By: Christopher Parrella, Esq., CPC, CHC, CPCO

Parrella Health Law, Boston, MA

A Health Care Provider Defense and Compliance Firm

The federal government’s recent $1 million settlement with SSM Health Care deserves attention because the alleged conduct was unusually narrow. There were no allegations of medically unnecessary services, fabricated prescriptions, kickbacks from a manufacturer, or a complex referral scheme. The central issue was the routine waiver of pharmacy copays.

SSM agreed to pay $939,290 to resolve allegations that the retail pharmacy at Saint Louis University Hospital regularly waived or failed to collect copays owed by Medicare and Federal Employees Health Benefits Program patients between September 2020 and February 2023. SSM also agreed to pay $150,000 in attorneys’ fees and costs to the whistleblower. The settlement included no admission of liability, and the government credited SSM for cooperation and remedial action.

What makes this case stand out is that copay waivers were apparently the primary theory of liability. Federal settlements often include cost-sharing allegations as one part of a broader case involving false claims, improper marketing, medically unnecessary services, or illegal remuneration. Here, the government was willing to pursue a substantial False Claims Act settlement based on the alleged failure to collect patient responsibility itself. That is a warning to pharmacies and all other providers that have treated copay collection as a secondary revenue cycle issue rather than a compliance obligation.

The government’s theory is straightforward. Routine copay waivers can influence patients to select one provider or pharmacy over another. They can also misrepresent the true cost of the service or prescription because the federal program pays its share on the assumption that the patient remains responsible for the required cost-sharing amount. When the provider never intends to collect that amount, prosecutors may argue that the resulting claim is false or inflated.

This does not mean every uncollected copay creates False Claims Act liability. Providers may waive cost-sharing in legitimate cases of financial hardship if the decision is based on an individualized assessment and is properly documented. Providers may also make reasonable collection efforts and then determine that further collection is impractical. The risk arises when waivers are automatic, routine, advertised, or used to attract and retain patients.

The whistleblower component is also important. The qui tam relator will receive $159,210 from the recovery. Pharmacy staff, billing personnel, and front-office employees often know whether collection policies are genuine or merely exist on paper. A written policy requiring copay collection offers little protection if employees are routinely instructed not to follow it.

Providers should review their cost-sharing practices now. Compare written policies with actual workflows. Determine whether staff consistently request payment. Review hardship forms and confirm that waivers are based on documented patient-specific circumstances. Examine whether balances are being written off automatically by location, payer, service line, or patient category. Marketing teams should also be prohibited from promising free care or suggesting that patients will never be responsible for copays.

The broader lesson is that the government does not need a complicated fraud theory to bring a significant case. A consistent pattern of waived copays can be enough. If you have questions about copay collection, financial hardship policies, or False Claims Act exposure, please contact Parrella Health Law at 857.328.0382 or Chris directly at cparrella@parrellahealthlaw.com.