Your Hospital s Financial Assistance Policy (FAP) Make Certain it Complies with the IRS 501(r) Requirements

Transcription

1 Your Hospital s Financial Assistance Policy (FAP) Make Certain it Complies with the IRS 501(r) Requirements HCCA Compliance Institute 2015 Lake Buena Vista, Florida Monday, April 20, 2015 Session 310 3:00 4:00 PM Objectives Overview of the IRS regulations, required policies, and effective dates. Identify elements required in the financial assistance policy, plain language document, emergency medical care policy and related collection procedures. Discuss challenges of the FAP. 1

2 Background Charitable Hospitals Tax exempt under section 501 (c)(3) of the Internal Revenue Code No income tax in lieu of charity provided to uninsured and underinsured individuals Report charity annually on the 990, Schedule H Concerns raised with members of Congress and legislators Should hospitals be tax exempt are they providing enough charity care? Are they providing adequate community benefit to offset the taxes they re not paying? Are only uninsured patients being charged gross charges? The Patient Protection and Affordable Care Act March 23, 2010 Section 9007 Additional requirements for charitable hospitals Revises Section 501 to include 501(r) Financial assistance and emergency care policies More later Community Health Needs Assessment Every three years Implementation strategy Effective years beginning after March 23, 2012 Excise tax for failure to meet - $50,000 Guidance would be forthcoming Questions on hospitals 990 Schedule H 2

3 Affordable Care Act Requirements Section 9007 To qualify as a charitable 501(c)(3) hospital, section 501 of the IRS code has been redesigned to require the following: A meets the community health needs assessment requirements B meets the financial assistance policy requirements C meets the requirement on charges D meets the billing and collection requirement Financial Assistance Policy (FAP) Written financial assistance policy that includes eligibility criteria and whether such assistance includes free or discounted care, the basis for calculating amounts charged to patients, the method for applying for financial assistance, either within the FAP or as a separate billing and collection policy the actions the organization may take in the event of nonpayment, including collections action and reporting to credit agencies, and measures to widely publicize the policy within the community to be served by the organization. 3

4 Financial Assistance Policy (FAP) Written emergency care policy requiring the organization to provide, without discrimination, care for emergency medical conditions to individuals regardless of their eligibility under the financial assistance policy Limitation on Charges To FAP Eligible Individuals limits amounts charged for emergency or other medically necessary care provided to individual eligible for assistance under the financial assistance policy to not more than the amounts generally billed to individuals who have insurance covering such care prohibits the use of gross charges 4

5 Billing and Collection Requirements does not engage in extraordinary collection actions before the organization has made reasonable efforts to determine whether the individual is eligible for assistance under the financial assistance policy Regulatory Authority and Guidance The Secretary shall issue such regulations as guidance as may be necessary to carry out the provisions in this subsection, including guidance relating to what constitutes reasonable efforts to determine the eligibility of a patient under a financial assistance policy March 2010December

6 Three Sets of Regulations 1. ACA March 23, Federal Register June 26, 2012 Guidelines for implementing the ACA provisions Guidance would be forthcoming IRS Notice January 2014 Hospitals may rely on June 2012 and April 2013 (CHNA only) information until additional guidance is developed 3. Federal Register regulations Issued December 31, 2014 Effective December 29, 2014 Effective Dates the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. March should be in place regulations Allow reliance on 2012 proposed regulations First taxable year beginning after December 29,

7 Financial Assistance Policy (FAP) ACA Requirements Written financial assistance policy that includes Eligibility criteria and whether such assistance includes free or discounted care Basis for calculating amounts charged Method for applying for financial assistance, Actions the organization may take in the event of nonpayment, including collections action and reporting to credit agencies, and Measures to widely publicize the policy within the community FAP - General June 2012 Applies to emergency and medically necessary care December 2014 No change Added - list providers, other than the hospital itself, covered by the hospital s FAP and which are not 7

8 FAP Eligibility Criteria Financial assistance available under the FAP and eligibility criteria Must specify amount (gross charges) to which discounts applied if applicable Must state following determination of FAP-eligibility individual will not be charge more than AGB for emergency or other medically necessary care Adds -Disclose discounts available under the FAP Not necessarily all discounts No specific discounts required No specific eligibility requirements Only FAP discounts are considered a community benefit for 501(c)(3) And reported on 990 FAP: How to Apply for Financial Assistance Include (in FAP or FAP App) Required documentation Contact information for help with process May not deny assistance based on information not specifically requested by FAP or FAP App May accept alternative documentation Added: May grant financial assistance without complete FAP Does not have to describe in FAP Ex. Patient attestation May use other reliable information to determine FAP-eligibility ID in policy what & how used 8

9 Actions if Nonpayment - General Must describe in either FAP or separate billing and collections policy Including extraordinary collection actions If separate policy, FAP must reference billing and collection policy & how get a copy Readily available website or free paper copy No change from proposed regulations Widely Publicized FAP, FAP App & Plain Language Brochure Available on website Available in public places Free and upon request Notify/inform visitors with conspicuous public displays Notify/inform residents of community served hospital likely to need financial assistance FAP must list measures taken to make documents widely publicized Plain language brochure Primarily the same Available in public places Paper copies available upon request Emergency room and admissions areas Must provide paper copy unless individual prefers electronic Notify/inform visitors of FAP Noticeable size where visitors likely to see it Provide to patients before discharge and will billing statement Phone number & website for info & copy Offer plain language brochure as part of intake/discharge No longer needs to list measures taken to widely publicize the policy 9

10 Translated Documents Translated into languages spoken by 10% of the members of the community served by the hospital Financial Assistance Policy Emergency Care Policy Plain Language Summary Same lowed threshold for translation to 5% or 1,000 individuals May use any reasonable method to determine Limited English Proficient (LEP) populations Clarified Billing & Collection policy if separate Plain Language Brochure Summary of FAP Included with all billing statements Identify how to get a copy of FAP: Web site and physical location Phone number & physical location w/room number of staff with FAP information Name of any agencies that hospital identified as sources of assistance with FAP apps Only required before notice of Extraordinary Collection Activities (ECA) Contact information for assistance Hospital or outside agency Physical department location & phone # for FAP No room number or staff name How to apply for assistance 10

11 Emergency Care Policy Treat Regardless of FAP-Eligibility Requires hospitals to provide care for emergency medical conditions as required under CMS standards and certification that includes EMTALA Prohibits hospital from actions that discourage individuals from seeking emergency medical care either in emergency room or other hospital areas Ex: require payment before care or debt collection Same as proposed Made clear that debt collection activities only refer to emergency care May be part of FAP, part of existing emergency care policy (such as EMTALA), or separate policy Limitation on Charges Limited to Amounts Generally Billed (AGB) to Those with Insurance Choice of two methods Look-back last 12 months Medicare FFS Medicare FFS & Commercial Prospective expected Medicare payments Determine annually Sum of expected charges for emergency and medically necessary care/sum of gross charges for claims Charges (Insurance & Individual) Same as proposed with Medicaid added as an option for look-back and prospective methods Alone, with Medicare, with Medicare and commercial insurers (look-back only) May change method during the year FAP would need to be updated 11

12 AGB FAP includes AGB calculation method (lookback or prospective) AGB percentage, how calculated or how get this info in writing free of charge No changes Clarified Insured FAP-eligible Individual can t be charged more than AGB Individual & insurance payment may be more than AGB Not FAP-eligible - may be charged gross charges ECAs ECAs = actions taken against an individual to obtain payment that require a legal or judicial process, involve selling debt to another party, or reporting adverse information to a consumer credit reporting agency or credit bureau. No change 12

13 Billing and Collections Policy Must make reasonable attempt to determine FAP eligibility before beginning extraordinary collection activities (ECAs) Process & timeframes for collecting payments Includes reasonable efforts to determine FAP eligibility Include office/department/committee that determine reasonable effort was made to determine FAP-eligibility and may now engage in extraordinary collection activities Same as proposed Clarified does not require hospital to determine FAPeligibility before engaging in ECAs against private/public/ third party insurer. HOSPITAL ECAs Specific Examples Reports to credit agencies Describe in FAP or billing and collection policies Liens Clarifies that liens against third parties are not ECAs Sale of Debt Not an ECA if legal, written document with these terms: 1. No ECAs to obtain payment 2. Limit on interest rate (set by IRS) 3. Debt must be returnable to hospital if FAP-eligibility determined 4. If debt not returned to hospital, collector only collects on amount eligible under FAP If 4 terms met, may sell debt before eligibility determined 13

14 Reasonable Efforts to Determine FAP- Eligibility Notification Notification Period between date care provided and 120th day after the first billing statement for care Distribute plain language summary of the FAP and offer FAP App before discharge Include plain language summary with at least three billing statements and all written billing communications during notification period Clarified that 120- and 240- day periods start from date first post-discharge billing statement is provided Revised distribution of plain language brochure Include in one communication post discharge Only if intend to engage in ECAs (include with ECA notification) Reasonable Efforts to Determine FAP- Eligibility Notification Period Continued - No ECAs Inform about FAP during oral communications during notification period Provide at least one written notices about ECAs that may be taken if FAP not submitted or amount paid by no earlier than end of notification period. Must be provided at least 30 days before deadline in notice Application Period Up to 240 days after billing statement complete FAP app - stop ECAs If FAP-eligible return and payments and revers ECAs All statements must include FAP notice Oral communications focus on those hospital is likely to engage in ECAs, not all patients ECA notification to those hospital intend to initiate ECAs Only ECAs likely to initiate (not all) Send plain language brochure 240 days post discharge bill = reasonable time to determine FAP eligibility ECA may start after 120 days May continue to accept FAP applications but not required 14

15 Oral Notification of FAP Oral notification of FAP required with all communication Let me tell you all about our FAP! Changed to reasonable effort to orally notify about FAP and FAP application assistance at least 30 days before initiation of ECAs. Written ECA Notice At least 30 days before initiating ECA Disclose all ECAs that may be initiated Same timing Disclose only ECAs planning to initiate Document ECA notification Expected ECAs Will need to report reasonable efforts to determine FAP eligibility before initiating ECAs on

16 ECAs and Incomplete Applications Incomplete applications after notification period Suspend ECAs for reasonable period until hospital determines FAP-eligibility If eligible, reverse ECAs Only applies to care related to this application (not previous care and ECAs) Reasonable period is not the full 240 days Provide notification about potential ECAs and plain language summary Must include contact information for assistance with FAP application process: may be hospital department or outside agency FAP- Eligible Provide with billing statement Indicates amount owed Shows or describes how to get the AGB for care How facility determined amount owed Refund excess payments Billing statement of amount owed Written notification of eligibility for free care Does not need to be a billing statement No requirement to provide AGB detail Reiterated only refund excess payments related to this care/application Clarified refunds are to individual (not insurer) and amount individual responsible for paying 16

17 Presumptive Eligibility May be for 100% or less assistance If less than 100% eligibility, considered reasonable effort to determine eligibility if - 1. Notify individual basis for presumptive determination and how to apply for more assistance 2. Provide reasonable time to apply for additional assistance before beginning ECAs on amount owed 3. Process FAP application by the later of the end of the application period or reasonable time period given in 2. No presumptive FAP-ineligibility Send FAP plain language brochure May use outside sources to predict eligibility Challenges Determining eligibility Limits geographically Time period covered Determining AGB Method: Look-back, prospective Multiple rates? All hospital services Inpatient / outpatient By department Multiple hospitals same methods? Computer system abilities/limitations 17

18 More Challenges Explaining to patients Different hospitals / different rates / different processes Staff education Talking points / scripts Different AGB percentages for different hospitals in the community Within your organization or external More confusing to the public Financial assistance provided to the community Will AGB affect total dollars? Other Tidbits Hospital must establish the FAP documents Board or authorized body must adopt policies and hospital must implement FAP, Billing & Collection, Emergency Care Billing & Collection may be part of FAP Emergency Care may be part of EMTALA or FAP Hospital facility not bricks and mortar Buildings licensed under a single state license Multiple hospitals with same ownership may have same policies Must apply to hospital and clearly state hospitals covered Hospitals define medically necessary care AGB may be changed as often as desired Must be done annually Related forms must be revised to reflect updated AGB 18

19 More Tidbits Individual determined is FAP-eligible after collection activities started Refund any payments more than required to pay that are over $5 Hospitals held accountable for ECA actions of third parties collecting debt on its behalf or to which it sells debt. If third party takes steps to determine FAP-eligibility treated as if the hospital took the steps for purposes of reasonable eligibility efforts Even More Tidbits Notifications may be by if individual prefers electronic communication Date provided = Date written communication mailed Date sent electronically Date delivered by hand Filing a claim in a bankruptcy proceeding is not an ECA FAP-eligibility determination no specific time period in a timely manner May delay determination until after determination of Medicaid eligibility 19

20 QUESTIONS? Presenter and Links Presenter Jodie R. Caplan, Senior Compliance Consultant Carilion Clinic Links Original ACA Regulations: Section 9007 Additional Requirements for Charitable Hospitals 111publ148.pdf Regulations: June Regulations: December