As patient out-of-pocket expenses continue to climb, community pharmacies increasingly find themselves caught in a difficult position. On one hand, pharmacists want to ensure their patients have access to their life-saving medications. On the other hand, Medicare, Medicaid, and Pharmacy Benefit Managers (“PBMs”) enforce strict rules requiring the collection of patient cost-sharing responsibilities, such as copayments and deductibles.

Failing to navigate this tension correctly can lead to severe consequences, ranging from PBM network termination to federal regulatory scrutiny. However, there is a compliant path forward: implementing a formalized Financial Hardship Waiver Program.

The Danger of “Routine” Waivers

The general rule across all commercial and governmental third-party payors is relatively simple – the pharmacy must make a good-faith effort to collect the patient’s cost-sharing responsibility.

Routinely waiving copayments or deductibles is strictly prohibited. PBMs view routine waivers as a breach of your pharmacy provider agreement and a misrepresentation of the drug’s actual charge, which frequently triggers audits, recoupment, and network dismissals. More severely, the U.S. Office of Inspector General (“OIG”) considers the routine waiver of Medicare or Medicaid cost-sharing as a potential violation of the federal Anti-Kickback Statute.

Further, pharmacies are strictly prohibited from advertising or promoting the availability of copay waivers. This means that a pharmacy cannot proactively offer a waiver; the process must be initiated by the patient.

What is a Financial Hardship Waiver Program?

A Financial Hardship Waiver Program is an internal set of policies and procedures that allows a pharmacy to ethically and legally waive a patient's cost-sharing obligations on a case-by-case basis.

When a patient expresses an inability to pay, the pharmacy provides them with a Financial Hardship Waiver Application. The waiver is only granted after the patient demonstrates genuine financial need, usually by providing supporting documentation (such as tax returns, proof of Medicaid enrollment, or participation in programs like WIC or SNAP) that shows their income falls at or below certain Federal Poverty Guidelines.

If a patient does not qualify for a waiver, the pharmacy cannot simply write off the balance immediately. A compliant program outlines a documented, “good faith” collection effort, which is typically a 120-day process involving a series of mailed invoices and phone calls. Only after these documented efforts are exhausted can the pharmacy legally write off the unpaid obligation.

The Medicaid Nuance: Your Duty in New York

While the general rules require strict collection efforts, New York pharmacies must be acutely aware of specific state and federal protections afforded to Medicaid enrollees.

Under the Social Security Act (SSA) § 1916 and Title 18 NYCRR § 360-7.12, pharmacy providers may not refuse services to otherwise eligible Medicaid members who cannot afford to pay their co-payment. Turning away a Medicaid patient because they cannot pay their $1.00 or $3.00 copay is classified as an “unacceptable practice.” Additionally, according to eMedNY policy, a pharmacy may not dispute or challenge a Medicaid enrollee’s statement that they cannot afford the cost-sharing amount.

However, this does not mean you should proactively waive Medicaid copays across the board. In fact, the eMedNY manual specifically states that providers cannot proactively waive copays, and, instead, they must be waived on a case-by-case basis at the individual’s request. As such, when a Medicaid patient states they cannot pay their applicable copay, you must still dispense the medication. A Financial Hardship Waiver Program can account for this by having the patient sign a specific Medicaid-tailored affidavit for your records to prove that the waiver was requested by the patient, streamlining the process and keeping you compliant with both state access laws and billing regulations.

How We Can Assist

Regulators and PBMs are closely scrutinizing how pharmacies handle copay collections. Handing out waivers informally or failing to document your collection efforts is a major operational risk. By formalizing a Financial Hardship Waiver Program, you ensure that your staff knows exactly how to respond when a patient cannot pay, providing a clear, auditable paper trail that protects your business while still serving your community compassionately.

Every pharmacy’s patient population is slightly different, and your compliance protocols should reflect that reality. Our team of experienced and knowledgeable health care attorneys regularly assist pharmacies in crafting customized Financial Hardship Waiver Programs that align with current state, federal, and PBM requirements.

If you have questions about your current copay collection practices or would like assistance developing a compliant waiver program for your pharmacy, please feel free to contact us at (212) 668-0200 or info@mdrxlaw.com.