The practice of waiving co-payments and deductibles can lead to a mess of lawsuits, fraud charges and even prison. Under Medicare and Medicaid laws, doctors who write off charges can be charged with filing false claims or violating anti-kickback laws. Private insurance also can file civil or criminal fraud charges against doctors who waive copayments. At the very least, such discounts can result in FBI agents showing up in your waiting room with a subpoena for your billing records. While an occasional case with an extreme financial hardship may be overlooked, this practice by federal law requires such waivers of co-payments and deductibles be made on an individual basis, and must be documented in the patient's records.
Regulators are skeptical on the routine use of such cases.
A better method in such hardship cases is to charge the low income patient the copayment or deductible, making it clear you expect him to pay, but that you won't pursue the matter in court if he doesn't. Sending the letters is evidence of a good faith effort to collect. The law says trying to collect is the doctor's duty, not to actually collect it. Instead, they let it be known in advertisements or in private conversations that they do write-offs to generate referrals. Although these tacky methods are not considered outright insurance fraud, unless the patient's insurance company is billed at the full price, they nonetheless are indicative of tasteless and deplorable ethics.