September 25, 2012


Hi Jennifer,

I was wondering if you could comment on the collection of co-pays.  Please correct me if I am wrong.  My understanding is that collection of co-pays is mandatory under contractual agreements with insurance companies; non-collection is deemed as fraud.  I encountered a situation which a patient requested to lower her co-pay.  If my office lowered the co-pay, would it be considered as a contract violation or worse, fraud?

Dr. M


Dr. M thank you for your question!  I can't believe we have not covered Co-Pays for in such a long time!  Co-Pays are absolutely mandatory; by co-pays I am referring to amounts the healthcare provider is required to collect from the patient including co-pays, deductibles and co-insurance.   While I know many of you find it burdensome, annoying and potentially detrimental to the practice (maybe patients will go elsewhere if I try to collect?) to bother patients with co-pays, deductibles and co-insurance, please allow this email to remind you that if you do not collect all of the above, you are in fact committing insurance fraud.  The prior statement does not apply of course if you are strictly fee for service, no insurance participation whatsoever and do not accept assignment.  The theory behind this type of insurance fraud is that the patient has executed a contract with a third party payor accepting a certain financial responsibility for their coverage (to pay their premium, deductible and co-payment). And, while a $5-$20 co-pay may not seem like a lot of money when patients leave an office when the visit will be reimbursed for several hundreds of dollars by a third party payor, but amounts that should have been collected add up over time.
The New York State Office of the Commissioner started paying particular attention to practices all across the state and auditing on the basis of failure to collect co-pays.  Being involved in such a review is easily avoidable by collecting same, which will also have a positive impact on your practice financially.  Which is why I strongly recommend that if you own or work for a practice that does not attempt to collect co-pays, deductibles or co-insurance that you correct this policy. $5 out of your patient's pocket at the time of visit may save you countless in legal fees, penalties and refunds.
When collecting or attempting to collect co-pays, you are required to make a good faith effort to collect, which means speaking to your patient population about paying at the time of service, sending out notices of late payments and possibly sending off late bills to collection.  Rule of thumb - make at least 3 attempts.  Exceptions to the collection rule -  indigent patients (known to be and can prove that they cannot pay) or when services are a professional courtesy.