Transcript 501(r) - SD HFMA

501(r) Regulations and Financial
Assistance Policies
Presented by:
Marie Murphy
Manager, Health Care Revenue Cycle Consulting
701.476.8321
[email protected]
www.eidebai lly.com
Agenda
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501(r) Background
Definitions
Financial Assistance Policies
Limitations on Charges
Billing and Collections
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501(r) Background
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The Patient Protection and Affordable Care Act
requires hospitals under §501(c)(3) to meet
requirements to maintain tax exempt status
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Community Health Needs Assessment (CHNA)
• Financial Assistance (FAP) and Emergency Care
Policies
• Limitations on Charges
• Billing and Collections Policies and Practices
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501(r) Background
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Proposed Regulations issued on June 22, 2012
to provide guidance on:
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Financial Assistance and Emergency Care Policies
• Limitations on Charges
• Billing and Collection Policies and Practices
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Proposed Regulations issued on April 13, 2013
to provide guidance on:
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Community Health Needs Assessments
Consequences for failing to meet requirements
Final Regulations issued December 29, 2014
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501(r) Background
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Compliance with 501(r) law required for tax
years beginning after March 23, 2010
• Regulations provide guidelines for interpreting
the law
• Must be in compliance with final regulations for
tax years beginning after December 30, 2015
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501(r) Background
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Failure to meet requirements results in loss of
tax exempt status under 501(c)(3) for the
noncompliant hospital facility
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Exceptions for minor omissions and errors that are
inadvertent and due to reasonable cause
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Requires correction and disclosure
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501(r) Background
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Applies to a Hospital Organization
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Organization that is recognized (or seeks to be
recognized) under IRC §501(c)(3) that operates one
or more hospital facilities
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Must meet the rules separately with respect to each hospital
facility
Includes governmental hospital with dual status
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Confirm 501(c)(3) status by reviewing Master File on IRS
website
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501(r) Background
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Hospital Facility
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State licensed, registered, or similarly recognized as
a hospital:
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Multiple buildings operated under a single state license are
considered a single hospital facility
Does not include a facility outside the US
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501(r) Background
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Operating a Hospital Facility
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Through organization own employees or contracting
out to another organization
Sole member or owner of a disregarded entity that
operates a hospital
Ownership (directly or indirectly) of a capital or profits
interest in an entity treated as a partnership that
operates a hospital unless:
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Organization does not have control and treats income from
partnership as unrelated business income
Partnership operated for educational and scientific purposes
and has not engaged primarily in operation of hospital
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Financial Assistance Policy-Statute
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Policy must be in writing and include:
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Eligibility criteria for financial assistance and whether such
assistance includes free or discounted care
The basis for calculating amounts charged to patients
The method for applying for financial assistance
If the hospital organization does not have a separate billing and
collections policy, the actions the hospital may take in the event
of nonpayment
Measures to widely publicize the policy within the community
served by the hospital facility
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Financial Assistance Policy Requirements
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Applies to all emergency and medically necessary
care provided by the facility and any partnership,
disregarded entity that provides care in the hospital
facility
• Policy must be widely publicized
• In addition to requirements under the Code, must
include:
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Information obtained from sources other than the individual
and whether and how hospital uses prior FAP-eligibility
determinations
List of providers, other than hospital, delivering emergency or
other medically necessary care and whether they are
covered under the FAP
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Eligibility Criteria and Basis for Calculating
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Financial assistance available, including discounts and
free care (under the FAP) and the amounts to which
discounts will apply
All eligibility criteria that an individual must satisfy to
receive assistance
Method used to determine the amount generally billed
(AGB)
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Percentage of discount and how calculated or
How to obtain information in writing
Indication that once eligible for financial assistance,
may not be charged more than AGB
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Method for Applying for Assistance
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Describe how an individual applies for financial
assistance
FAP or FAP application must include a list of any
required information or documentation to be submitted
with the application
Provide contact information (telephone and physical
location) for resource who can assist with the
application process
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Hospital office or department
Nonprofit or government agency
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Actions Taken for Nonpayment
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Action the hospital (or authorized party) may take
relating to obtaining payment including extraordinary
collection actions (ECAs)
Process and time frame used to determine if an
individual is eligible for financial assistance
Who in the organization is responsible for determining if
reasonable efforts have been made to assess the
patient’s eligibility so collection actions may begin
If information is described in a separate billing and
collection policy
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Indicate how members of the public may obtain a free copy of
this separate policy
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Widely Publicizing the FAP
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Post the FAP, FAP application, and plain language
summary on facility, hospital, or other website
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Hospital website must provide link to other website along
with clear instructions for accessing website
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Must not require special hardware or software or require a fee to
download or creating an account with personal information
Make paper copies of the FAP, FAP application,
and plain language summary available upon
request and free of charge by mail and in the
hospital emergency room and admissions areas
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Widely Publicizing the FAP
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Notify and inform those members of the community
most likely to require assistance
Notify and inform visitors and patients
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Offer a copy of the plain language summary as part of the
intake or discharge process
• Include conspicuous written notice on all billing
statements with telephone number of department to
provide information and website address where copies
can be obtained
• Provide conspicuous public display (reasonably calculated
to attract attention) to notify patients about FAP availability
in emergency room and admissions areas
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Accessibility to Non-English Speakers
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Must translate FAP, FAP application, and plain
language summary into the primary language
spoken by populations of limited English
proficiency
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Language group made up of the lesser of 1,000
individuals or 5% of the community served
May use any reasonable method to calculate
population
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Plain Language Summary
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Brief description of eligibility requirement and assistance offered
Brief summary of how to apply for assistance
Web site address and physical locations to obtain FAP and
application form
Instructions on how to receive copy of FAP and application by mail
Contact information (telephone and physical location) for resource
who can assist with the application process
• Hospital office or department
• Nonprofit or government agency
Statement of availability of translations
Statement that FAP may not be charged more than AGB for
emergency and medically necessary
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Emergency Medical Care Policy
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Hospital facility must provide, without discrimination,
care for emergency medical conditions to individuals
regardless of their eligibility under the FAP
Will meet requirements if policy requires care be
provided under existing federal laws such as the
Emergency Medical Treatment and Labor Act
(EMTALA)
Must prohibit the hospital facility from engaging in
actions that discourage individuals from seeking
emergency medical care
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Establishing the Policies
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Adopted by an authorized body of the hospital
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Governing body or a committee thereof
Other party authorized under governing body as
permitted under state law
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Implemented by the hospital facility by
consistently carrying out the policy
• May be established by more than one facility if
identical across facilities
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May have different AGB percentages or methods of
calculating AGB
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Limitation on Charges-Statute
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Must limit amounts charged for emergency or
other medically necessary care to a FAPeligible individual to not more than the amounts
generally billed (AGB) to individuals with
insurance covering that care
• Prohibits the “use of gross charges”
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Limitation on Charges
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Choose method to determine AGB
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Look Back Method
• Prospective Medicare
• Other method specified in future regulations or guidance
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Different facilities can use different methods
Facility can change method at any time
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Need to update FAP with information on method used
Limitation applies to the amount patient is
personally responsible for paying after deductions,
discounts, and insurance have been applied
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Look-Back Method
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Based on actual allowed by either:
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Medicare fee-for-service
• Medicare fee-for-service and all private health
insurers; or
• Medicaid alone or with either of the above
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Calculated at least annually based on claims
allowed
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Select a 12 month period to use for the calculation
Must begin applying to gross charges for FAP-eligible
patients within 120 days of the end of the calculation
period
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Look-Back Method
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Calculation:
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Sum of all claims allowed by health insurers for
emergency and other medically necessary care from
either:
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Medicare and payments from Medicare beneficiaries OR
Medicare and all private health insurers including copayments, co-insurance, or deductibles from beneficiaries or
insured individuals
Divided by:
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Sum of the associated gross charges related to those claims
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Look-Back Method
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May calculate multiple AGB percentages
• May calculate off of all medical claims versus
just medically necessary and emergency
• May calculate one AGB percentage for all
hospitals covered under the same Medicare
number
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Prospective Method
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Based on the billing and coding process the
hospital facility would use if the FAP-eligible
individual were
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Medicare fee-for-service
Medicaid beneficiary or
Both
AGB is set at the amount the hospital facility
determines would be the total payment for the
care from
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Medicare or Medicaid reimbursement and
Beneficiary payments
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Gross Charges
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Must charge FAP-eligible individual less than
gross charges for any medical care covered
under the FAP
• Billing statements may state gross charges as a
starting point before applying various
allowances, discounts, and deductions
• Amount personally responsible for paying must
be less than gross charge
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Safe Harbor
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Will not violate limitation on charges rule if
charge more than AGB to FAP-eligible
individual if
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Charge was not made or requested as a precondition of providing medically necessary care to a
FAP-eligible individual
Patient has not completed application
Must correct amount charged when found to be FAPeligible (if > $5)
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Billing and Collection-Statute
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Requires that a hospital facility not engage in
“extraordinary collection actions” (ECA) against
patients before reasonable efforts have been
made to determine if the person qualifies for
financial assistance
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Extraordinary Collection Actions
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Selling of debt to another party unless
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Purchaser is prohibited from engaging in ECA
• Purchaser is prohibited from charging more than FMV
interest
• Debt is returnable to hospital if patient is FAP eligible; and
• If debt not returned, purchaser ensures patient pays no
more than obligated to pay under FAP
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Reporting adverse information to credit agencies or
bureaus
Deferring, denying, or requiring payment before
providing medically necessary care due to
outstanding bills
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Extraordinary Collection Actions
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Require legal or judicial process
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Liens on property
• Foreclosure on real property
• Attaching or seizing bank accounts
• Commencing civil action
• Causing arrest
• Subjection to writ of body attachment
• Garnishing wages
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Reasonable Efforts
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Presumptive FAP determinations based on
third-party information or prior eligibility
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If determine patient is eligible for less than the most
generous discount under the FAP
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Must notify the patient regarding the basis for the
presumptive determination and how to apply to obtain more
generous assistance
Provide reasonable time to apply for more assistance before
starting ECAs
Must review applications submitted during the application
period
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Reasonable Efforts
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Notification and Processing Applications
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Notify an individual about its FAP for at least 120 days
from the date of first post-discharge billing statement;
• Properly address an incomplete FAP application; AND,
• Make a determination of eligibility on all complete forms
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If individual fails to submit FAP application by end
of notification period and notification requirements
were met, hospital may engage in ECA
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Must still accept and process FAP during application
period
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Notification Requirements
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At least 30 days before initiating ECAs:
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Written notice is provided
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Informs about the ECAs the facility intends to take if
individual does not submit a FAP application or pay the
amount due
Includes a plain language summary of the FAP
Hospital makes reasonable effort to orally notify the
individual about FAP and how to obtain assistance
with the FAP application process
Indicate a deadline
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Notification Requirements
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Deferring or denying care due to nonpayment
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Not required to make notice at least 30 days before
initiating if:
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Provides FAP application form and written notice of FAP
assistance indicating a deadline for submission for the
previously provided care (later of 30 days of the notice or 240
days from the first post-discharge billing for previous care)
Must provide a plain language summary
Hospital makes reasonable effort to orally notify the
individual about FAP and how to obtain assistance with the
FAP application process
Must process application on expedited basis once received
Still subject to rules under EMTALA for emergency
care
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Reasonable Efforts
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Application Period
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Begins on the first day of care and ends on the 240th
day after the hospital facility provides the individual
with the first post-discharge statement
If an individual submits a complete or incomplete FAP
application during the application period, the hospital
must process the application and determine eligibility
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Reasonable Efforts
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If an individual submits an incomplete FAP
application during the application period, the
hospital facility meets its reasonable efforts
requirement if the hospital facility:
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Suspends any ECAs against the individual related to
care at issue
• Provides a written notice of additional information
needed and contact information for assistance
• Provides a reasonable amount of time to submit
information
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Reasonable Efforts
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If an individual submits a complete FAP
application during the application period, the
hospital facility meets the reasonable efforts
requirement if it:
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Suspends ECAs
Makes and documents a determination of FAP
eligibility in a timely manner
Notifies the individual in writing of the determination
of FAP eligibility and basis for determination
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Reasonable Efforts
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If individual is FAP-eligible, the hospital must:
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Provide a billing statement that indicates
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Amounts the individual owes as a FAP-eligible individual (if
eligible for discounted care)
How the amount was determined
How to get information regarding AGB
Refund any excess payments made by the individual
for the care at issue (if >$5)
Take reasonable measures to reverse any ECAs
taken against the individual
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Exception for sale of debt
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Third Party Agreements
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If a hospital facility refers or sells debt to another
party, reasonable efforts are deemed to be made if
the hospital obtains a legally binding written
agreement from the other party that they will:
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Refrain from ECAs against individual until the hospital
facility has met reasonable efforts requirements
• Suspends ECAs against the individual if they submit a
FAP application during the application period
• If determined to be FAP-eligible, other party will do the
following in a timely manner:
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Adhere to procedures to ensure the individual does not pay
more than required to pay under FAP
• Takes reasonable measure to reverse any ECAs, AND
• Obtains written agreement from any sub-parties that the subparty is adhering to the above requirements
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General Provisions
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Reasonable efforts are not made if determination that
non-FAP eligible based on unreliable information or
information obtained under duress or coercive
practice
Can meet requirements by making determination
based on completed application even if not all
notification requirements were met
May postpone determination of FAP eligibility during
period where Medicaid eligibility is being determined
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Conclusion
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Questions?
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Comments?
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Contact Information
Marie Murphy
701.476.8321
[email protected]
This presentation is presented with the understanding that the information contained
does not constitute legal, accounting or other professional advice. It is not intended to
be responsive to any individual situation or concerns, as the contents of this
presentation are intended for general informational purposes only. Viewers are urged
not to act upon the information contained in this presentation without first consulting
competent legal, accounting or other professional advice regarding implications of a
particular factual situation. Questions and additional information can be submitted to
your Eide Bailly representative, or to the presenter of this session.
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