Most patients pay via insurance, check, debit card, or credit card. I’m guessing a handful of practices accept bitcoins. And, yes, every practice accepts cash.


Did you know that if you receive over $10,000 in a trade or business, Form 8300 needs to be filled out and sent to the IRS? Is medical care considered such a “trade or business?” Let’s analyze.


First, what is the purpose of Form 8300? It’s designed to identify money laundering or illicit activities. The default premise assumes that those who pay in cash do not want a paper trail and may be up to no good. Banks are well aware of this form. If you bring in a large pile of cash to the bank, Form 8300 will be on its way to the IRS.


Form 8300 includes the cash payer’s name, social security number, date or birth, and record of identification document (such as driver’s license or passport). It includes the cash payer’s occupation, profession, or business. The person filing must check a box if it was a “suspicious transaction.” Question #34 asks for a “specific description of property [sold] or service [rendered].”


If you ignore your duty:


A minimum penalty of $25,000 may be imposed if the failure is due to an intentional or willful disregard of the cash reporting requirements.


Well, what about HIPAA? Can you report all of the details about your cash-paying patient to the IRS and still comply with detailed Privacy Laws? HIPAA allows for disclosure of protected health information (without a patient’s consent) in numerous circumstances. These are explicit exceptions.


Let’s make this complicated.


Our answer may lie in Section 164.512 which addresses “Uses and disclosures for which an authorization or opportunity to agree or object is not required.”


Section 164.512 (a)(1) says: “A covered entity may use or disclose protected health information to the extent that such use or disclosure is required by law and the use or disclosure complies with and is limited to the relevant requirements of such law.”


That sounds straightforward.


In that context, Form 8300 would need to be filled out for every patient who pays with $10,000 or more of cash.


Not so fast.


Section 164.512 (a)(2) says: Section 164.512 (a)(1) says: “A covered entity must meet the requirements described in paragraph (c), (e), or (f) of this section for uses or disclosures required by law.”


And, without boring you with details, these respective sections deal with “Disclosures about victims of abuse, neglect or domestic violence”; “Disclosures for judicial and administrative proceedings”; and “Disclosures for law enforcement purposes”.


Well, isn’t Form 8300 related to law enforcement? Probably not. Examples of disclosures related to law enforcement are defined to include “crime on premises”; disclosure to victim of a crime”; or “reporting a crime in an emergency.” Looking at the examples in the HIPAA statute, “law enforcement” may not be the same as “enforcement of a law.” Confused yet?


To add further to the confusion, HITECH (HIPAA’s child) has something to say about privacy rights being increased with cash payments (or at least payment not associated with insurance).

Section 164.522(a)(1)

(v) A covered entity must agree to the request of an individual to restrict disclosure of protected health information about the individual to a health plan if:

      1. The disclosure is for the purpose of carrying out payment or health care operations and is not otherwise required by law; and

      2. The protected health information pertains solely to a health care item or service for which the individual, or person other than the health plan on behalf of the individual, has paid the covered entity in full.


So, what’s the answer?


Not sure.


But, the irony is that some patients go to great lengths to maintain privacy. They don’t want their insurance carrier, employer, spouse, bank, or credit card company to have any knowledge they were treated by Dr. Smith for X, Y, and Z. So, what do they do? Naturally, they pay cash.


Back to bitcoins. The IRS recently disclosed they will be treating bitcoins as “property” and “not a “currency.” This implies that payment in $10,000 or more of bitcoins would NOT trigger this Form 8300 reporting; the trigger for that reporting being cash transaction.


I need to stop writing now as my head just exploded.