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Charging Interest to Past Due Medicare Patients
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I am frequently asked about the appropriateness of charging Medicare patients interest on past-due amounts.

Here's the bottom line from CMS regarding charging interest, etc., to Medicare beneficiaries. 

This issue has been brought up to CMS for several reasons but, basically, if a provider is a participating doctor and signs an agreement that he/she will accept assignment on his claims, the only amount that provider can collect from the patient is any deductible and the 20 percent co-payment.

If a physician is non-participating, he understands that the most he/she can collect is the limiting charge. Medicare views the cost of collection of deductibles and co-insurance as part of the routine practice expense of doing business. Therefore, if a physician were to charge interest or other fees to beneficiaries for the collection of deductible and/or co-insurance amounts, that would be a violation of the assignment agreement or the limiting-charge provisions.

For participating physicians, it's Institute of Medicine (IOM) Pub. 100-08, Chapter 4, Section 4.24:

"4.24 - Breaches of Assignment Agreement by Physician or Other Supplier (Rev. 259, Issued: 06-13-08, Effective: 07-01-08, Implementation: 07-07-08)

A. Criminal Penalty

The law provides that any person who accepts an assignment of benefits under Medicare, and who ‘knowingly, willfully and repeatedly’ violates the assignment agreement, shall be guilty of a misdemeanor and subject to a fine of not more than $2,000, or imprisonment of not more than six months or both."

For non-participating physicians, it's IOM Pub. 100-08, Chapter 4, Section

" - Civil Monetary Penalties Delegated to CMS (Rev. 71, 04-09-04)

The following is a brief description of authorities from the Social Security Act:

Section 1848(g)(1)(B)—Any nonparticipating physician, supplier or other person who furnishes physicians' services and bills on a non-assigned basis, or collects in excess of the limiting charge, or fails to make an adjustment or refund to the Medicare beneficiary. (This violation may cause an assessment and an exclusion.)"

It's also in the Social Security Act 1848(g)1A(ii):

"NO LIABILITY FOR EXCESS CHARGES—No person is liable for payment of any amounts billed for the service in excess of such limiting charge."

For both participating and non-participating physicians, Section 4.25 of IOM Pub 100-08, Chapter 4, states:

"4.25—Participation Agreement and Limiting Charge Violations (Rev. 176, Issued: 11-24-06, Effective: 12-26-06, Implementation: 12-26-06)

Section 2306 of the Deficit Reduction Act of 1984 established a physician/supplier participation program. The Omnibus Budget Reconciliation Act of l989 established a limitation on actual charges by nonparticipating physicians (see §1848(g) of the Act). Participating physicians/suppliers who violate their participation agreements, and non-participating physicians who knowingly, willfully and repeatedly increase their charges to Medicare beneficiaries beyond the limits, are liable for action in the form of CMPs, assessments and exclusion from the Medicare program for up to five years, or both. Criminal penalties also apply to serious violations of the participation agreement provisions."

Note: CMS is firm that anything charged to the Medicare patient over the participating allowable, for participating physicians, and the limiting charge, for non-participating physicians, is a violation of the Medicare program and, as such, subject to penalties, etc. from the Medicare program.

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About the author: This article originally appeared in the November 2010 issue of Coding Bulletin. It was written by Academy Coding Executive Sue Vicchrilli, COT, OCS.

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