Hospitals Permitted to Waive Cost of Self-Administered Medications to Outpatients

by Ronald Hirsch, MD, FACP, CHCQM

CMS’ introduction of CMS-1455-R in March 2013 allowed hospitals to ignore the one-year timely filing deadline and rebill admissions that were denied by an auditor, even many years after the date of service. This rebilling shifted the payment from Part A to Part B and therefore changed the patient’s financial liability. When CMS-1455-R was released, hospitals asked if they were allowed to waive the patient copayment and cost of self-administered medications on these claims since it would unfair to ask for payment after such a long time period. But CMS responded that hospitals do not have the authority to waive this liability, noting that hospitals would need to address the implications on beneficiary inducement and anti-kickback laws with the Office of the Inspector General (OIG). For context, when a hospital bills a patient for self-administered medications, it must charge the patient the chargemaster price in order to avoid accusations of differential pricing by payer. These chargemaster prices are often many times higher than the retail price and although the patient can seek reimbursement from their Part D prescription drug plan, that is a daunting proposition.

Fast forward to October 29, 2015, when the OIG released a policy statement entitled “Regarding Hospitals That Discount or Waive Amounts Owed by Medicare Beneficiaries for Self-Administered Drugs Dispensed in Outpatient Settings.” In this memo, the OIG has stated that hospitals may waive the cost of self-administered medications to Medicare beneficiaries without concern about inducement or kickback accusations if the hospital develops a policy and applies it uniformly. 

The OIG set conditions for this waiver, including the following:

• Hospitals must uniformly apply their policies regarding discounts or waivers, without regard to a beneficiary’s diagnosis or type of treatment
• Hospitals must not market or advertise the discounts or waivers
• Hospitals must not claim the discounted or waived amounts as bad debt or otherwise shift the burden of these costs to the Medicare or Medicaid programs, other payers, or individuals

This is good news for hospitals. The cost of self-administered medications is often what greatly increases the cost of an observation stay and leads to patient complaints and public relations issues. If this policy is adopted, hospitals will be losing a revenue stream so the decision to develop and adopt such a policy should be multi-disciplinary, involving finance, risk, compliance, case management and patient relations.

Click here to access the OIG policy.

Editor’s note: Dr. Hirsch is the vice president of the regulations and education group at AccretivePAS Clinical Solutions in Chicago.