounted fee schedule applied to you. For an initial visit in the office, if you had insurance, the fee was around $350.
Of course, this included the initial exam, x-rays, and treatment. But if you were without insurance, this magic discount appeared and you were charged $125. That’s what I call a discount! Apparently this worked great for them…until they were targeted by an insurance company. An investigator was dispatched, posing as a new patient. This investigator represented himself as a cash paying patient without insurance from the first phone call through the initial visit with the doctor.
The CA dutifully explained the “time of service discount” fee to the patient at checkout, since they were without insurance. She quoted $125 for all the x-rays, examination, and treatment. As this patient was checking out, he told the front desk assistant that he thought this may be the result of a car accident. He handed over an adjuster’s name and information, and the CA told him to hold off on paying, until this could be verified. Next visit, the patient was given the GREAT news! There was truly a claim open, and he wouldn’t have to worry about paying. It would all be submitted to the carrier. Can you guess what happened next?
The assistant was on hidden camera talking about the time of service discount, and then, because this was now being billed to a carrier, the price went up 5.
This was a set up. When the office submitted the bill for the full fee of $350, the carrier had the proof they needed that something fishy was going on. The assistant was on hidden camera talking about the time of service discount, and then, because this was now being billed to a carrier, the price went up $225. A formal investigation was opened, with referral to the Attorney General in his state, and the Board of Chiropractic Examiners. So, is it ok to give a time of service discount or not? A simple yes or no would be nice.
Unfortunately, it depends on whom you ask, what state you practice in, if the patient is federally insured, AND their particular circumstances. In the days before insurance, third party reimbursement, state and federal payers, nobody was really paying attention. Now, when someone else is paying part or all of the costs for health care, and especially under a regulated program like Personal Injury Protection, rules change and regulations apply.
Dual fee schedules (charging more to insurance companies than you do to your cash patients) and improper time of service discounts (reductions that are really MORE than a reasonable bookkeeping reduction) are illegal in most states. Offering discounts that do not fall into one of Medicare’s safe harbors is absolutely a violation of federal regulations in EVERY state. Personal Injury Protection in this doctor’s state included a regulated fee schedule. Some include a “most favored nation” clause, like Medicare does. It says that you will not charge any patient “significantly less” than Medicare. If your PIP law has such a clause, offering discounted fees below this amount to cash paying patients is clearly a violation.
It even works with partially insured patients, like those with Medicare.
All is not lost, however. Once we helped this office get through the investigation and aftermath, we assisted them with setting up a legal cash discount fee schedule. This applies to anyone paying cash, even Medicare patients who pay for the non-covered services. It’s my opinion that the cleanest, most logical and ethical way to meet and exceed the requirements of legal discounting, allowing you to accept a lower than normal fee, is to join a Discount Medical Plan Organization (DMPO). When a patient also joins, that makes a legal contract within which you can have a set fee schedule, not unlike insurance! Using a DMPO, you can still bill your UCR fees and have the protection of a contract that allows you to offer network-based discounts to your cash and underinsured patients.
It even works with partially insured patients, like those with Medicare. I encourage all of my clients to join, rather than to worry about whether the various “deals” they make are ok. By belonging to a DMPO, such as ChiroHealthUSA, all of your worries about illegal discounts can go away. If only my client had known about this before this nightmare landed on his doorstep! Luckily, it’s not too late for you to tune up your fee schedules and avoid the unpleasant results of dual fee schedules.
Kathy Mills Chang is a Certified Medical Compliance Specialist (MCS-P) and since 1983, has been providing chiropractors with reimbursement and compliance training, advice and tools to improve the financial performance of their practices. Kathy can be reached at 888-659-8777 or