What Is Professional Courtesy and When Is It Insurance Fraud?

Doctor greeting patient

“Physician, heal thyself” may make a good proverb, but it’s anything but practical. Though at times physicians may self-prescribe medications (they shouldn’t!) it’s impossible to maintain necessary objectivity when treating yourself or your loved ones.

Professional Courtesy (PC) is, first and foremost, a way to avoid self-treatment and receive good care. The trouble is, there are plenty of cases when simply providing or accepting this harmless perk constitutes outright insurance fraud.

It’s easy to stay legally clean when offering professional courtesy by adhering to a few simple guidelines.

What is Professional Courtesy?

Professional courtesy is a waiver of payment between peers. It’s been used by physicians and lawyers for decades. It’s also sometimes used (illegally) by police officers.

With physicians, professional courtesy means not charging peers, their families, and their staff for health care. As shown below, there are cases when PC can get a physician into trouble with anti-fraud laws.

When is Professional Courtesy Insurance Fraud?

Professional courtesy is illegal when it’s traded for generating Federal healthcare business. In other words, if we extend courtesy to get referrals or otherwise increase our Medicare/Medicaid income, we run counter to anti-fraud laws.

There are generally two situations where professional courtesy turns into insurance fraud or abuse:

  1. When it’s offered in exchange for referrals. When a physician offers professional courtesy only to other physicians who provide referrals (or who can potentially provide them), they trip over the Federal anti-kickback statute.
  2. When it generates paid business. Waiving copays and collecting insurance payments at the same time implicates the anti-kickback statute. That’s because waiving copays creates an incentive for patients to return, while collecting insurance payments enriches the physician. The combination of the two actions for the same visit is legally unsound.

How To Use Professional Courtesy Safely

If it’s fraud to extend professional courtesy to doctors who can potentially refer patients to us, then how can we ever extend courtesy to anyone? Worse, should we only extend it to those who promise never to refer patients? Doesn’t that seem a bit backward-thinking?

It’s actually easy to extend courtesy even to other physicians who can or do provide referrals without tripping over the anti-kickback statute. The key is in how we go about it.

Be Safe by Offering to Groups

They blueprint to offering courtesy safely is to grant it whole-cloth. Rather than pick and choose who gets professional courtesy, a practice or physician can simply extend it to all doctors in her geographic area. If that seems too narrow, the group can be defined in other ways. The key is, the group must not be defined by the potential for referrals.

When It’s OK to Extend Professional Courtesy to Referring Doctors

As long as we choose professional courtesy recipients by group rather than selecting certain individuals, there’s generally no implication of the anti-kickback statute. That is, even if a physician who gives us referrals gets the benefit of our courtesy in terms of free medical care, we’re safe because we didn’t cherry pick that doctor and others like her. Instead, we provided professional courtesy to an entire group, and a few referral-source physicians just happened to be part of that group.

Professional Courtesy and Copays

The other situation that can get us into trouble with professional courtesy is waiving copays. When we waive copays, we can trigger abuse laws if we also accept insurance payments.

That’s because cutting out copays can be seen as providing free (or reduced rate) service in exchange for increasing our Medicare/Medicaid business.

How does that work?

If a physician waives a copay, the patient is a lot more likely to return. (Who among us doesn’t love free medical care?)

If the physician then accepts the insurance money from that visit, she gets a benefit in the form of Federal healthcare program business. The two in combination are illegal.

How to Waive Copays Safely

We can still provide professional courtesy in the form of waived copays as long as we don’t submit a claim for that visit to an insurance company.

Since we’re not getting any benefit in this situation, there’s no question of insurance fraud. As long as we also haven’t hand-picked our PC beneficiaries based on referrals-granting power, we’re most likely in the clear.

What about in situations where we need to recoup costs, as for vaccines or other premium supplies?

In that case, a good policy is to charge the copay for the visit that involved the vaccine, then submit the bill to insurance to cover costs. PC can be handled on a case-by-case basis like this to avoid entanglements.

Exceptions to the Rule

In cases where financial need is demonstrated, the anti-kickback statute is more lenient.

As we said above, when waiving copays as a professional courtesy, we can stay safe by not submitting any portion of the bill to an insurance company. We can also avoid legal trouble by offering PC to a large group without regard to referrals potential.

Yet another exception is the allowance to waive copays for financially needy patients. In some cases, physicians without a strict PC policy in place can still provide PC without implication in cases of patient financial need.

Have a Policy in Place

We’ve established that professional courtesy causes problems when we cherry-pick only those doctors who can provide us with referral business. There’s also a danger when we waive copays but still submit a claim to an insurance company.

The best way to avoid both pitfalls is to put a PC policy in place before the question comes up.

A sample policy might state:

  1. The practice will provide professional courtesy to all physicians in a predefined (potentially geographical) area.
  2. The practice will waive copays where possible to all physicians in the group. When copays are waived, insurance won’t be billed either.

While the above isn’t a bad generic PC policy, it’s of course advisable to seek a lawyer’s advice and assistance when drafting it.

Saving Money

It’s easier to provide professional courtesy in the first place if we’re not strapped for cash. Over the past several years, costs faced by private practices continue to skyrocket. Not least among these are medical waste disposal costs, which have historically risen 18% every nine months.

One option is a biohazard and medical waste box service like that offered by MedPro Waste Disposal. MedPro offers low, predictable prices and safe, predictable service. Their handy savings calculator lets physicians and staff see projected savings at a glance.

The OIG and Professional Courtesy

The Office of the Inspector General (OIG) oversees cases where professional courtesy may conflict with anti-kickback laws. The exact wording in the Federal Register states:

“In general, whether a professional courtesy arrangement runs afoul of the fraud and abuse laws is determined by two factors:

(i) How the recipients of the professional courtesy are selected; and

(ii) how the professional courtesy is extended.

If recipients are selected in a manner that directly or indirectly takes into account their ability to affect past or future referrals, the anti-kickback statute—which prohibits giving anything of value to generate Federal health care program business—may be implicated. If the professional courtesy is extended through a waiver of copayment obligations (i.e., ‘‘insurance only’’ billing), other statutes may be implicated, including the prohibition of inducements to beneficiaries, section 1128A(a)(5) of the Act (codified at 42 U.S.C. 1320a–7a(a)(5)). Claims submitted as a result of either practice may also implicate the civil False Claims Act.”

Examples of Professional Courtesy in Action

Via: Pixnio.com

To further clarify what classifies as legal, above-board professional courtesy and what doesn’t, have a look at the examples below. Each one shows a different case where extending PC either runs counter to Federal statutes or complies with current law.

Selective PC. In this example, a urologist extends professional courtesy to seven hand-picked doctors in his geographical area. Five of these doctors could pass referrals to the urologist. The other two could not. This implicates the anti-kickback statute because the urologist displays a preference for granting PC in exchange for Federal health care referrals.

Waiver of copay with insurance billing. A physician visits a local clinic and receives service, but the clinic’s physician waives her copay. The clinic’s front office staff then submit a claim to the patient’s insurance company. This violates the prohibition of inducements to beneficiaries, since the patient is now induced to return to the clinic for service (based on waiver of copay) and the clinic received compensation for the visit.

You as a patient. Let’s say you’re a G.P. and you visit a local dermatology practice to get a skin biopsy. The dermatologist extends professional courtesy, waiving your copay. However, the dermatologist then makes a claim on your insurance for the visit. You’re now required to pay the copay. Failure to do so puts the dermatologist in jeopardy. It also may put you in danger of breach of contract with your insurance company.

Waiver of copay without insurance billing. An optometrist receives service from a proctologist. The proctologist waives the optometrist’s copay, then doesn’t submit an insurance claim. The proctologist receives no compensation for the visit. In this case, even though the patient is induced to return, there’s no financial gain and therefore the proctologist is most likely in the clear.

Generalized professional courtesy. A dermatologist extends PC to 25 physicians in his area, without limiting access. More than half of those physicians refer patients (or could refer them) to the dermatologist. Because he placed no restrictions or criteria on his PC and didn’t cherry pick his beneficiaries, his use of PC is considered safe and legal.

Financial need. An E.R. doc has fallen on hard times. He visits his G.P. at a local clinic, and the G.P. waives his copay. The G.P. has never extended PC to anyone else. Even though the E.R. doc has referred business to the G.P. in the past, the G.P. is still most likely in the clear, since the E.R. doc has a clear financial need.

Guilt by omission. An allergist extends professional courtesy to 20 other local physicians, waiving copays and not billing insurance. When a G.P. colleague stops referring patients to her, the allergist withdraws PC in that one instance. The allergist is now in jeopardy with the fraud and abuse laws, since she has displayed a selection preference for other physicians who provide referrals.

Proper use. In this professional courtesy example, a pediatrician routinely offers professional courtesy to a wide range of other physicians. When she waives a physician’s copay, she doesn’t submit claims to their insurance companies. When she gives immunizations, she does submit claims to cover her costs, but in these instances, she also charges a copay. She has created a written PC policy with her attorney’s help, and has shared this document with her front office staff. This is proper use of PC.

Inconsistent use. A cardiologist sometimes extends professional courtesy to his peers, but sometimes doesn’t. He isn’t trying to induce referrals or foster personal gain, but he doesn’t have a clear policy in place and sometimes it slips his mind. In this case, he’s putting himself at risk because a case could be made that his application of PC is selective.

Questionable use. An ENT doc provides professional courtesy to all other physicians within a 10-mile radius. An allergist 20 miles distant suddenly demonstrates the potential to refer a high volume of patients to the ENT. The ENT is in danger because she shows signs of biased selection of her PC beneficiaries based on referrals in this one case.


Professional courtesy is a healthy, even necessary practice that lets physicians avoid the poor habit of providing medical care to themselves and their families and staff. Though it can put a physician in conflict with anti-insurance-fraud laws and other federal statutes, using it safely isn’t hard.

Generally, physicians can use PC correctly by the way they choose who gets the benefit, and the way they handle related insurance claims. The explanations and examples above clarify the safe, legal use of this time-honored exchange of services. That said, the information given here is not intended as legal advice. As always, consult with an attorney before committing to a policy.

For another tip on how to keep your practice safe financially and legally, consider conducting compliance training and rethinking your current waste disposal solutions. HIPAA violations are serious business, and waste disposal cost increases are out of control. MedPro Waste Disposal offers both compliance training and reliable medical waste disposal at predictable prices. See their savings calculator here to find out how much you could save.

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