Sponsored By: Strategies to Ensure Compliance with IRS-501(r) and Its Impact on Patient Responsibility Workflows

Transcription

1 Sponsored By: Strategies to Ensure Compliance with IRS-501(r) and Its Impact on Patient Responsibility Workflows Steve Warner, VP, Patient Responsibility, Adreima

2 Steve Warner, VP, Patient Responsibility Steve Warner is the VP of Patient Responsibility for Adreima, with responsibility for selected Early Out/Extended Business Office Clients and oversees all of Adreima s Bad Debt Services operations. Steve also serves as compliance manager for the Patient Responsibility service line and provides healthcare and account resolution compliance guidance both internally and for Adreima clients. Steve has worked with numerous clients on ensuring compliance with healthcare and account resolution/collections regulations on both a federal and state level. Prior to joining the Adreima, Steve helped to build a revenue cycle firm focusing exclusively on serving emergency medicine physicians. Steve holds a MBA from the University of Chicago and a B.S. in Finance from Northern Illinois University. Steve is a member of the HFMA and ACA International. 2

3 Agenda Regulatory Changes Impact of Changes 3

4 What is IRS Rule 501(r)? Language in ACA as a placeholder Final rule from the IRS with input from the CFPB Compliance affects the tax status of a hospital 501c hospitals are tax exempt (non-profit) Effective date varies based on: First tax (fiscal) year beginning after 12/29/15 4

5 Requirements for Tax Exempt Hospitals Financial Assistance Policy (FAP) Board approval Average Generally Billed (AGB) Two methods for calculating Extraordinary Collection Actions (ECA) What must happen prior to ECA? 5

6 Four Components of Rule (r)3: Community Health Needs Assessment (CHNA) (r)4: Financial Assistance Policy (FAP) (r)5: Limits on charges (AGB) (r)6: Reasonable effort to collect prior to Extraordinary Collection Actions (ECA) Note: when all are met = Tax Exempt hospital 6

7 Recommendations for Hospitals Form a 501(r) compliance team Develop timeline including Board approval and legal analysis or consultant support Conduct GAP analysis Develop tools and procedures to continually monitor Research state laws Evaluate reimbursement considerations 7

8 Elements to Financial Assistance Policy Eligibility Criteria Actions for Nonpayment Adoption by Board List all Providers Delivering Emergent/Medically Necessary Care Financial Assistance Policy Methodology for Limited Charges Policy for Emergency Medical Care Sources used to make FAP Determination 8

9 FAP Must Be Widely Publicized Rules do not list measures of wide publication But hospitals must do them. Billing statement must include a conspicuous written notice of the FAP and contact information Plain language summary must be offered as part of intake or discharge process Need for translation into multiple languages used within the community 9

10 Additional Documents Emergency Medical Service Policy If not included in the FAP: Billing and Collections Policy including Bad Debt determination Plain Language Summary 10

11 Plain Language Summary Must be offered during intake and/or discharge process Must be offered in translation when 5% (or 1,000 persons, whichever is less) of patient population uses a different language Must include contact information including hospital s website, physical locations, department name and phone numbers 11

12 Plain Language Summary (cont.) Must describe the basics how to apply Must include the time frames for application * Up to 240 days from the first post discharge billing statement. All required elements must be contained Hospitals may add additional information; e.g., a statement regarding patient s responsibility to pay 12

13 501(r)5 Limitation on Charges Hospitals must limit charges to the AGB for FAP eligible individuals Final regulations this limitation applies only to Emergency Medically Necessary care Emergency Medically Necessary care should be defined in: Emergency Services policy FAP 13

14 Limitation on Charges Average Generally Billed AGB Two Methodologies: LookBack or Prospective - May change method at anytime (must update FAP to include change prior to implementation of the change) - Different facilities in same system may use different methodology - Individual is considered charged after all discounts, deductions, payments, etc. have been applied 14

15 LookBack Methodology Can base AGB on one of these: Medicare FFS Medicare FFS + All Private Insurance Medicaid Medicaid in combination with Medicare and Private Insurance 15

16 Calculating AGB under LookBack Methodology IRS clarified, under the Look Back Methodology, the hospital must use the full amount of all claims that have been allowed (rather than paid) to ensure inclusive of amounts allowed by plans as well as amounts due from patients Additional clarification, the 12 months of allowed claims; NOT 12 months based on date of service. Must exclude those claims still outstanding May choose to include claims allowed for all medical care as opposed to just emergency and medically necessary care 16

17 Limitations Average Generally Billed AGB Recommendation: start with the Look back Methodology Conservative, defensible, and can be changed Less likely to draw scrutiny 17

18 Prospective Methodology Determine AGB, but do not include what was allowed forward-looking evaluation Use same billing and coding process Medicare FFS Medicaid Or both 18

19 Safe Harbor For certain charges in Excess of AGB If charge was not discounted or requested as a pre-condition of providing medically necessary care to FAP eligible person If complete FAP application has not been submitted or determination made. If FAP application is submitted later, individual is made eligible, and any excess collected is refunded unless amount is <$

20 501(r)6 Billing & Collections Must make Reasonable Efforts Must make FAP determination Must understand Extraordinary Collection Actions (ECAs) 1. Selling patient debt 2. Reporting debt to credit bureau(s) 3. Requiring payment prior to delivery of care 4. Legal actions (liens, garnishments, etc) 20

21 Reasonable Efforts Presumptive FAP Determination must be explained in the FAP Not required to offer most generous discount Must notify individual regarding basis for determination and way to apply for more Defined by the provider in the FAP Must give reasonable time to apply Must accept completed application within the period and determine eligibility 21

22 Reasonable Efforts Must refrain from engaging ECAs for a minimum of 120 days from first post discharge billing statement Must assist individuals, submitting incomplete applications, with instructions and reasonable opportunity to appropriately complete When aggregating multiple episodes of care, must wait 120 days from first post discharge billing for the most recent episode of care 22

23 Reasonable Efforts Obtaining a signed waiver from patient does not constitute reasonable effort Agreements with third parties must be legally binding regarding no ECAs to be initiated until reasonable efforts have been made Documents may be provided electronically to patients who request electronic communications 23

24 Application Period Begins on the date of service Ends on the 240 th day following first post discharge billing statement Some exceptions for incomplete applications, or presumptive determinations 24

25 Complete FAP Applications On receipt of a complete FAP application within the 240 day period from date of discharge Hospital must suspend all ECAs Make a determination on the FAP application if qualified provide new (adjusted) statement If paid refund excess up to $5.00 Take all efforts to reverse ECA May postpone FAP determination until after Medicaid eligibility is determined 25

26 Impact on Billing Cycle Workflows Impact on accounts once they have moved into the billing cycle: Timing: Ensure patients have been informed of the availability of the Financial Assistance Plan ( FAP ) Through multiple communication channels Extraordinary Collection Activities may not be taken during the first 120 days of the account s billing cycle Identify the ECAs give a deadline no earlier than 30 days after the notice is given 26

27 Impact on Billing Cycle Workflows Patient responsibility billing cycle impacts FAP information must be offered to the patient at least once during the intake / discharge process Inform patient of the availability of the FAP during any interactions the first 120 days Patient statements must inform patients that a FAP is available and how to learn more about the FAP Recommend that the patient receive a minimum of three statements during the first 120 days of the billing cycle 27

28 Extraordinary Collection Activities Placing liens on individual s real property Garnishing an individual s wages Taking any type of legal action to recover amounts due Reporting to credit agencies that the individual s accounts are delinquent Selling debt 28

29 Extraordinary Collection Activities (ECA) Patient responsibility billing cycle impacts Extraordinary Collection Activities The regulation prohibits the utilization of Extraordinary Collection Activities (ECAs) during the first 120 days from the date of first statement Extraordinary Collection Activities may be used during day 121 to day 240 from the date of first statement; However if the patient is determined to be FAP eligible the ECAs must be suspended / reversed We do not believe the regulation prohibits the timing of when accounts may be placed into collections (bad debt) 29

30 When to Commence ECAs After at least 120 days from the date of the patient's first post-discharge billing statement After the facility can demonstrate it has made reasonable efforts to determine whether an individual is eligible for assistance under the hospital s FAP Patient must be informed at least 30 days prior to any ECA being taken that ECA may be commenced Recommend language be included on written statement informing patient of ECA potential 30

31 When to Commence ECAs We recommend waiting until the 240 days from the first post-discharge statement and the FAP application period has ended Although ECAs may be commenced during day , the regulation specifies that the actions be suspended and any adverse impact to the patient be reversed 31

32 ECAs Credit Reporting Risk For ECAs such as credit reporting or initiation of legal action, disputes likely to arise over the impact to the patient Credit reporting, which is governed by the Fair Credit Reporting Act, allows for unlimited damages if an individual who was credit reported was inaccurately reported Until the regulation provides more specificity and/or the legal system provides clarity around how to reverse the impact of ECAs, we recommend ECAs should not be initiated until Day

33 Last Words If Billing and Collection policies are separate from the FAP, these must be approved by the appropriate governing authority (Board) Review billing statements to ensure FAP language is in place Review agreements with vendors/collection agencies Review P&Ps related to Bad Debt accounts Review ECAs 33