CMS Reasonable Collection Requirement Probate and Bankruptcy

Transcription

1 CMS Reasonable Collection Requirement Probate and Bankruptcy

2 Introduction Angela Horn Contributor to national publications Longterm Living, Healthcare Finance News, HFM Magazine, Credit and Collections Risk, and Fierce Health Finance on the topic of probate and creditors rights 17 years of experience practicing in probate and probate litigation Recognized probated expert, speaking to national and regional trade groups across the U.S. Participated as an expert panelist in the Federal Trade Commission s Workshop on Debt Collection and Technology Member of the American Bar Association s Estate and Trust Division JD from Lewis and Clark University, Cum Laude, BA, University of Minnesota, Phi Beta Kappa Admitted to practice law in New York, Minnesota, U.S. District Court, District of Minnesota

3 Data and Contact Management Solutions Collection agency focused on specialty revenue cycle solutions Develops and leverages proprietary technologies to deliver innovative solutions to credit grantors and survivors Who we are: For over 18 years, DCM Services (DCMS) has been the premier provider of specialty account recovery solutions. Our customers: Our customer base spans 7 of the 10 largest health systems and +150 others 100% market share from 3 of the top 7. Our focus: Our focus is to provide the best survivor and customer experience by deploying the most brand sensitive estate recovery process. What we offer: Solutions built on state of the art technology to help our clients maximize their estate process. Headquartered in Minneapolis, MN and founded in 1998 Full-time employees: 259

4 Agenda Basic Terminology Your Current Processes The CMS Requirement Defining the CMS Requirement in the Estate and Bankruptcy Context Case Studies Additional Compliance Issues in the Decedent Context Probate Specific Compliance Questions and Answers

5 Basic Terminology

6 What is an estate? Everyone has an estate. An estate consists of the assets and debts someone leaves behind when he or she passes away. What is probate? Probate is the legal process used to administer the estate of the deceased.

7 Your Current Processes

8 What does your organization currently do with its deceased accounts? A. Nothing/write them off B. Use internal resources to try to collect C. Outsource to a non-specialist collection agency or attorney

9 Do you currently look for probated estates? A. Yes B. No

10 Are you currently attempting to locate probated estates and file claims? 68% YES 32% NO

11 What is the biggest challenge you face in dealing with deceased accounts? A. Lack a strategy to deal with this type of account B. Lack the expertise to deal with this type of account C. Resource constraints D. PR/community relations concerns

12 Nearly 100% of respondents indicated they knew that they were not being effective in finding estates and filing claims. See below for the biggest challenges cited. 75% LACK OF INTERNAL EXPERTISE 9% PUBLIC RELATIONS ISSUES 9% LACK OF RESOURCES 4% TIME CONSTRAINTS 4% OTHER

13 The Challenges of an Aging America The Trends The Result The Solution Growth of deceased receivables Estate account recovery strategy that leads to an increased revenue stream Depressed economy Increase in self-pay Aging population By implementing a strategy, organizations will increase revenue and enhance inventory management practices. Soaring end of life costs It is important to have a strategy that addresses this receivable type

14 Medical debt is the number one cause for filing bankruptcy

15 ACA reduced the number of uninsured BUT Patient deductibles and co pays are increasing Many people filing bankruptcy are actually insured

16 63% Of Americans with medical insurance and bill problems report using up savings. 42% took an extra job. 20% of all people with health insurance report struggling with bills while 53% without said the same. Source: New York Times and Kaiser Family Foundation Studies in April 2014; Jan. 2016

17 The CMS requirement

18 What is an allowable Medicare Bad Debt? 42 CFR A bad debt must meet four basic criteria: 1. The debt must be related to covered services and derived from deductible and coinsurance amounts 2. The provider must be able to establish that reasonable collection efforts were made 3. The debt was actually uncollectible when claimed as worthless 4. Sound business judgement established that there was no likelihood of recovery at any time in the future

19 Reasonable Collection Effort To be considered a reasonable collection effort, a provider's effort to collect Medicare deductible and coinsurance amounts must be similar to the effort the provider puts forth to collect comparable amounts from non-medicare patients. It must involve the issuance of a bill on or shortly after discharge or death of the beneficiary to the party responsible for the patient's personal financial obligations. It also includes other actions such as subsequent billings, collection letters and telephone calls or personal contacts with this party which constitute a genuine, rather than a token, collection effort. The provider's collection effort may include using or threatening to use court action to obtain payment. A. Collection Agencies - A provider's collection effort may include the use of a collection agency in addition to or in lieu of subsequent billings, follow-up letters, telephone and personal contacts. Where a collection agency is used, Medicare expects the provider to refer all uncollected patient charges of like amount to the agency without regard to class of patient. The "like amount" requirement may include uncollected charges above a specified minimum amount. Therefore, if a provider refers to a collection agency its uncollected non-medicare patient charges which in amount are comparable to the individual Medicare deductible and coinsurance amounts due the provider from its Medicare patient, Medicare requires the provider to also refer its uncollected Medicare deductible and coinsurance amounts to the collection agency. Where a collection agency is used, the agency's practices may include using or threatening to use court action to obtain payment. B. Documentation Required - The provider's collection effort should be documented in the patient's file by copies of the bill(s), follow-up letters, reports of telephone and personal contact, etc.

20 Defining the Reasonable Collection Efforts in the Estate Context

21 Estates open over time Only nationwide searches truly effective 15-20% of estates open outside the county of last residence

22 Percent of Estates Open Probated Estate Opening Timeline 100% 90% 80% 70% 60% 50% 40% 30% Within twelve months of a date of death 86% of estates have been opened. Probated estates continue to open over time. 20% 10% 0% Months from Date of Death to Estate Open Date

23 Documenting searches Not specifically defined Clearly more than just your word More than the word of a family member Must be verified with the courts

24 Bad Debt Log Checklists Do not include accounts that were claimed in prior years or same year duplicates. Only include bad debt which relates to unpaid deductibles and coinsurance only. Amounts included should be net of any payments received from the beneficiary or other third party payers. Do not include physician Part B professional services or outpatient fee-based services For deceased patients, ensure that the determination that there was no estate available is fully documented. A statement from a surviving family member that there is no estate is not acceptable.

25 Sample guidance on documentation Charity/Indigent Bad Debts Signed application with income supported Testing of income, assets, and liabilities Charity approval follows charity policy No Estate documentation for deceased patients Discharge of Debtor notice for bankruptcy patients Write-off amount not to exceed sliding scale award percentage

26 Defining Reasonable Collection Efforts in the Bankruptcy Context

27 Bankruptcy- the historical approach

28 In house notification

29 Most common: write-off

30 Filing Attempt to file in house Highly manual Lack of resources

31 Better practice brings: Risk mitigation New revenue

32 Bankruptcy identification and claim filings Automated and electronic claim filing procedures on all Ch. 7a s and 13 s Assembly of necessary documents Completion and review of final proof of claim documents Timely filing of claims with the courts Identification of proactive scrubs

33 Claim payment Chapter 13s: 28% - 33% liquidation Chapter 7s with assets:10% - 13% liquidation Expert management

34 Case Studies

35 Small Hospital Case Study Overview: Hospital is a 330-bed healthcare facility in the Midwest. They have a state-of-the-art trauma center and the ability to care for critically injured patients which sets them apart from other area hospitals. Key Facts: Number of beds: 330 Impatient admissions: 16,894 A nationally recognized teaching facility Trends: Implement a strategy to proactively manage our deceased account portfolio and improve recoveries. Key objectives include: Offered immediate improvement in recovery performance, and decrease in search costs and labor Cost effective method to timely identify deceased and estates whenever and wherever they occur Able to implemented quickly and easy to integrate with existing processes with no up front costs Respond to Medicare audit request for documentation of estate searches Challenges: The existing deceased recovery strategy was reactive, time-consuming and expensive. Key challenges include: Identify deceased accounts from existing account portfolio Identify estate from the 3,400+ counties, in a timely manner Manage the complexity of the claim filing process & legal rules Lack internal expertise and resources to manage the process Manual and expensive to support (increasing operating expense)

36 Small Hospital Case Study Solution: Implement a strategy using Probate Finder OnDemand to proactively manage our deceased account portfolio and improve recoveries. Key outcomes include: Offered immediate improvement in recovery performance, and decrease in search costs and labor Cost effective method to timely identify deceased and estates whenever and wherever they occur Able to implemented quickly and easy to integrate with existing processes with no up front costs Resulting method to document estate searches for Medicare Results: Over $1.1MM in claims filed and projected annualized of approximately $300k with an ROI of over 700%

37 Top 10 Health System Overview: A large national health system among the top 10 as measured by the American Hospital Directory in annual net patient revenue. Historically did not conduct estate searches proactively except on very high balances and they did not retain any evidence of even those searches. Occasionally they received notice of an estate administration and would present a claim for payment to an estate if the correct form could be located. They continued to place all of the unpaid deceased accounts on their cost reports. They were audited historically but auditors never asked for proof regarding deceased accounts until recently. Challenges: When the auditors did finally ask, they could not prove they had searched for an estate on the majority of accounts because they had not. Even for those they did search on, they did not retain any proof. Realizing that they had already likely lost millions in otherwise allowable bad debts and would likely continue to lose money in future audits. Solution: Employed a comprehensive estate strategy which employs continuous automated and nationwide estate searches, creates documentation of those searches to receive reimbursement for debts where no estate is located and pass future audits and actually files claims and collects millions annually payment from cases where an estate is located. Results: $63M claims filed to date with annualized revenue projected at $19.4M

38 Bankruptcy case study large academic health system Problem lack of systematic approach missing revenue exposed to risk resources invested in manual process no good way to report or track Solution proactive scrubs in place automated electronic filing added claim supervision addition of well defined process and reporting Results $10MM+ in new claims filed 15K+ new claims Risk of violating the automatic stay and other compliance concerns relieved Reasonable collection efforts in place

39 Additional Estate-Specific Compliance Issues Fraud prevention - significant % fraud coming from transactions/accounts not properly flagged as decedent s Filing deadlines - A proactive decedent identification tool is inherent in CMS requirement because of short filing deadlines days, in many cases HIPAA and state privacy laws - Estate location tool identifies the person with whom you are entitled to communicate and who has a duty to pay claims Survivor experience - Proactive decedent and estate location avoids subjecting survivors to traditional debt collection and unnecessary contact

40 Probate-specific compliance Compliance with state probate codes Timeliness Sufficiency of claim - 4 basic requirements - Additional requirements in some jurisdictions Forms management, 3,450 local court rules

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42 Angela Horn VP of Business Development and Corporate Counsel Phone: