Transcript Document

MANAGING SELF-PAY COLLECTIONS IN A
RAPIDLY CHANGING HEALTHCARE
ENVIROMENT
September 27, 2013
Western Reserve AAHAM
Fall Institute
Presenter:
Mark Rukavina, Principal
Community Health Advisors, LLC
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The following information is not intended as legal advice and
may not be used as legal advice. Legal advice must be tailored
to the specific facts and circumstances of each case or inquiry.
Every effort has been made to assure that the information
contained in this presentation is up-to-date as of the date of
publication. It is not intended to be a full and exhaustive
explanation of the law in any area, nor should it be used to
replace the advice of your own legal counsel.
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Mark Rukavina, principal of Community Health Advisors, LLC, has more than 25
years of experience working on health policy issues. He is a recognized expert on
healthcare affordability, financial assistance, billing and collection, and
community benefit requirements for tax-exempt healthcare providers. Mark has
testified before US Congressional committees and has published research and
policy briefs on these issues. In March 2013, he was invited to join the Healthcare
Financial Management Association’s Medical Debt Advisory Task Force. Mark
previously directed The Access Project, a national research and advocacy
organization and prior to that managed a community health program sponsored
by the AHA’s Health Research and Educational Trust Mark holds an MBA from
Babson College and a BS from the University of Massachusetts in Amherst.
Community Health Advisors, LLC offers customized service to hospitals to ensure
compliance with regulatory mandates and protection of federal tax exempt status.
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Overview of Section 501 r requirements
IRS Form 990 Schedule H
Industry Actions on Self-Pay/Patient Financial
Interactions
Question & Discussion
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Background and Political Context
Bitter Pill: Why
Medical Bills Are
Killing Us
By Steven Brill
March 04, 2013
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Establishes the following requirements
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Financial assistance policy
Limitation on charges
Billing and collection practices
Community health needs assessment
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Patient Protection and Affordable Care Act enacted March 23, 2010
IRS issued Notice 2010- 39 in May 2010 requesting comments on the new 501(r)
requirements
IRS issued Notice of Proposed Rulemaking in June 2012 on Financial Assistance,
Limitation on Charges and Billing and Collection Practices
April 5, 2013, Notice of Proposed Rulemaking issued on Community Needs
Assessment and Implementation Strategies
The proposed CHNA rule states that the IRS intends to finalize the 2012 proposed
(FAP) regulations in conjunction with the finalizations of these (CHNA) proposed
regulations.
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Written financial assistance policy
Criteria for eligibility ( i.e. percentage of
federal poverty guidelines, whether assets
considered)
Type of assistance provided (i.e. free care,
discounted care, medical indigent or
hardship)
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Must be approved by the Board or Trustees
or another governing body of the taxexempt hospital
Considered implemented when the policy is
consistently carried out by the facility
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Clearly inform patients of how and where to apply
Explain documentation requirements
Assistance may not be denied based on omission of
documentation not specified in the policy
Applicants must be notified in writing of eligibility
determination
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Include a written policy to provide, without
discrimination, care for emergency medical
conditions (within EMTALA rules) for individuals
regardless of financial assistance eligibility
Policy regarding care for emergency medical
conditions must prohibit actions such as demanding
payment prior to receiving services or permitting debt
collection activities that could interfere with
provisioning of emergency medical care.
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“Plain Language” summary must be available, free of charge:
• Hospital website
• In public locations in the hospital facilities
. • By mail, if a hard copy is requested
Information must also be available in other languages when they
constitute over 10% of the population
Notify residents of policy in a manner that is “reasonably
calculated” to reach community members in need of assistance
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Proposed regulations prohibit charging patients eligible for
financial assistance gross charges.
Fees charged to patients eligible for financial assistance must to
limited to amounts generally billed those with insurance.
Regulations cite specific examples for calculating AGB
AGB is applied to all ER care and medically necessary care
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Look Back Method - based on actual past claims paid by Medicare
fee-for-service and deductible and copayments made by the
Medicare beneficiary, or Medicare FFS together with all private
health insurers, as well as costs paid by Medicare beneficiaries or
insured patients through deductibles, copayments or co-insurance.
Prospective Method - estimate that amount that would be
paid by Medicare and the Medicare beneficiary for the
emergency or medically necessary care, if patient were a Medicare
beneficiary.
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The proposed rule includes a “safe harbor” provision for certain
charges in excess of amounts generally billed.
Hospitals will meet requirements if an eligible patient has not
completed FAP applications and the hospital continues to make
reasonable efforts to determine whether a patient is eligible for
assistance.
If a patient is later found to be eligible, payment made in excess of
amounts generally billed should be refunded.
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May stand as a separate policy or be incorporated into the overall
financial assistance policy
Describe permissible collection actions that may be taken in event of
nonpayment and time frame for taking action
Applies to both internal hospital collection efforts and efforts
undertaken by authorized third parties
If a patient is determined to be FAP qualified later in the revenue cycle,
the extraordinary collection actions must be reversed
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Extraordinary Collection Actions are defined as actions taken by the
hospital, or a third party acting on behalf of the hospital, that require
legal or judicial process.
They include, but are not limited to the following:
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Reporting adverse information to credit bureaus
Sale of debt to another party
Initiating civil litigation
Liens on property
Foreclosure on real estate
Attaching or seizing bank account
Causing and Individuals arrest
Body attachments
Garnishment of wages
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Hospitals are prohibited from engaging in
extraordinary collection actions while making
reasonable efforts to determine whether an
individual is eligible for assistance under their
financial assistance policy.
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120 day notification period which begins
after issuing the first bill to the patient.
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 120 application period, a patient may submit an
application.
With an incomplete application, the hospital must
refrain from collection actions and provide
information on what is needed to complete
application.
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Distribute plain language summary of policy and offer
application prior to discharge
Include summary in at least three billing statements and
other written communication during notification period
Inform patient of policy in all oral communication
regarding amount of bill due during notification period
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Provide with at least on written notice, a minimum of
30 days prior to deadline specified within notice,
informing patient about collection actions that may be
taken if patient does not submit application for
assistance or pay the outstanding balance
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Contains an “anti-abuse” rule stating that a hospital will
not have made reasonable efforts to determine eligibility
if the hospital bases a decision on inadequate
information. For example the data could be unreliable,
incorrect, or could be obtained from the individual
under duress or through the use of coercive practices.
Coercive practices could include delaying or denying
emergency care until individual provides requested
information.
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A waiver signed by patients
stating that they do not wish
to apply for FAP does not
constitute a determination
of FAP-eligibility and will
not satisfy the reasonable
efforts to determine whether a patient
is FAP-eligible prior to engaging in ECAs.
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If a patient is determined to be eligible later in the
revenue cycle, the hospital must
Refund excess payment made in excess of amounts
generally billed
Reverse extraordinary collection actions
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Presumptive eligibility screening provides hospitals with
an important safeguard regarding collection actions and
demonstrates effort made to qualify patients for
assistance
Presumptive eligibility must be extended for the most
generous level of financial assistance
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Predictive presumptive screening analytics help identify
accounts of financially needy patients before going to
bad debt
Crucial safeguard that also helps to avoid unnecessary
collection actions and negative publicity
Categorize as charity care not bad debt
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Form 990 Schedule H is for use by tax-exempt
hospitals to report on community benefit and
Section 501 r requirements
Schedule H reporting is currently in place
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Federal Poverty Guidelines
Asset Test
Other Threshold
Insurance Status
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Full Free Care
Discounted Care
Medically Indigent/
Medical Hardship
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Full Free Care
Discounted Care
Medicall Indigent/
Medical Hardship
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Website
Attached to billing invoices
Posted in ER, waiting rooms, admissions
Provided in writing on admission
Available on request
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Reporting to Credit Agency
Lawsuits
Liens on Residences
Body Attachments
Other
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Lowest negotiated commercial insurance rate
Average of lowest 3 negotiated commercial insurance rates
Medicare rates
Other
Also note whether hospital charged patients eligible for
assistance gross charges for any services provided
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Clarify whether reported in accordance with HFMA Statement 15
Quantify bad debt expense
Estimate bad debt attributed to patients likely eligible for financial assistance
Provide methodology used to estimate
Record reviews
Assessment of incomplete applications
Analytical methods
Rationale for including portion of bad debt as community benefit, if so
reported
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The Patient Financial Interactions (PFI) Best
Practices project was convened in order to
promote, accelerate and coordinate the
development voluntary best practices related to
sensitive financial interactions between provider
organizations and patients.
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Michael O. Leavitt (Chairman)
Former HHS Secretary
Founder and Chariman, Leavitt Partners
Tom Daschle
US Senator from South Dakota
Donna Shalala
Former HHS Secretary
President, University of Miami
Bill Frist
US Senator from Tennessee
Jamie Gorelick
Attorney, WilmerHale
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The PFI project is currently being managed by HFMA. The
best practices focus on financial interactions when medical
services are scheduled, and during both emergency and
non-emergency care. They provide guidance for when,
how, and by whom communication should take place about
patient insurance coverage, financial counseling, patient
financial responsibility for service, and any existing
balance the patient may have.
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Emergency Department Interactions - Help providers handle the most
sensitive financial interactions with patients that take place in the Emergency
Department.
Time of Service (Outside the ED) Interactions - Help providers handle the
most sensitive financial interactions with patients that take place at the time of
service, outside the ED.
Advance of Service Interactions - help providers handle the most sensitive
financial interactions with patients that take place in advance of service.
Best Practices for All Patient Financial Interactions - This overarching
set of Best Practices provides the needed guidelines to help providers.
PFI Measurement Criteria -The PFI Measurement Criteria was developed to
guide the evaluation of a healthcare organization’s compliance with the PFI Best
Practices.
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The public comment period for the PFI Best
Practices ran from June 17th - July 31st, 2013.
Current status of project
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The Healthcare Financial Management Association
(HFMA) and the Association of Credit and Collection
Professionals (ACA, International) convened a task force
representing patient advocates, revenue cycle leaders,
and collections agencies. The purpose of the task force
was to establish guidelines outlining the step-by-step
actions needed to resolve patient accounts after patient
care has been provided.
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In August of this year, HFMA and ACA
released draft guidelines for fair resolution of
the patient portion of medical bills.
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Provider should make a reasonable effort to ensure
accurate and complete patient financial responsibility
•Ensure correct balance due
• Attempt to enroll self-pay patients in any applicable public
programs or other insurance programs (i.e.COBRA, private
insurance)
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•Screen for financial assistance/charity care (may include use of
presumptive eligibility)
• Ensure that all processes adhere to HFMA's Patient Friendly
Billing Principles.
•Offer payment plans that consider the economic circumstances
of the community.
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• Collection process clock starts at first statement date from
provider’s system.
•Transfer of accounts between provider and business affiliates can
occur at any time in the debt resolution process
• All business affiliates need access to relevant data to service
accounts, including but not limited to the date of first statement
and all subsequent statements.
•Reporting an account to a credit bureau should occur no earlier
than 120 days from first statement from provider or early out
agency.
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•Policies related to extraordinary collections activity (ECAs) (as defined
by the IRS— i.e. liens, credit reporting, lawsuits, wage garnishments, or
sale of debt) are board approved, and communicated to and practiced
by collection agencies.
•Ongoing provider efforts to educate patients about the account
resolution process including informing patients of the ECAs that are
board sanctioned.
•If account is delinquent, communicate to the patient that the potential
exists for all board-approved ECAs (including reporting to credit
bureaus) prior to initial placement.
•Accounts in early out
should not be considered delinquent.
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•All business affiliates involved in account resolution activities are
required to report patient complaints.
•Review by management teams to monitor billing/registration and
other revenue cycle issues that result in inappropriate accounts
sent to collections
•Call audits and other quality assurance activities to ensure that
policies are followed and provide process improvement
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Regular reconciliations to occur between provider and business affiliate
systems for accounts in bad debt.
Providers should ensure through the reconciliation process that only one
business affiliate is working on an account.
Reconciliation should occur between business affiliate and bureau for
account update.
Remove a paid debt or account that is challenged in accordance with ACA
International Guidelines.
Timeframe of 45 days
Need acknowledgement of data transmission—a reconciliation—
that verifies receipt of information and completion of task
Need to define the dataset between bureau and
provider/business affiliate
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If a provider/business affiliate report an outstanding debt to a
credit bureau, and the debt is subsequently satisfied (includes
accepting a settlement for less than full value as paid in full), the
report should be deleted.
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All collection efforts (either internal or external) should adhere to
internal written/formal provider collection policies, which include
but are not limited to screening individuals for and applying charity
care/financial assistance policies to those who are eligible and
permissible account resolution tactics.
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If debt is sold, the buyer must be certified by DBA International.
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The public comment period ran from August 1st –
September 6th 2013.
Current status of project
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Community Health Advisors, LLC55
© 2013. ALL RIGHTS RESERVED
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Focus on affordability – the ACA is the Affordable Care Act
Following guidance outlined in the Proposed Rule and on
IRS Form 990, Schedule H
Avoid criticism and respond to scrutiny with clear policies
and defensible practices
Apply your policies consistently
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Compliance Strategies
Ensure existing policies/ practices are sufficient in new regulatory
environment
Secure board approval of financial, billing and collection policies
Review info submitted on IRS Form 990, Schedule H to ensure
compliance
Connect financial need AND community benefit
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Compliance Strategies
Formalize “reasonable efforts” to inform patients of financial
assistance
Implement safeguards to ensure collection actions not used against
patients with financial need
Authorize all collection actions allowed by collection agencies
Agency audits
Staff training
Easy access to financial assistance, billing and collection policies
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Compliance Strategies
Align hospital policies with federal and state laws and regulations, as
well as industry standards and guidelines.
Utilize a comprehensive external review of financial assistance and
billing/collection policies to ensure 501(r) compliance
Apply policies consistently to all patients
Pro-actively educate community, policymakers and the media on
policies
Evaluate policies annually, they will be used to determine federal tax
status for non-profit hospitals
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Questions?
[email protected]
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