by Daniel J. Schulte, MSMS Legal Counsel
I recently terminated my contract with a health plan. As a result patients enrolled in that health plan may have higher out of pocket costs if they elect to continue treating with me and may have to file claims with the plan themselves to obtain their benefits. In an effort to keep as many of these enrollees as possible I plan to offer them reduced fees. These lower fees will be different than the fee schedules of other health plans I continue to participate with and the fees I charge patients that are not enrolled in any health plan and have no health insurance coverage. Is there anything illegal about charging patients differing fees for the same services?
There is no Michigan statute that prohibits a physician from varying the fees charged for services based on whether the patient is enrolled in a health plan, has insurance or the fact that the patient used to have coverage with a health plan that you no longer participate with. However, there are two reasons you should be careful in doing so.
First, you would not want your practice of charging different fees to be construed as a disguise for illegal discrimination. Technically charging patients differing fees for the same service is discriminating. However, not all discrimination is illegal. For discrimination to be illegal it must affect a protected class of patients. Protected classes are established an anti discrimination statute (e.g. those of the same gender, race, nationality, etc). It is hard to imagine that what you are contemplating would have the effect of adversely affecting a particular protected class of patients. If somehow it did, you could be subject to discrimination claims.
The second reason is that you may have another participation agreement with a health insurer/plan that imposes adverse consequences should you offer lower fees than that health insurer's/plan's fee schedule amounts. Such adverse consequences may include a “most favored nation” provision providing that if fees are charged to patients not enrolled in that plan that are lower than the plan's fee schedule amounts, the fee schedule amounts are automatically lowered to that level. This is much less of a concern following the enactment of MCL 500.3405a. That statute generally prohibits the use of most favored nation clauses in the absence of approval by the Michigan Department of Insurance and Financial Services.
You mentioned that you continue to participate with some health plans. You must carefully review those participation agreements (and any uniform participation requirements, rules, terms, etc that are referenced and incorporated into the agreements) to determine whether there are most favored nation provisions or other prohibitions or consequences of varying the fees you charge patients in your practice.
In addition to the legalities of charging patients different fees for the same service you need to consider the practicalities. Will others understand your decision to incentivize your patients to continue to treat with you following your termination of your participation with this health plan?
Prior to charging patients differing fees for the same service the best practice is to both carefully review all your participation agreements and consider how doing so is going to appear to your patients and, most importantly, how patients will react.