Did You Know? The Hidden Rules of Insurance Claims for Family-Provided Healthcare

Did you know that all medical and dental plans include a clause prohibiting a doctor from submitting an insurance claim requesting reimbursement for professional services provided to an immediate family member? Yes, it is true. Let’s dive into what this means and why this is the case and discuss a real-life scenario.

The Cost of Misunderstanding

A few years ago, I received a consulting call from a dentist who had received a refund request from a dental payer. This payer requested all of the monies paid to her practice for the past three years for services performed on her sister. Her question was, can they really do this? The answer is yes, they can. This is called the familial relation clause or family exclusion clause. After I explained this to her, I later received a call from her sister, who questioned my explanation.

The dentist’s sister was a physician at a local hospital, which was a self-funded plan. We will refer to the physician as Dr. S. Dr. S quickly told me that she had reviewed her plan document, and this clause was not in her document. So, while I had her on the phone, I asked if she could email the plan document to me, and she did. I showed her this clause on page one of her dental plan document. The clause stated this:

“Coverage is excluded for care or services from a provider in a subscriber or patient’s immediate family.” It defined immediate family members as “immediate family or immediate family of spouse” or “enrollee’s spouse, child, brother, sister, or parent.”

So, in the end, Dr. C, the dentist, returned several thousand dollars to the payer for reimbursement for dental treatment provided for Dr. S, her sister, over three years. In addition, Dr. C  violated her state law prohibiting copayment and deductible forgiveness, and her dental PPO contract prohibited forgiveness of a patient’s copayment or deductible provision, as the applicable copayments and deductibles were not collected. This was also a misrepresentation of the actual fee charged for the service, resulting in overbilling the insurance plan, a potentially fraudulent billing practice.

The Legal Framework: Understanding the Insurance Contract

Since that time, I have reviewed multiple medical and dental plan documents. Each plan will define an immediate family member, and the definition of an immediate family varies according to the plan. Another example of how a plan may define an immediate family member as part of the benefit exclusion is:

“a person who lives in the covered person’s home or who is related to the covered person by blood or marriage”

CMS Guidelines on Family-Related Exclusions

Let’s examine what the Centers for Medicaid and Medicare Services (CMS) says about his topic.

“130 – Charges Imposed by Immediate Relatives of the Patient or Members of the Patient’s Household (Rev. 1, 10-01-03) A3-3161, HO-260.12, B3-2332

A.  General These are expenses that constitute charges by immediate relatives of the beneficiary or by members of their household. The intent of this exclusion is to bar Medicare payment for items and services that would ordinarily be furnished gratuitously because of the relationship of the beneficiary to the person imposing the charge. This exclusion applies to items and services rendered by providers to immediate relatives of the owner(s) of the provider. It also applies to services rendered by physicians to their immediate relatives and items furnished by suppliers to immediate relatives of the owner(s) of the supplier.

B.  Immediate Relative The following degrees of relationship are included within the definition of immediate relative.

• Husband and wife;
• Natural or adoptive parent, child, and sibling;
• Stepparent, stepchild, stepbrother, and stepsister;
• Father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law;
• Grandparent and grandchild; and 
• Spouse of grandparent and grandchild.

NOTE 1:  A brother-in-law or sister-in-law relationship does not exist between the physician, supplier or owner of a provider (or supplier) and the spouse of his wife’s or her husband’s brother or sister.

NOTE 2:  A father-in-law or mother-in-law relationship does not exist between a physician or the owner of a provider and his or her spouse’s stepfather or stepmother. A step-relationship and an in-law relationship continues to exist even if the marriage upon which the relationship is based is terminated through divorce or through the death of one of the parties. For example, if a provider treats the stepfather of the owner after the death of the owner’s natural mother or after the owner’s stepfather and natural mother are divorced, or if the provider treats the owner’s father-in-law or mother-in-law after the death of their spouse, the services are considered to have been furnished to an immediate relative, and therefore, are excluded from coverage.”

Source: Centers for Medicaid and Medicare Services (CMS)

https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c16.pdf

Why is this? In simple terms, any time a provider, whether the treating provider, owner of the practice, or any other relationship to the practice where there is potential financial gain from insurance benefits, this type of billing practice is inappropriate and not allowed. This includes an associate dentist who supervises the hygiene services rendered to his spouse, child, or other immediate family members. Most of us treat our immediate family members in our dental practices when services are rendered by another doctor or team member, such as a hygienist. Still, no claim should be filed for reimbursement.

I am often asked, “Well, I have a business to run; what do I do?” My response to a young dentist, new practice owner, was this – “Thanks, Mom and Dad, for supporting me through dental school. I am happy to provide your dental care for free as my thanks to you. Please consider referring your friends to me.”

The Ethical Dilemma of Treating Family Members

There is also an ethical piece to this puzzle. The American Medical Association says this about treating family and friends.

“When the patient is an immediate family member, the physician’s personal feelings may unduly influence his or her professional medical judgment. Or the physician may fail to probe sensitive areas when taking the medical history or to perform intimate parts of the physical examination. Physicians may feel obligated to provide care for family members despite feeling uncomfortable doing so. They may also be inclined to treat problems that are beyond their expertise or training.

Similarly, patients may feel uncomfortable receiving care from a family member. A patient may be reluctant to disclose sensitive information or undergo an intimate examination when the physician is an immediate family member. This discomfort may particularly be the case when the patient is a minor child, who may not feel free to refuse care from a parent.

In general, physicians should not treat themselves or members of their own families. However, it may be acceptable to do so in limited circumstances:

• In emergency settings or isolated settings where there is no other qualified physician available. In such situations, physicians should not hesitate to treat themselves or family members until another physician becomes available.
• For short-term, minor problems.

When treating self or family members, physicians have a further responsibility to:

• Document treatment or care provided and convey relevant information to the patient’s primary care physician.
• Recognize that if tensions develop in the professional relationship with a family member, perhaps as a result of a negative medical outcome, such difficulties may be carried over into the family member’s personal relationship with the physician.
• Avoid providing sensitive or intimate care especially for a minor patient who is uncomfortable being treated by a family member.
• Recognize that family members may be reluctant to state their preference for another physician or decline a recommendation for fear of offending the physician.”

Source: AMA Code of Medical Ethics, chapter 1 Patient-Physician Relationships

https://code-medical-ethics.ama-assn.org/chapters/patient-physician-relationships

Navigating Compliance: Practical Advice for Practitioners

Am I the only one who didn’t know this? Absolutely not. We have not had formal training on insurance-related topics in dentistry until recent years. There were also limited resources available. We only know what someone else told her before us or what we figured out on our own. This includes me. I worked in a dental practice before I began my consulting career 10 years ago. I experienced this in our practice. My doctor had been treating his son, daughter-in-law, and grandchildren for many years and began filing claims for their hygiene services. It was not long before the dental payer made the family connection and requested refunds for all services reimbursed for the previous six years since he began submitting claims. He did not violate state copayment or deductible forgiveness laws because the plan paid 100% of the charges submitted, nor was he in-network. Still, he gained financially from his son’s employer’s dental benefit plan.

Balancing Professional Ethics and Legal Obligations

Take the knowledge learned today, write a billing process to ensure compliance, and place it in your administrative standard operating procedure manual (SOP) – we all have one, right? If not, this is an excellent starting place to develop your administrative SOP manual. Train your team, document the training, and include this in your team onboarding training program. It can happen to you regardless of the type of plan – federal, self-funded, or fully insured, regardless of PPO participation.

Legal Disclaimer: The information presented is only intended for educational and training purposes. It is not intended to be legal advice. The author is not a licensed attorney. For definitive answers to legal-related questions, consult with an attorney knowledgeable of federal and state healthcare laws.

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