Yes, a private medical practice can refuse cash payments in most instances, as no federal law requires a private business to accept cash tender.
However, several states and major cities, such as New Jersey, Massachusetts, San Francisco,
and New York City, have prohibited private businesses, including private medical practices, from refusing cash payments from their customers and patients.
Besides state laws or city ordinances, some medical insurance companies may prevent private medical practices from accepting cash payments. This is often due to specific network participation obligations and other contractual requirements physicians have agreed to abide by when accepting patients covered by those policies.
No Federal Requirement to Accept Cash:
According to the Federal Reserve System, federal law does not require medical practices or other private businesses to accept cash.
Section 31 U.S.C. 5103 states, “United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes, and dues.” However, legal tender in this case applies to debt repayment, and not customer payment transactions.
Provider’s Right to Set Payment Policies
As any other private business, a medical practice has the freedom to set its own payment method policies, including a refusal to accept cash (so long as a state law or local ordinance doesn’t prevent it from doing so). Payment policies must apply fairly to all patients and not discriminate on any basis.
Under federal law, private medical practices can legally refuse cash before rendering services. However, since cash is legal tender, it must be accepted if tendered to a creditor for a pre-existing debt.
Insurance Contract Constraints
Every medical insurance company has its own contractual terms and network payment obligations. Depending on the insurance provider, this could prevent medical practices from accepting cash payments, particularly for in-network treatments and services.
Disregarding these conditions and bypassing the appropriate insurance billing processes could violate the contractual terms, leading to compliance and other legal issues for the practice.
No Surprises Act (Good Faith Estimates)
For the sake of transparency and improved consumer protection, the U.S. Congress passed the No Surprises Act (NSA). Under this legislation, balance billing is prohibited in the event of emergency services. Also, medical practices must provide uninsured patients or those not using the appropriate insurance with good-faith cost estimates, specifically when the patient receives treatment out of network, etc. That way, patients aren’t surprised later with a larger, unexpected medical bill.
The NSA also establishes clear independent dispute resolution (IDR) protocols for payment discrepancies. Since the out-of-network care treatment provider isn’t in a direct contract with the patient’s insurance company, the care provider can use IDR protocols to initiate the claims process and ultimately negotiate the actual cost of treatment services.
HIPAA and Payment Methods
A private medical practice is free to set its own payment policies, including the right to refuse cash from patients (unless it provides services in a state or city where doing so is forbidden). HIPAA doesn’t mandate that medical practices offer patients certain payment methods over others.
However, what HIPAA requires is for medical facilities to protect their patients’ electronic Protected Health Information (ePHI), which includes credit card information, involving the electronic transfer of sensitive personal data. No matter if a practice accepts digital-payment-methods-only, cash-only, or any combination of payment methods, it may still be subject to HIPAA’s regulations and therefore deemed a “covered entity.”
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