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Is it legal to have two separate fee schedules, one for insurance and Medicare and a second for cash paying patients? For example, can I charge a reduced rate for a simple office visit (no coding and no insurance), but also have traditional billing and coding for patients with insurance?


It is not appropriate to have separate fee schedules for Insurance / Medicare versus private pay patients. Having a separate, and presumably lower, fee schedule for private pay patients yet representing to insurance companies that you are billing them your standard “usual and customary” fee has clear implications of insurance fraud.

If you encounter patients who do not have insurance and due to financial hardship cannot afford to pay the full fee, we recommend either providing the service without charge or billing your standard fee for the services rendered. We also recommend that these services be coded utilizing the appropriate CPT codes to define the services provided. Once the charges are posted, the balance should be reduced or written off only after making commercially reasonable attempts to collect the balance or justifying determination of financial hardship.
It is important to note that there are federal regulations (specifically in the Health Insurance Portability and Accountability Act) that prohibit discounting of fees filed for insurance benefits. The best policy is to include the detail of all charges and related discounts on all information provided about the encounter. This will avoid situations in which patients use your information to independently file insurance on services that have been discounted.

The one exception to maintaining separate fee schedules is for non-participating Medicare providers. Non-par providers are limited to charging the Medicare Limiting Charge. This amount is 115% above the non-par allowable fee.

Also, note that some Medicare participating providers choose to use a separate fee schedule for Medicare, billing only the allowed fee. We do not recommend this for many reasons not the least of which is that this method of billing understates gross charge production and artificially overstates the gross collection ratio.

Russell B. Still (bio...)
Executive Vice President

MMA does not provide legal, accounting, or tax advice.  If you need assistance in these areas, we recommend that you consult a qualified professional.  In addition, please note that a client relationship with MMA is not established by the submission of a question to this forum or by the publishing of MMA's response.

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