Office of Inspector General (OIG) Permits Prompt Pay Discounts to Patients

I have always advised my clients that they can provide a discount to patients who pay cash for services. The question has always been how big a discount can a patient receive? The Department of Health and Human Services Office of Inspector General (OIG) has provided guidance on this issue in the form of an Advisory Opinion.

The Advisory Opinion permits offering 5-15% discounts to all patients for prompt payment of their cost-sharing amounts and amounts owed for non-covered services (for which Medicare patients received an advanced beneficiary notice).

The OIG recognizes that it is legitimate for a health care provider to provide prompt pay discounts aimed at reducing accounts receivables and cost of debt collection and boosting cash flow.

The key factor in determining the discount amount is that it must bear a “reasonable relationship to the amount of collection costs that would be avoided.” The OIG also acknowledged that the discount may vary depending on the timing of the payment and the size of the remaining balance owed by the patient.

In order to avoid the inference that the discount is an incentive to induce patients to self-refer, the discount should be provided to all patients and the health care provider should not advertise the fact that it provides discounts. I recommend posting a notice at your reception desk informing patients of the discount.

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    Orly R. Rumberg

    Orly Rumberg's health care law practice provides essential support to health care providers including physicians, hospitals, pharmacies, health systems, and long-term care clients with respect to corporate and regulatory aspects of health care delivery.

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