Community Health Advisors, LLC © 2013. ALL RIGHTS RESERVED MANAGING SELF-PAY COLLECTIONS IN A...

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 3 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 Associations 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 AHAs 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com Overview of Section 501 r requirements IRS Form 990 Schedule H Industry Actions on Self-Pay/Patient Financial Interactions Question & Discussion

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com Establishes the following requirements Financial assistance policy Limitation on charges Billing and collection practices Community health needs assessment

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 8 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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)

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com Must be approved by the Board or Trustees or another governing body of the tax- exempt hospital Considered implemented when the policy is consistently carried out by the facility

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com. 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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: 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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. 120 day notification period which begins after issuing the first bill to the patient.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com Website Attached to billing invoices Posted in ER, waiting rooms, admissions Provided in writing on admission Available on request

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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 organizations compliance with the PFI Best Practices.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com The public comment period for the PFI Best Practices ran from June 17th - July 31st, 2013. Current status of project

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com In August of this year, HFMA and ACA released draft guidelines for fair resolution of the patient portion of medical bills.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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)

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com Collection process clock starts at first statement date from providers 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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 transmissiona reconciliation that verifies receipt of information and completion of task Need to define the dataset between bureau and provider/business affiliate

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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.

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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

Community Health Advisors, LLC 2013. ALL RIGHTS RESERVED www.CommunityHealthAdvisors.com 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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