Why physicians can't collect Medicare Advantage copays like they used to

In October 2024, a subtle but consequential shift took hold across Medicare Advantage plans, including Blue Advantage in Tennessee. It wasn't announced as a headline policy change, and it didn't eliminate copays outright. Instead, it redefined when — and whether — physicians could realistically collect them. The result is a growing financial and operational strain on medical practices that few outside the industry fully appreciate.

At its core, the new reality is this: Physicians are increasingly discouraged — or effectively prevented — from collecting copays at the time of service. Under evolving interpretations of CMS guidance, providers are expected to wait until claims are adjudicated before billing patients. In theory, this ensures accuracy. In practice, it creates uncertainty, delays, and a sharp decline in collections.

Historically, point-of-service collection was not just a convenience — it was a necessity. Copays were modest, predictable and aligned with the patient's understanding of their responsibility. Today, that clarity has eroded. A visit that appears to warrant a specialist copay may later be adjudicated as preventive or reassigned a $0 patient responsibility. Practices that collect upfront, as the patient's insurance card seems to require, risk refunds, complaints or even audit exposure. The safer course is to wait.

But waiting comes at a cost.

Statements sent after the fact are both expensive to generate and far less likely to be paid. This has always been true, but recent changes have amplified the problem. With the erosion of credit reporting as an enforcement mechanism — medical debt is now largely excluded from credit scoring — patients face fewer consequences for nonpayment. The predictable outcome is declining collection rates, rising accounts receivable and increased administrative overhead for practices already operating on thin margins.

Compounding the issue is the growing reliance by insurers on algorithm-driven claims adjudication. Increasingly, coverage determinations are made not through nuanced professional review of the medical record, but through automated systems that classify visits based on coding patterns, diagnosis linkages and internal rulesets. While seemingly more efficient, these systems are not infallible. They may reclassify visits in ways that defy clinical reality, leaving both physicians and patients confused about what was actually covered — and why.

How this new policy conforms to norms using RVUs, Relative Value Units, to value episodes of care, remains unclear. Every medical service is assigned a RVU and a value per RVU. Cost-sharing is then applied to determine a copay and the insurer pays the difference.

For specialties like mine, ophthalmology, this is particularly acute. A comprehensive eye exam may be performed for a legitimate medical indication, yet portions of the visit may be algorithmically categorized in a way that reduces or eliminates patient responsibility. The physician provides and correctly documents the level of care, but the reimbursement and patient obligation may shift unpredictably after submission.

This disconnect undermines trust on multiple levels. Patients question why they were — or were not — charged. Front desk staff struggle to explain a system that no longer offers clear answers at the point of care. Physicians are left navigating a landscape where financial responsibility is determined after the fact, often by processes they cannot see and cannot challenge in real time.

The broader implication is a gradual transfer of financial risk from insurers to providers. If copays cannot be reliably collected at the visit, and post-service billing yields diminishing returns, practices are effectively being forced to absorb a portion of the cost-sharing structure that insurers designed. This is not a sustainable model, particularly for independent practices without the scale to absorb systematic revenue attrition.

There are, of course, arguments in favor of the current approach. Eliminating inappropriate upfront charges protects patients from overpayment and administrative hassle. Automated adjudication increases efficiency and reduces costs at scale. But these benefits must be weighed against unintended consequences — namely, the destabilization of the very practices that deliver care. A contractually negotiated cost-sharing paradigm is being unilaterally changed, effectively creating a substantial reduction in payment for a given service.

A more balanced approach is needed. Greater transparency in adjudication logic, clearer real-time benefit determination tools and safe harbors for reasonable point-of-service collection would help restore equilibrium. Absent that, the system will continue to drift toward a model where responsibility is opaque, accountability is diffuse and the burden falls disproportionately on providers.

The October 2024 shift may not have made headlines, but its effects are already being felt by medical practices across the country. If left unaddressed, it risks accelerating a trend that many fear: the escalating erosion of independent medical practice under the weight of administrative complexity and financial uncertainty.

In the end, healthcare cannot function on delayed clarity and diminished accountability. Patients deserve to understand their obligations. Physicians deserve to be paid for their work. And policies — however well-intentioned — must account for the real-world dynamics they set in motion.

Glenn N. Pomerance, M.D., is a practicing ophthalmologist in Chattanooga, Tenn.