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

1. 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

2. 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.

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 committeesand 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 organizationand 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.

4. Presentation Outline Overview of Section 501 r requirements IRS Form 990 Schedule H Industry Actions on Self-Pay/Patient Financial Interactions Question & Discussion

5. Section 501 r – New Billing Environment

6. Background and Political Context Bitter Pill: Why Medical Bills Are Killing Us By Steven Brill March 04, 2013

7. Internal Revenue Code Section 501 r • Establishes the following requirements • Financial assistance policy • Limitation on charges • Billing and collection practices • Community health needs assessment

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. Background - Section 501 r

9. 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)

10. Financial Assistance Requirements 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

11. Financial Assistance Requirements 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

12. Emergency Care 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.

13. Publicizing Policy . • “Plain Language” summary must be available, freeof 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

14. Limitation on Charges • 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

15. Hospitals May Use One of Two Methods • 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.

16. 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.

17. Billing and Collection Policy 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

18. Extraordinary Collection Actions 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

19. Reasonable Efforts 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.

20. 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.

21. Efforts to Inform Patients 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

22. 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

23. 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.

24. 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.

25. 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

26. Presumptive Eligibility Safeguard Presumptive eligibility screening provides hospitals with an important safeguard regarding collection actions and demonstrateseffort made to qualify patients for assistance Presumptive eligibility must be extended for the most generous level of financial assistance

27. Predictive Analytics 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

28. IRS Form 990 Schedule H 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

29. Eligibility Federal Poverty Guidelines Asset Test Other Threshold Insurance Status

30. IRS Form 990 Schedule H Full Free Care Discounted Care Medically Indigent/ Medical Hardship

31. Schedule H Check List Full Free Care Discounted Care Medicall Indigent/ Medical Hardship

32. Publicizing Policy Website Attached to billing invoices Posted in ER, waiting rooms, admissions Provided in writing on admission Available on request

33. Collection Actions Reporting to Credit Agency Lawsuits Liens on Residences Body Attachments Other

34. Amounts Generally Billed Lowest negotiated commercial insurance rate Average of lowest 3negotiated commercial insurance rates Medicare rates Other Also note whether hospital charged patients eligible for assistance gross charges for any services provided

35. Bad Debt 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

36. Scrutiny of Regulators

37. Patient Financial Interactions 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.

38. PFI Advisory Panel Michael O. Leavitt (Chairman) Former HHS SecretaryFounder and Chariman, Leavitt Partners Tom Daschle US Senator from South Dakota Donna Shalala Former HHS SecretaryPresident, University of Miami Bill Frist US Senator from Tennessee Jamie Gorelick Attorney, WilmerHale

39. Patient Financial Interactions 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.

40. Summary of Best Practices 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.

41. Comments on PFI Best Practices The public comment period for the PFI Best Practices ran from June 17th - July 31st, 2013. Current status of project

42. Public Relations Challenge

43. 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.

44. 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. 

45. Summary of Guidelines 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)

46. 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.

47. 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.

48. 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.

49. Tracking Patient Billing/Collection Complaints •All business affiliates involved in account resolution activities are required to reportpatient 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

50. Account Reconciliation 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 receiptof information and completion of task Need to define the dataset between bureau and provider/business affiliate