501(r) Final Regulations

Basics

PPACA

This is the way I like to think of PPACA

PPACA

Maybe you think of something more like this…

Patient Protection and Affordable Care Act (PPACA)

Subsection 501(r)

Requirements for tax-exemption of

nonprofit hospitals

Most of the implementation details were Most of the implementation details were

left to the IRS

Patient Protection and Affordable Care Act

(PPACA)

The IRS released Proposed

Regulations in June of 2012

Patient Protection and Affordable Care Act (PPACA)

Final Regulation

Released December 29, 2014

Patient Protection and Affordable Care Act (PPACA)

The statutory requirements are already in effect

For earlier years

rely on a reasonable, good faith interpretation

of the proposed rulesof the proposed rules

Take action

implement the final rules immediately!

Compliance Checklist

Section 501 r Requirements Yes/No

Written financial assistance policy

Written emergency medical care policy

Written billing and collection policy

Limitations on charges (amount generally billed)

Authorized extraordinary collection actions (ECAs)

120 day waiting period from date of first post-discharge

statement prior to initiating ECAsstatement prior to initiating ECAs

Written notice provided at least 30 days in advance of

initiating intended ECAs

Presumptive financial assistance described in policy

Widely publicize policies

Authorized body approved financial assistance and

billing/collection policies

Develop procedures to inform and monitor 3rd party

vendors

Limitation on charges

Pick a method of determining

the Amount Generally Billed (AGB)

Limitation on charges

“Amount generally billed” (AGB)

-Prohibits the use of gross chargesCannot charge patients who qualify for financial

assistance more than “amounts generally billed” to

individuals who have insurance

- State how you determine AGB

- You can change your AGB but must first change your FAP

Two methods to determine AGB

“Look-Back”

Divide Medicare payments by gross charges or -

Divide Medicare and all private health insurers

combined

- “Prospective Medicare”

Use the same billing and coding process the

hospital uses for Medicare fee-for-service

beneficiaries

Charges

Gross charges

Full price before allowances, discounts or deductions

Can be shown on the bill as an explanation of how the bill

was determined

You cannot use gross charges

Safe HarborIndividual who has not submitted a complete financial Individual who has not submitted a complete financial

assistance application

Must continue to make “reasonable efforts” to

determine eligibility

If it is determined later that the individual is eligible -

Correct the bill

Refund the excess paid

Billing and collection

Extraordinary Collection Actions (ECA)

Cannot engage in ECAs prior “reasonable efforts” to determine if

patient is eligible for financial assistance.

Send a notice of intended actions

Outline ECAs

At least 30 days – notify of time frames

Any action related to obtaining payment of a bill that

involvesLegal Legal

Selling debt

Reporting on credit bureaus.

Liens and foreclosures

Commencing a civil action

Causing an individual’s arrest (warrant)

Wage garnishments

You are responsible for third parties collecting

debt on your behalf

Presumptive Eligibility

Utilize information other than that provided by individual or

based on prior FAP-eligibility determination

Presumptive eligibility must be described in FAP

You cannot use presumptive eligibility to deny, only approve

A signed waiver stating that an individual does

not wish to apply for, or receive information

about financial assistance won’t workabout financial assistance won’t work

If you use presumptive tools you mustNotify individual regarding basis for PE determination

Provide information on how to apply for more generous

assistance

Allow reasonable time prior to initiating ECAs

Process complete application by end of application period or within

reasonable time period

Automated

Score or red, yellow, green light

Based on national credit reporting agencies data

Based on zip code and financial profile

Based on public records and hospital history

Overlook minutia that qualifies or disqualifies

Can help you understand where to start with patient

Non-Automated

Scoring Systems

Non-Automated

Work vendor or internal staff – diligently interview patients

Be seen as part of the solution from the beginning

Use important data for other collection opportunities

Move bad debt to charity on the back end

Hybrid

Scoring as a beginning point

Combine with financial screening data

Move to appropriate category

Financial Assistance Policy (FAP)

Must be in writing

Must be offered prior to discharge

Must have clear guidelines

Must be available to the public

- Paper copies

- Public display

- Measures to notify community- Measures to notify community

- Website

Must provide method for calculating AGB

Must be detailed

- Criteria used to determine charity eligibility

- Method for applying the policy

- Measures taken to widely publicize the policy

- Hospital policy relating to emergency medical care

Establishing Policies

Financial assistance and billing & collection policies

must be adopted by authorized body

Reasonable Efforts

Plain language summary of FAP at admission OR discharge

Billing statements

⁻ Conspicuous written notice regarding availability of

financial assistance

⁻ Contact information

⁻ Web site

Final notice

⁻ Give 30 days

⁻ Advise of ECAs⁻ Advise of ECAs

⁻ Plain language summary

⁻ No longer required on everything, just the final notice

prior to ECAs

Make eligibility determination on all applications

Document determination

Notify patient of determination

Translate for limited English proficient populations - lesser of

1,000 or 5% of community

Notification Period – Now called “waiting period”

Final regulations significantly changes what was included in the

notice of proposed rulemaking

Time Frame- Begins - Date care is provided

- Ends - 120 days after first billing statement AFTER DISCHARGE

During the notification period

⁻ Plain language summary prior to ECAs⁻ Offer the patient the application prior to discharge ⁻ Offer the patient the application prior to discharge

⁻ Summary must

⁻ Describe FAP requirements and assistance offered

⁻ Provide a website, URL and physical location to obtain the

policy

⁻ Provide instructions to obtain the FAP by mail

⁻ Provide contact information for questions

⁻ Include a statement regarding the AGB

⁻ Include a plain language summary of the policy

Application Period

If the hospital meets all of the waiting period requirements

If the individual fails to submit the application, the hospital

may engage in ECAs

The hospital must continue to accept and process financial

assistance applications for 240 days after the date of the

first billing statement after dischargefirst billing statement after discharge

Application period will be longer than 240 days if the hospital

chooses to extend

Eligibility Determination

If hospital has a completed Medicaid application, it

may postpone making FA determination until

Medicaid eligibility determination made.

may postpone making FA determination until

Medicaid eligibility determination made.

Financial Counseling

http://www.advisory.com/daily-

briefing/resources/primers/medicaidmap#lightbox/1/

Medicaid MAGI – new with PPACA

Key differences compared to old Medicaid methods:

Child support is not counted

Income Not Counted

Scholarships, fellowship grants and awards used for

education purposes

American Indian and Alaska Native, payments, American Indian and Alaska Native, payments,

ownership interests , and real property usage rights

Lump sum amounts only counted in month received

Under insured patient

HSA’s, HRA’s, Co-pays, start of new deductible year

Financial Counseling

http://kff.org

Potential payment sources

Financial Counseling – Other resources

Employer has 30 days to notify the COBRA

insurance plan administrator of a qualifying event

The plan administrator has 14 days to notify the

employee of COBRA benefits

The employee has 60 days to elect coverage

The employee must pay the premium. The employee must pay the premium. Your office can pay the premium if it would be worth while

Initial payment must be made within 45 days.

COBRA Verification and Worksheet

Financial Counseling – Other resources

PC to customer service and spoke to McKenzie who advised:

-- Deductible has been met for the year.

-- Co-insurance for an in-patient visit would be 20%.

-- Max out-of-pocket for this policy is $2000.

-- Hospital is in-network

COBRA payment estimation:

$11373.00 (services)

- 3441.90 (estimated allowable amount) - 3441.90 (estimated allowable amount)

-------------------------------

$7961.10

- 1592.00 (co-insurance)

-------------------------------

$6368.88

- 0.00 (deductible)

-------------------------------

$6368.88

- 423.39 (premium amount)

-------------------------------

$5945.49 (estimated payment)

Financial Counseling – Accidents

TRUE OR FALSE?

You should bill insurance and other payment

sources even if you file a lien

Class action lawsuits by patients against hospitals over the issue of liens.

The hospital chose NOT to bill the patient’s insurance company in an

attempt to recover total billed charges.

If a patient has a valid medical insurance policy, you should bill that policy

Accidents and Personal Injury cases

Confirmation of suit with Attorney representing injured

party

Confirm the suit involves your service date

Obtain case status

Confirm that the attorney has a copy of the bill, or send the

bill

Attorney Representation

Financial Counseling – Accidents

Attorney Representation

File notice of hospital lien IMMEDIATELY

Monitor the case for attorneys or personal injury lawsuits

Negotiate settlements with attorneys and/or insurance

companies

Attend and participate in settlement hearings.

File enforcement actions as necessary

Underinsured

Follow process for self payHSA’s , HRA’s, New year, Co-pay

Co-Pays and DeductiblesComplete a screening!

Financial Counseling Co-Pays and Deductibles

Emergency Medical Care Policy

The hospital must provide, without discrimination, care for

emergency medical conditions regardless of whether the patient is

FAP eligible and provide a written statement to this effect

Written EMTALA policy satisfies this requirement

Add to FAP

List any providers delivering emergency or medically necessary care List any providers delivering emergency or medically necessary care

who are not covered under FAP

If care provided by third party is not covered under the hospital FAP,

the hospital facility may not be eligible for 501(c)(3) status

Failure to Satisfy Section 501 r

Fail to meet one or more of the Section 501 requirements

May have 501 (c )(3) status revoked as of first day of the

taxable year in which failure occurs

Facts and circumstances apply

Not considered failure if following satisfied:

Inadvertent or reasonable cause

Hospital corrects as promptly after discovery Hospital corrects as promptly after discovery

If multiple omissions or errors, must be minor

Income derived from non-compliant hospital during that taxable year, will

be subject to tax

For organizations operating more than one hospital, only non-compliant

hospital taxed

Non-compliance will not affect the tax-exempt status of bonds issued to

finance the non-compliant hospital

Hospitals may rely on reasonable, good faith interpretation of the statute

Things to consider

Negative?

Need for more financial counselors or vendor to meet

“reasonable effort” regulations

Need for additional screening software

Issues when collection agency must return accounts

under the 240 day period requirement

The longer patients are given to resolve a bill, the less

likely they are to resolve itlikely they are to resolve it

Notify vendors of first statement after discharge date

Positive?

Find value in the information you gather and analyze

Opportunity to strengthen relationship with

the community

Action items

⁻ Update the hospital’s FAP

⁻ Make the policy widely publicized and available

⁻ Update web sites

⁻ Place signage in hospital waiting areas

⁻ Make written copies readily available

⁻ Determine what method of charges you will use ⁻ Determine what method of charges you will use

⁻ Determine how the AGB will affect your bottom line

⁻ Determine how the waiting period will affect your AR

⁻ Review in house processes to identify eligible patients early

⁻ Consider presumptive screening tools

⁻ Provide vendors with your FAP

⁻ Insure your collection agency will comply with the 240 day

notification period

PPACA

Questions?

Mea Austin

maustin@haaseandlong.com