Our hospital is developing a self-pay discount policy. What are some of the legal ramifications we should be aware of? For example, is there a definition for a true self-pay patient (there are various types of patients who pay out of pocket, but are they still considered self pay if they have insurance)? Also, what is a fair and legal cut off for offering these discounts? Should we offer them no matter when the patient pays, or should we put a time limit on the availability of the discount (e.g., pay within 30 days and we offer a 20 percent discount). Any other ideas on legal issues we should be aware of related to self-pay discount policies/programs are appreciated.
Answer 1: You will need to consult your payer contracts for restrictions on self-pay discounts for patients who have insurance as you referenced in your question. Most contracts require you to collect the member liability. Discounting based on factors such as prompt pay are generally not acceptable. That said, if the discount is based on a financial assistance policy that is based on federal poverty guidelines and ability to pay, you can usually negotiate language that allows certain discounts.
This question was answered by: Michele Marcum, director of contracting, Humana, Inc., Meridian, Idaho, and a member of HFMA’s Idaho Chapter.
Answer 2: It depends on the type of entity. For example, if this is a not-for-profit hospital, the regulations under 501(r), which give specific criteria on discounts, would apply. The not-for-profit must provide the same discount as the lowest discount offered to the insured group. The location may also come into play. There may be specific state laws that govern discounts offered.
This question was answered by: David A. Williams, partner, Horne LLP, Jackson, Miss.
Answer 3: State laws concerning discounts are relevant to this question. Insurance contracts requiring that cost-sharing be collected from beneficiaries would also be relevant. For patients at not-for-profit hospitals, 501(r) rules requiring patients to be charged no more than generally accepted charges would be relevant only if patients are eligible for financial assistance under the hospitals’ financial assistance policies. In addition, state laws may address this self-pay discount as well.
This question was answered by: Elizabeth M. Mills, senior counsel, Proskauer Rose LLP, Chicago, and a member of HFMA’s Illinois Chapter.
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