Requests for Bill Adjustments

A bill adjustment request, which may include a request for a refund, write-off, or waiver of fees or co-payment, is a process that requires careful navigation. An organization may wish to consider bill adjustments for several reasons. Dissatisfied patients may decline to pay their outstanding balance, ask for money to fund subsequent care, or request a bill adjustment. Organizations may offer bill adjustments as part of a communication and resolution program (CRP) when medical treatment results in patient harm. Regardless of the reason, it is imperative to consider several factors before agreeing to adjust bills, including payer contracts, reporting requirements, Medicare compliance, and legal/regulatory issues.

Contracts with third-party payers (including Medicare) may require collecting copayments and deductibles at the time of service. The provider’s ability to waive or refund certain fees may be limited or even prohibited in certain circumstances. Some insurance plans allow a practitioner to waive a patient’s outstanding balance only after the practitioner refunds any third-party payer fees. Other payers refuse to allow waived deductibles based on the contractual relationship between the patient, employer, and insurance company, requiring the patient to pay the full amount. Review your organization’s payer contracts and follow their provisions to avoid allegations of insurance fraud or abuse. 

Waiving or refunding fees to patients on Medicare plans can be particularly complicated. It is sometimes viewed as coercion or an incentive for additional services or referrals. Without adequate documentation of the reasons for waiving or refunding fees and additional evidence that the organization refunded Medicare payments, the Office of Inspector General (OIG) can raise questions and/or start an investigation that may lead to charges, fines, and/or other penalties. 

Risk Recommendations

Bill waivers, refunds, or write-offs can seem like an obvious way to respond meaningfully to patient complaints and grievances. If done improperly, however, bill adjustments can expose a practitioner or organization to risk. Consider the following when reviewing your organization’s policy and procedures for bill adjustments: 

• Know the law. Work with an attorney to understand federal and state regulations, contractual obligations, and reporting requirements related to billing adjustments. Know which situations require billing adjustments and which require providing care at no cost to the patient. Consult an attorney when developing policies and procedures related to billing adjustments to ensure compliance with federal and state law. 
• Determine your organization’s philosophy. Work with an interdisciplinary group including risk management, claims, billing, legal, and compliance to determine the organization’s bill adjustment philosophy. Ensure that this philosophy is reflected in the organization’s policies and procedures. Is your organization comfortable or uncomfortable adjusting balances as a business decision or customer service gesture even if practitioners delivered appropriate care? Will the organization decline to adjust balances in those situations? Understand that whatever the policy, you must apply it consistently to avoid allegations of favoritism or inequity. 
• Develop a policy and procedure. Clearly outline your billing practices in a written policy and consistently apply provisions for billing adjustments. Ensure the policy addresses key elements, such as:
  • Postponing billing efforts while requests are being evaluated.
  • Identifying accounts that require review of charges for purposes of billing adjustment.
  • Auditing and oversight.
  • Receiving and routing bill adjustment requests.
  • Tracking and responding to bill adjustment requests.
  • Establishing who will make decisions regarding adjustment requests and how they will do it. 
• Educate employees. Ensure that employees who are authorized to make billing adjustment decisions understand that policy adherence is imperative and that deviation from the process can lead to allegations of inequity and/or coercion. Verify that employees know who is authorized to communicate with a patient and/or family regarding bill adjustments.
• Communicate with patients. Inform patients and their families how to dispute bills related to care concerns and design that process with their participation in mind. Identify a person whom patients and families may call or write for billing questions related to care concerns. Post this information in a prominent place in your organization, in written patient materials, and on your website. Communicate your decision regarding specific adjustment requests and the reason for it to the patient or requestor in a timely fashion.
• Document carefully. Keep complete files with documentation on each complaint and adjustment request in the event you are required to explain your decision to an outside auditor or ombudsman. Omit information about billing decisions from the medical record. Centralize documentation to facilitate responding to inquiries. Track and trend adjustment amounts and the reasons for them to identify unfavorable trends. 

Billing adjustments are a common method for resolving patient complaints and providing financial compensation following an adverse event, but they can expose an organization to liability. Well-designed, consistently applied policies and procedures can help to minimize risk.