Risk Management

When to Report “Free Servicing” of Patients to Data Bank

 By Paul Weber, JD

Argus, July, 1995

Occasionally, a patient may ask an ophthalmologist to waive or refund a fee following a poor clinical outcome or a perceived poor clinical outcome. These situations, sometimes called “free servicing,” are in some instances reportable to the National Practitioner Data Bank (Data Bank). They also may raise legal and insurance coverage issues, which go beyond the scope of this article.

Recently, the Data Bank changed and clarified some of its reporting requirements regarding fee waivers and refunds. Waiving a fee or choosing not to bill a patient should not be reported to the Data Bank.

For example, if a patient with a documented history of asthma and allergies has a severe reaction to a topical medication and is willing to accept waiver of the fee as “settlement,” that waiver is not reportable to the Data Bank. Likewise, if the practitioner waives a fee or chooses not to bill a patient for services relating to repair or treatment of a complication, that also is not reportable.

However, a fee waiver may not actually “settle” a claim unless the patient signs a binding release of claims. Before drafting such a release, seek the advice of your liability carrier because releases can compromise liability insurance coverage. In many cases, an informal (non-binding) fee waiver can help defuse a litigious situation.

A fee refund is somewhat more complicated for reporting purposes. If an individual practitioner makes a refund out of personal funds, it is not reportable to the Data Bank. However, if a corporate entity (including solo incorporated practitioners) makes a refund, that payment is reportable to the Data Bank unless the refund is made solely on behalf of the entity, such as a hospital, clinic or group practice. Always consult with an attorney or your insurance carrier to distinguish whether a refund is being made on behalf of an entity or an individual practitioner.

Finally, a refund of a fee paid by an entity (not out of personal funds) is reportable only if the refund arises from a written complaint or claim demanding monetary payment for damages. The written complaint must be based on the ophthalmologist’s provision of, or failure to provide, health care services. A written complaint or claim includes the filing of a lawsuit for medical negligence or simply a letter from a patient or the patient’s attorney demanding money for damages related to the practitioner’s provision of health care services. However, if the patient orally demands and receives a refund, this does not have to be reported to the Data Bank. As with a fee waiver, a fee refund may not actually “settle” a claim, but it may help defuse a litigious situation.

For more information, call the Data Bank Help Line, 800-767-6732. OMIC insureds may call the OMIC Risk Management Hotline, 800-562-OMIC, ext. 4, for more information about the Data Bank reporting requirements and other issues affecting their practice.