MANAGING SELF-PAY COLLECTIONS IN A RAPIDLY CHANGING HEALTHCARE ENVIROMENT September 27, 2013 Western...

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MANAGING SELF-PAY COLLECTIONS IN A RAPIDLY CHANGING HEALTHCARE

ENVIROMENTSeptember 27, 2013

Western Reserve AAHAM Fall Institute

Presenter:Mark Rukavina, PrincipalCommunity Health Advisors, LLC

http://www.communityhealthadvisors.com/


Disclosure

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.



Presentation Outline

Overview of Section 501 r requirementsIRS Form 990 Schedule H

Industry Actions on Self-Pay/Patient Financial InteractionsQuestion & Discussion



Section 501 r – New Billing Environment



Bitter Pill: Why Medical Bills Are Killing UsBy Steven Brill March 04, 2013

Background and Political Context



Internal Revenue Code Section 501 r

Establishes the following requirements

• Financial assistance policy• Limitation on charges • Billing and collection practices• Community health needs assessment



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Background - Section 501 rPatient 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.



Financial Assistance Requirements

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)




Must be approved by the Board or Trustees or another governing body of the tax-exempt hospitalConsidered implemented when the policy is consistently carried out by the facility




Clearly inform patients of how and where to applyExplain documentation requirementsAssistance may not be denied based on omission of documentation not specified in the policyApplicants must be notified in writing of eligibility determination



Emergency Care

Include a written policy to provide, withoutdiscrimination, care for emergency medical

conditions (within EMTALA rules) for individuals regardless of financial assistance eligibilityPolicy 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.



Publicizing Policy

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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



Limitation on Charges

Proposed regulations prohibit charging patients eligible forfinancial assistance gross charges.

Fees charged to patients eligible for financial assistance must tolimited 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



Hospitals May Use One of Two Methods

Look Back Method - based on actual past claims paid by Medicarefee-for-service and deductible and copayments made by theMedicare beneficiary, or Medicare FFS together with all privatehealth insurers, as well as costs paid by Medicare beneficiaries orinsured patients through deductibles, copayments or co-insurance.

Prospective Method - estimate that amount that would bepaid by Medicare and the Medicare beneficiary for theemergency or medically necessary care, if patient were a Medicare beneficiary.



Safe Harbor Provision

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.



Billing and Collection PolicyMay 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



Extraordinary Collection ActionsExtraordinary 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:• 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



Reasonable EffortsHospitals 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. 120 day notification period which begins

after issuing the first bill to the patient.



Application Period

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.



Efforts to Inform PatientsDistribute 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



Notice on Collection Action

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



Anti-Abuse

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.



Waiving Application

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.



Reversing Collection Actions

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



Presumptive Eligibility SafeguardPresumptive 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



Predictive Analytics

Predictive presumptive screening analytics help identify accounts of financially needy patients before going to bad debtCrucial safeguard that also helps to avoid unnecessary collection actions and negative publicityCategorize as charity care not bad debt



IRS Form 990 Schedule HForm 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



Eligibility

Federal Poverty GuidelinesAsset TestOther ThresholdInsurance Status



IRS Form 990 Schedule H

Full Free CareDiscounted CareMedically Indigent/Medical Hardship



Schedule H Check List

Full Free CareDiscounted CareMedicall Indigent/Medical Hardship



Publicizing PolicyWebsiteAttached to billing invoicesPosted in ER, waiting rooms, admissions Provided in writing on admission Available on request



Collection Actions

Reporting to Credit AgencyLawsuitsLiens on ResidencesBody AttachmentsOther



Amounts Generally BilledLowest negotiated commercial insurance rateAverage of lowest 3 negotiated commercial insurance ratesMedicare ratesOther

Also note whether hospital charged patients eligible for assistance gross charges for any services provided



Bad Debt

Clarify whether reported in accordance with HFMA Statement 15Quantify bad debt expenseEstimate bad debt attributed to patients likely eligible for financial assistanceProvide methodology used to estimate

Record reviewsAssessment of incomplete applicationsAnalytical methods

Rationale for including portion of bad debt as community benefit, if so reported



Scrutiny of Regulators



Patient Financial InteractionsThe 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.



PFI Advisory PanelMichael O. Leavitt (Chairman)Former HHS SecretaryFounder and Chariman, Leavitt PartnersTom DaschleUS Senator from South DakotaDonna ShalalaFormer HHS SecretaryPresident, University of MiamiBill FristUS Senator from TennesseeJamie GorelickAttorney, WilmerHale



Patient Financial InteractionsThe 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.



Summary of Best PracticesEmergency 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.



Comments on PFI Best PracticesThe public comment period for the PFI Best Practices ran from June 17th - July 31st, 2013.

Current status of project



Public Relations Challenge



Medical Debt Task Force

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.



Medical Debt Task Force

In August of this year, HFMA and ACA released draft guidelines for fair resolution of the patient portion of medical bills.



Summary of GuidelinesProvider 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)



Financial and Billing Assistance

•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.



Collections• 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.



Summary of Collection Actions•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.



Tracking Patient Billing/Collection Complaints•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



Account ReconciliationRegular reconciliations to occur between provider and business affiliatesystems 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 daysNeed acknowledgement of data transmission—a reconciliation— that verifies receipt of information and completion of taskNeed to define the dataset between bureau and provider/business affiliate



Credit Report InformationIf 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.



Access to Financial Assistance/Charity Care Policy

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.



Selling Receivables

If debt is sold, the buyer must be certified by DBA International.



Comments on Medical Debt GuidelinesThe public comment period ran from August 1st – September 6th 2013.

Current status of project



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Operating During Interim PeriodPrior to Issuance of IRS Final Rule

Focus on affordability – the ACA is the Affordable Care ActFollowing guidance outlined in the Proposed Rule and on IRS Form 990, Schedule H Avoid criticism and respond to scrutiny with clear policies and defensible practicesApply your policies consistently



Compliance StrategiesEnsure existing policies/ practices are sufficient in new regulatory environmentSecure board approval of financial, billing and collection policiesReview info submitted on IRS Form 990, Schedule H to ensure compliance Connect financial need AND community benefit



Compliance StrategiesFormalize “reasonable efforts” to inform patients of financial assistance Implement safeguards to ensure collection actions not used against patients with financial needAuthorize all collection actions allowed by collection agencies

Agency auditsStaff trainingEasy access to financial assistance, billing and collection policies



Compliance StrategiesAlign 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 patientsPro-actively educate community, policymakers and the media on policiesEvaluate policies annually, they will be used to determine federal tax status for non-profit hospitals



Mark Rukavina, PrincipalCommunity Health Advisors, LLC

[email protected](617) 833-9829

Questions?


mailto:[email protected]

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MANAGING SELF-PAY COLLECTIONS IN A RAPIDLY CHANGING HEALTHCARE ENVIROMENT September 27, 2013 Western...

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