(4) FAP. RU Still. Compliant? By: Shawn Gretz. 501 r (5) AGB (6) ECA

Transcription

1 501. RU Still (4) FAP Compliant? By: Shawn Gretz 501 r (6) ECA (5) AGB

2 Who Me? I am not a lawyer, nor do I play one on TV, and I did not stay at a Holiday Inn last night. People seeking legal advice should always consult with an attorney.

3 After 501r

4 After 501r

5 Agenda Background on 501r Schedule H Audit What Happens Discuss Options for Improvements, Compliance, and Procedures: 501r-4 501r-5 501r-6 Q&A

6 Background 501(r) Senator Grassley started inquiring about the community benefit for hospitals IRS released Schedule H on the IRS was required to create 501r IRS released the final version of 501r, but also released that hospitals must use a good faith interpretation of 501r previously.

7 Background 501(r) 501(r)(4) Financial Assistance Policy (FAP) FAP 501(r)(5) Amount Generally Billed (AGB) 501(r)(6) Extraordinary Collection Actions (ECA) ECA 501 r AGB

8 Schedule H Highly Recommend Looking at Your Schedule H! Ask for it from your Controller!!!! Background 501(r)

9 IRS is Auditing!!!! Affordable Care Act requires IRS to review every hospital for 501r at least once every three years! Mostly non-contact reviews of 990s, financial statements, & websites. 1,200 reviews completed in referrals exams 1 Tax Exempt Status Lost!

10 Big Data 990 IRS is Auditing!!!! IRS implemented a data metrics system that will flag 990s! Watch your ratios of bad debt to financial assistance!

11 Cost for Violations IRS is Auditing!!!! $50,000 excise tax &/or loss of Not-For-Profit Status

12 IRS is Auditing!!!! What happens if you are audited? 1. Information document request (IDR) - Questions you will be asked - Evidence of adoption such as board minutes or resolution - Exact website page for FA, FAP, EMTALA, and Billing and Collection Policy - Copies of policies FA, FAP, EMTALA, and Billing and Collection Policy - Amount Generally Billed (AGB) Location in FAP and Calculations - Gross and AGB Charges for all Emergency and Medically Necessary Care

13 IRS is Auditing!!!! IDR Continued - How FA information was Widely Publicized - Copy of a Billing Statement (conspicuous written notice) - Copy of Translated Documents - Onsite Tour of Signage (Widely Publicized) - List of Extraordinary Collection Actions (ECA) performed - Three examples of ECA performed with timeline - Final Notice sent to those three examples - Examples of ECA legal or judicial actions taken - Copy of Contract with Collection Agency with 501r addressed - Interview Individual Names

14 IRS is Auditing!!!! IDR Continued - Complaints from Patients in regards to 501r - List of Providers for FAP (with date updated)

15 Noncompliance IRS will allow hospitals to correct noncompliance before the audit and if minor. Make Corrections Now!!!!

16 501r - Improvements

17 501r Look Again

18 Who Must Comply? Any hospital organization, meaning any Code Section 501(c)(3) organization that operates a hospital facility A hospital facility is any facility required by state law to be licensed, registered, or similarly recognized as a hospital Special situations: Hospital systems Government hospitals Disregarded entities and partnerships

19 Who Must Comply? Government Hospitals - The final regulations specifically called out government hospitals as an entity that has to comply. What the IRS could attempt to remove the not-forprofit status for the donations that are made to the hospital and or fine $50,000. Transparent - Many attorney s have stated against complying.

20 Offering Financial Assistance Timeline!

21 240 Days!

22 501(r) 4 Financial Assistance Policy (4) FAP 501 r (6) ECA (5) AGB

23 (4) FAP Eligibility Criteria Improvement #1 When does an application qualify determination get made according to your current policy? Silent on the matter Date of service or application date?

24 (4) FAP Examples My Suggestion: A determination of financial assistance will be effective for a period of up to six (6) months include subsequent emergent or medically necessary care from the date the application was approved and will include all outstanding receivables including those at bad debt agencies unless a payment has been applied on the account. It is the patients responsibility to inform XYZ of a change in financial situation or the addition of third party payer eligibility may alter the approval period and require further review.

25 (4) FAP Refunds Improvements #2. Create a separate write-off code that does not classify as financial assistance but still forgives the balance on accounts to limit refunding! include all outstanding receivables including those at bad debt agencies unless a payment has been applied on the account.

26 (4) FAP Documents W2, Paystubs, Assets and MORE! Both your policy and application need to list the documents you are requiring. If you do not request any documentation you cannot deny based upon lack of documentation.

27 (4) FAP Documents Assets? Yes - Medicare Bad Debt Requires Assets!

28 (4) FAP Presumptive Determinations Hospital are not prohibited from using third party information sources and prior FAPeligibility determinations to try to predict which of its patients are unlikely to be FAPeligible.

29 (4) FAP Example of Presumptive Improvement #3 Presumptive Financial Assistance Eligibility: XXX Hospital recognizes that some patients will be unable or otherwise unresponsive to traditional FAP processes; and in an effort to remove barriers for these patients and improve community benefits, the hospital will utilize public record and/or an electronic screening process after all other funding sources have been exhausted; and that the information returned via this electronic screening will constitute adequate documentation under the Hospital s policy. Below are the six cases of presumptive eligibility: A. Patients without any third party coverage and without the ability to qualify for third party coverage will be scored through PARO estimates (score, Federal Poverty Level estimates, and asset indicators) at the date the account is determined self pay. PARO estimates may be used to determine accounts eligible for full discount or partial discount based on financial need. B. Patients listed for collections will be scored through a credit bureau. All accounts that score below 499 that have no payments will be qualified for financial assistance. C. Patient is homeless or received care from a homeless clinic; or D. Patient is deceased with no known estate; or E. Patient has been approved by the court for bankruptcy estate. F. Patient is receiving Supplemental Nutrition Assistance Program (SNAP).

30 (4) FAP AGB Statement in the FAP that says: Those approved for financial assistance may not be charged more than the Amount Generally Billed for emergency or other medically necessary care

31 (4) FAP Physicians on FAP Did you create a list of all physicians (separate practices) that provide emergency or other medically necessary care in the hospital facility and specify which providers are covered by the hospital facility's FAP and which are not? Follows Financial Assistance. Dr. ABC Does not follow Financial Assistance Dr. XYZ

32 (4) FAP Physicians on FAP 1. Subject to certain conditions, the provider list may be contained in a separate document from the FAP, such as in an addendum or appendix to the FAP. 2. If only the provider list is changed, a hospital's authorized body is not required to re-adopt the FAP again. 3. If a hospital updates the list of providers at least quarterly, it will be considered to have taken reasonable steps to ensure the accuracy of the list and corrected any minor omissions or errors on the list, which are requirements of the regulations.

33 (4) FAP APPENDIX Improvement #4 Your New Best Friend! 1. Look back - AGB 2. Physician List Updated Quarterly 3. Federal Poverty Guidelines

34 (4) FAP Not Covered What isn t Covered by Financial Assistance: Does your FAP clearly state that non-emergency and non-medically necessary care will not be covered under your FA? If not, then 501(r) (5) applies and the use of gross charges cannot be used for elective procedures. Medicaid Definition?

35 (4) FAP Not Covered Example 1: Services not eligible for financial assistance include the following: 1. Elective procedures not medically necessary, as well as services typically not covered by Medicare or defined by Medicare or other health insurance coverage as not medically necessary. 2. Services received from care providers not employed by XXX (e.g. private and/or non XXX medical or physician professionals, ambulance transport, etc.) Patients are encouraged to contact these providers directly to inquire into any available assistance and to make payment arrangements. See Appendix X for full listing of providers not covered under this policy. 3. Deductibles and coinsurance associated with medically necessary services provided to patients out-of-network as defined by their insurers.

36 (4) FAP Catastrophic Care Improvement #5 Catastrophic Care: XXX patients not meeting financial assistance eligibility thresholds may be eligible for assistance under circumstances when XX medical bills would result in severe financial hardship. Patients, or their guarantors, may be eligible for catastrophic care assistance if they have incurred out-of-pocket obligations resulting from medical services provided by XXX that exceed 25% of family income and have assets below the equivalent of 600% of the FPL threshold.

37 (4) FAP Plain Language Summary What is required on the Plain Language Summary? 1. The direct website address and physical location(s) where the individual can obtain copies of the FAP and FAP application form; and 2. physical location of hospital facility staff who can provide the individual assistance about the FAP and the FAP application process, or of the nonprofit organizations or government agencies, if any, that the hospital facility has identified as available sources of assistance with FAP application; and 3. how to apply for financial assistance. What other items would you like to add in your plain language summary (example: a statement regarding patient responsibilities)?

38 Widely Publicized Widely Publicize 5 Requirements 1. Paper Copies Available at "Public Locations 1. emergency department 2. admissions areas 3. Offer as part of the intake (outpatient) or 4. Offer discharge (inpatient) process are you offering patients about FAP?

39 Widely Publicized Widely Publicize 5 Requirements 1. Paper Copies Available at "Public Locations Documents to Have at these Locations - Financial Assistance Application Itself Plain Language Summary Financial Assistance Application Billing and Collection Policy All four have to be translated at a threshold of 5% of the population or 1,000 individuals, whichever is less

40 Widely Publicized Widely Publicize 5 Requirements 2. Available on Website 3. Conspicuous Written Notice on Every Statement - Telephone Number for Assistance and Direct Website Address Where Copies of Documents may be Obtained. 4. Conspicuous Public Display Signs that attract visitors of "noticeable size" and in minimum "public locations. 5. Notify and Inform the Community

41 501(r) 5 Amounts Generally Billed (4) FAP 501 r (6) ECA (5) AGB

42 (5) AGB Amounts Generally Billed 1. Look back (Medicare Alone or Medicare with all Commercial Payers) Update Annually and within 60 days of your fiscal year. 2. Perspective (What is Medicare Paying Today)

43 (5) AGB Amounts Generally Billed Improvement #6 What if you only gave away 100% discount and NO sliding scale? Spectrum in Michigan is doing this.

44 501(r) 6 Extraordinary Collection Actions (4) FAP 501 r (6) ECA (5) AGB

45 (6) ECA Extraordinary Collection Actions (ECA) May not engage in extraordinary collection actions before an organization has made reasonable efforts to determine whether individual is eligible for financial assistance for the care provided.

46 (6) ECA Extraordinary Collection Actions (ECA) Define ECAs (1) Credit Bureau (2) Legal or Judicial Process (3) Selling Debt (4) Upfront Collections for Previous Care

47 (6) ECA What are NOT ECAs? (1) Listing with a collection agency. (2) Calling a patient by telephone. (3) Writing-off the account to Bad Debt. (4) Sending a patient a Statement (5) Upfront Collections for the Current Care

48 (6) ECA Reasonable Effort 1. Three Bills/Statements - Based on typical billing cycles should ensure patients receive at least three bills before facing an ECA.

49 (6) ECA Reasonable Effort 1. Three Bills/Statements Example: Conspicuous Written Notice Financial assistance is available to those who qualify; please call XXX-XXX-XXXX or learn more at

50 (6) ECA Reasonable Effort 1. Three Bills/Statements Mail Returns: "Provided" is considered to be the date it was mailed, ed, or delivered by hand.

51 (6) ECA Reasonable Effort 1. Three Bills/Statements Mail Returns: Make sure your billing and collection policy is written correctly to put the requirement on the patient to provide a correct mailing address such as: It is the patient's obligation to provide a correct mailing address at the time of service or upon moving. If an account does not have a valid address, the determination for "Reasonable Effort" will have been made.

52 (6) ECA Reasonable Effort 2. Plain Language Summary: Final regulations require a plain language summary to be included with only one post-discharge communication and give a hospital facility the flexibility to send this one plain language summary only to the subset of patients against whom the hospital facility actually intends to engage in extraordinary collection actions.

53 (6) ECA Reasonable Effort 2. Continued - Plain Language Summary: What is Required on your Plain Language Summary 1. A statement such as, "Financial assistance is available to those that qualify." 2. How to qualify. Most health systems use the federal poverty guidelines to qualify a patient for financial assistance. My suggestion is to put what those qualifications are. 3. How to apply (required): a. The direct website address and physical location(s) where the individual can obtain copies of the FAP and FAP application form; and b. The physical location of hospital facility staff who can provide the individual assistance about the FAP and the FAP application process that the hospital facility has identified as available sources of assistance with FAP application. 4. Where free copies of the policies and application can be obtained.

54 (6) ECA Reasonable Effort 2. Continued - Plain Language Summary: Examples: content/uploads/2014/08/financial- Assistance-Plain-Language-Summary.pdf

55 (6) ECA Reasonable Effort 3. Oral Communication: Did the hospital facility make a reasonable effort to orally notify those patients against whom the hospital facility intends to engage in ECAs at least 30 days before they intend to initiate?

56 (6) ECA Reasonable Effort 3. Continued - Oral Communication: Remember that the hospital does not have to actually speak with the individual; it just must make an attempt to communicate.

57 (6) ECA Reasonable Effort 4. Final Notice- 1. The Intended ECAs, 2. Mentioning that Financial Assistance is Available, & 3. Give a 30 day Deadline before ECAs?

58 (6) ECA Reasonable Effort 4. Continued - Final Notice- Multiple Episodes of Care - Intended According to our records, your account is past due. If we do not hear from you within 30 days from the date of this letter, your account will be referred to a collection agency. Please call us at XXX-XXX-XXXX to discuss payment options, mail in payment-in-full, or pay-in-full online at We intend for our collection agency partner, at their discretion, and with our approval, to engage in the following extraordinary collection actions by the date listed on the reverse of this notice including, but not limited to: 1. Reporting your account to consumer credit reporting agencies or credit bureaus. 2. Taking actions that require a legal or judicial process, including, but not limited to commencing a civil action against and garnishing an individual's wages.

59 Application Period: Application Period Must accept & process FAP applications during longer period that end on 240th day after hospital provides an individual with first post discharge billing statement. -Have you Defined a Process??? - Are your Collection Agencies Aware to Offer???

60 Collection Agency Hospital facilities must be held accountable for the ECAs of the debt collection agency or debt buyers.

61 Collection Agency Do you have a contract in place with your collection agency that requires them to follow 501(r) regarding ECAs and also FAP applications? Included in the contract should be language that if the collection agency mistakenly violates 501(r)(6), they will notify/disclose to the hospital facility and correct the failure immediately.

62 Collection Policy Requirements 1. Describe the Actions the Hospital will take 2. Describe the Actions a collection partner may take 1. Including extraordinary collection actions (ECA) 2. But not limited to the ECAs 3. Must also describe the process and time frames the hospital facility (or other authorized party) will use in taking these actions 4. Include any reasonable efforts to determine whether an individual is FAP-eligible as described in section 501(r)(6). 5. In addition, the FAP or billing and collections policy must describe the office, department, committee, or other body with the final authority or responsibility for determining that the hospital facility has made reasonable efforts to determine whether an individual is FAP-eligible and may therefore engage in extraordinary collection actions against the individual. 6. How can individuals obtain a free copy?

63 Collection Policy

64 Q&A Shawn Gretz Thank you for attending!