News & Insights

Is it legal to have more than one fee schedule?

Journal of the Michigan Dental Association (September 2018)

By Daniel J. Schulte, MDA Legal Counsel
September 14, 2018

QUESTION:

I recently terminated my contract with Delta Dental. As a result my Delta patients may have higher out of pocket costs if they elect to continue treating with me and the hassle of filing claims with Delta to obtain their benefits. In an effort to keep as many of my Delta Dental patients as possible I plan to offer them reduced fees. These lower fees will be different than the Blue Cross Blue Shield of Michigan ("BCBSM") fee schedule (I only participate with BCBSM on a per claim basis), the fee schedules of other dental plans I continue to participate with and the fees I charge patients that have no dental insurance or dental plan coverage. Is there anything illegal about charging patients differing fees for the same services?

ANSWER:

Not necessarily.

There is no Michigan statute that prohibits a dentists from varying the fees charged for services based on either the type or provider of coverage the patient has, the fact that the patient has no coverage or the fact that the patient used to have coverage via a Delta Dental plan or some other 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 antidiscrimination 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 dental insurer/plan that imposes adverse consequences should you offer lower fees than that dental 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 dental 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. How will your higher paying patients react if and when they learn that they are paying you more than your Delta patients for the same services? How likely is it that these higher paying patients will understand your decision to incentivize your Delta patients for any increased cost and paperwork they will incur if they continue to treat with you following your termination of your Delta participation agreement?

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 look to your patients and, most importantly, how patients will react.


About Daniel Schulte ...

Daniel J. Schulte has more than 20 years experience representing small business owners in all aspects of transactional, operational and regulatory legal matters. A Certified Public Accountant as well as an attorney, Dan is the firm's managing partner and chair of the Health Care Practice Group.  

He regularly advises and counsels concerning the formation of business entities, the preparation and review of business and corporate contracts, the purchase and sale of ownership interests in businesses and/or their assets, and the purchase, sale and leasing of real estate. A significant component of Dan’s practice involves representing healthcare professionals in state regulatory matters, including disciplinary and other licensing disputes with the State of Michigan, and federal regulatory matters including fraud and abuse issues. He also counsels on the anti-kickback and Stark laws, preparation of compliance programs, and responding to and negotiating settlements in connection with government enforcement actions.

Dan is well-known for his knowledge and experience in the area of association law, and is primarily responsible for the firm’s representation of the Michigan State Medical Society the Michigan Dental Association and the Michigan Osteopathic Association.  His work related to association law includes the drafting and review of new legislation and the preparation of Amicus Curiae Briefs for filing in Michigan’s Supreme Court and Court of Appeals on a variety of topics affecting health care professionals practicing in Michigan.

Dan writes articles and presents frequently before legal, medical and business groups on a variety of topics, including HIPAA, the HITECH Act, the Stark Law, the fraud and abuse laws, health care compliance plans, business succession planning, asset protection, and estate and tax planning. 

He is ranked among The Best Lawyers in America®, and has been named a “Michigan Super Lawyer” by Thomson Reuters.


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