Can Pharmacies Waive Patient’s Co-Pays and Deductibles as They Please?

There’s a simple, short answer for whether pharmacies can, carte blanche, defer a patient’s co-pays and deductibles.

That answer is NO. 

Why Can't Co-Pays and Deductibles Be Waived?

The main reason is the federal Anti-Kickback Statute (AKS). This rule prohibits any person from “knowingly and willfully” paying, offering, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in exchange for or to induce the referral of any item or service covered by a federal health care program.

This prohibition comes, in part, from the underlying theories that financial conflicts of interest can affect sound medical judgment and/or lead to the overutilization of medical services.

The act criminalizes the payment of any funds or benefits designed to encourage a party to a provider for services to be paid for by a federal health care program.

If pharmacies routinely waive co-pays and deductibles, or advertise “no out-of-pocket costs,” they may be violating the AKS, the False Claims Act and the Civil Monetary Penalties law, for contributing to the overutilization of items and/or products paid for by the federal government.

What Happens If I'm in Violation?

The consequences for violating the AKS are severe.

The AKS is a criminal statute that include fines of up to $25,000 per violation and a prison term of up to five years per violation. The Office of the Inspector General may also ban providers from participating in federal health care programs under their exclusion authorities. It also can impose additional civil monetary penalties of up to $50,000 per violation, plus an assessment of up to three times the amount of the payment.

Many pharmacies believe that, by avoiding patients with public insurance such as Medicare, Medicaid or Tricare, they can routinely waive co-pays and deductibles because they are not violating the AKS. While it is true that if the federal government is not paying for the items and/or products, there is no violation of the AKS, many states such as Florida (through the enactment of the Florida Patient Brokering Act) have enacted similar laws to deal with the overutilization of medical services at the state level.

Are There Exceptions to This Process?

In December 2016, the OIG promulgated the Cost Sharing Safe Harbor through its proposed rule and comment process. This new safe harbor protects cost-sharing waivers by pharmacies (e.g., waiver of patient co-pays). To fall within the safe harbor, pharmacies are required to satisfy the following criteria:

  • The wavier and/or reduction must not be advertised or part of a solicitation.
  • The pharmacy must not routinely waive cost-sharing.
  • Before waiving a cost-sharing obligation, the pharmacy must determine in good faith that either the beneficiary has a financial need, or the pharmacy has failed to collect cost-sharing amounts after making a reasonable effort to do so.

Only the first criterion is required if a Medicare Part D and/or Medicaid enrollee is eligible for a Part D low-income subsidy, and this safe harbor is wholly inapplicable to waivers by physicians for co-payments of Medicare Part B drugs.

How Can I Learn More?

At Chapman Law Group, health care law is all we do. We understand the unique and rigorous requirements imposed on health professionals, and we fight aggressively to defend against claims including criminal charges, disciplinary matters and violations of the AKS. Contact us today to learn how we can help you.

Need an Attorney? Contact us now!

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