Skip to Main Content

Professional courtesies are nothing new to healthcare. For centuries physicians and their colleagues in the industry have offered their services to other professionals for little or no cost. Through this common practice, doctors were discouraged from treating their own family or close friends. It also provided an opportunity to show goodwill and a mutual respect for those people on a shared mission to elevate the practice of healthcare. This goodwill often opened the door to referrals. But in today’s healthcare climate, it can also open the door to non-compliance.

This practice has evolved over the years, and today, offering free or low-cost treatment for colleagues and other patients is regulated by the government. This regulation, the Anti-Kickback Statute (AKS), was first put in place in 1972 to curb abuse and fraud in the Medicare and Medicaid systems stemming from medical professionals offering their services to receive direct or indirect benefits outside the scope of regular fees and reimbursement. The statute has expanded and been amended over time to reflect changes in the industry, but at its core, it is still attempt to reduce fraud.

AKS Compliance

The AKS comes into play in three primary areas: copays and discounts, no-charge services, and professional courtesies.

You may have seen articles or heard speakers discuss copay and deductible waivers, discounts, taking only what is reimbursed by payers, “mirroring” in-network benefits, and banning professional courtesies. The AKS is relevant to all of these scenarios, and more.

According to the Office of the Inspector General of the U.S. Department of Health and Human Services (OIG), this law “prohibits the knowing and willful payment of ‘remuneration’ to induce or reward patient referrals or the generation of business involving any item or service payable by the federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients).”

Remuneration includes anything of value and can take many forms including but not limited to cash, free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies.

Criminal penalties and administrative sanctions for violating the AKS include fines, jail terms, and exclusion from participation in federal health care programs. Under the Civil Monetary Penalties Law (CMPL), physicians who pay or accept kickbacks also face penalties of up to $50,000 per kickback plus three times the amount of the remuneration.

To help reduce Medicare/Medicare fraud, the OIG is actively investigating healthcare providers, practitioners, and suppliers of healthcare items and services who are paid on the basis of charges and routinely waive (do not bill) deductible and copayment charges to beneficiaries for items and services covered by Medicare and Medicaid programs. According to the OIG, routine waiver of deductibles and copayments is unlawful because it results in:

  • false claims
  • higher program costs
  • corruption of medical decision-making
  • unfair competition
  • excessive utilization of items and services paid for by federal healthcare programs

The OIG indicated that it will not prosecute waivers of copayments and deductibles due to a patient’s genuine hardship. However, this “hardship exception” must not be used routinely:

“It should be used occasionally to address the special financial needs of a particular patient. Except in such special cases, a good faith effort to collect deductibles and copayments must be made. Otherwise, claims submitted to Medicare may violate the statutes discussed above and other provisions of the law.”

Based on this understanding of the statute and associated penalties, it’s good practice to note financial hardship in patient records.

Waivers may be granted for “professional courtesies,” defined by the OIG as possible waivers of deductibles and copayments for services provided to other physicians. They may therefore constitute a potential violation of the AKS.

Physicians can legally provide free or discounted services for uninsured patients which have no impact on federal health programs or fraud.

In addition to federal law, if services provided are reimbursed by commercial insurance, state anti-kickback and insurance fraud laws may apply. Most insurance companies have contract exclusions regarding waiving of copayment and deductibles. Physicians should be careful not to waive or discount any portion of the fee as a courtesy, and not report the reduced fee as the actual fee charged for the service. Administrative adjustment policies can be applied by the medical practice and the reason for the adjustment should be noted in the patient record.

The Stark Law

Also known as the Physician Self-Referral Law, the Stark Law “prohibits physicians from referring patients to receive ‘designated health services’ payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies.”

Financial relationships include both ownership/investment interests and compensation arrangements. For example, if you invest in an imaging center, the Stark Law requires the resulting financial relationship to fit within an exception or you may not refer patients to the facility and the entity may not bill for the referred imaging services.

The interim final rule of Phase II of the Stark rule on physician self-referral contains specific guidelines regarding when professional courtesy can be extended to immediate family members of practice doctors or office staff. Professional courtesy cannot be extended if the patient is on Medicare or any other healthcare program paid with federal dollars. For non-Medicare patients, professional courtesy can be given under the following conditions:

  • Must be offered to all physicians on staff or in the local community without regard to volume or value of referrals
  • May include only those services regularly offered by the practice
  • Must be supported by a formal policy written and approved by top practice management
  • Must be communicated in writing to the insurance company paying the bill
  • Must not violate anti-kickback laws or claims submission rules and regulations


The Health Insurance Portability and Accountability Act (HIPAA) of 1996 provided a new definition of healthcare fraud that included both public and private plans or contracts under which any medical benefit, item, or service is provided. Under this new definition of healthcare fraud, any person who makes a false statement would be imprisoned or subject to serious fines.

A “false statement” under this Act occurs when an individual knowingly and willfully makes any materially false, fictitious, or fraudulent statement or representation, or makes or uses any materially false writing or document, in connection with the delivery of healthcare benefits. False statements can also subject any person who submits, or causes the submission of a false claim, to criminal, civil, and administrative liability under the False Claims Act (FCA). It is likely that discounts, such as professional courtesies or any failure to charge in full for a service, could constitute both healthcare fraud and a false statement under federal law.

Limited Protection

There is some limited protection for waivers of coinsurance and deductibles under the Medicare and Medicaid Anti-Kickback Statute, but this “safe harbor” does not apply to many discounts offered by physicians. It only protects the waiver of beneficiary coinsurance and deductible amounts if the coinsurance or deductibles are owed to a hospital for inpatient services for which Medicare pays under the Prospective Payment System (PPS) in addition to certain other conditions, or the coinsurance or deductible amounts are owed by an individual who receives subsidized services from a Federally Qualified Healthcare Center.

Best Practice

Because of these laws and pronouncements by the federal government, along with other legal uncertainties in the area, it is recommended to bill for all copayments, deductibles, and full charges (no professional courtesies) in connection with the medical services that you provide in your practice. It’s the best way to avoid violation of state and federal law and protect yourself from prosecution.

The delivery of healthcare changes all the time, and the laws that regulate it are changing, too. Be sure you stay in the know so you can stay compliant. If you have questions, we have experts that can answer them. Just make the call.

This resource was first published prior to the 2019 merger between DocuTAP and Practice Velocity. The content reflects our legacy brands.

Sign Up for the Urgent Care Minute

Join over 20,000 healthcare professionals who receive our monthly newsletter.