AGENDA. 501 (r) WHAT YOU NEED TO KNOW. 501(r) Guidance Timeline. Who is affected by 501(r) Components of 501(r) Items for consideration.

Transcription

1 501 (r) WHAT YOU NEED TO KNOW Critical Access Hospital Finance Education Series 2016 August 16, 2016 AGENDA 501(r) Guidance Timeline Who is affected by 501(r) Components of 501(r) Items for consideration Contacts 2 1

2 GUIDANCE TIMELINE March 3, 2010 PPACA passed July 2011 preliminary guidance issued in notice (related to Community Health Needs Assessments) June 2012 proposed regulations for policies issued April 2013 proposed regulations for CHNA/IS issued January 2014 notice failure to file guidance December 2014 final regulations issued 3 WHO DOES 501(r) AFFECT? Requirements are applicable for tax-exempt hospitals under IRC 501(c)(3) including government hospitals that have been recognized under 501(c)(3). Required by a state to be licensed, registered, or similarly recognized as a hospital. 4 2

3 WHEN IS 501(r) COMPLIANCE REQUIRED? Effective the first day of the first tax year beginning after December 29, 2015 (all the requirements under 501(r)) January 1, 2016 for December year ends July 1, 2016 for June year ends 5 501(r) OVERVIEW The PPACA Law amends the requirements to qualify as a Section 501(c)(3) by adding subsection (r), Additional Requirements for Charitable Hospitals Hospitals. Section 501(r) contains four requirements involving a community health needs assessment, financial assistance policy, limitation on charges, and billing and collection activities. 6 3

4 501(r) COMPONENTS 501(r)(3) Community Health Needs Assessment (CHNA) and Implementation Strategy 501(r)(4)A & B - Financial assistance policy and Emergency medical policy 501(r)(5) Limitation on charges (AGB) 501(r)(6) Billing and collection Procedures Extraordinary Collection Actions (ECAs) 7 FAILURE TO SATISFY Minor and inadvertent omissions and errors Will not be considered a failure to meet the requirements Good faith effort to comply Error is minor, inadvertent, due to reasonable cause Error is promptly corrected Excusing certain failures Will not be a failure if corrected and disclosed Neither willful nor egregious = errors more than minor but not major Additional Revenue procedures to be issued 8 4

5 FAILURE TO SATISFY (CONT.) Determining whether to revoke 501(c)(3) status IRS has authority to revoke Based on facts and circumstances Considered a failure if willful and deliberate Taxation of noncompliance Hospital operating more than one hospital facility Noncompliant facility may be subject to tax depending on error Noncompliant facility income reported separately on Form 990-T 9 501(r)(3): COMMUNITY HEALTH NEEDS ASSESSMENT (CHNA) Assessment steps include: Defining the community served, Assessing the needs of the community, Acquiring input from community, Documenting the CHNA process, and Making it widely available. 10 5

6 501(r)(3): WIDELY AVAILABLE Community Health Needs Assessment (CHNA) Widely available on the web without charge Conspicuously posted complete and current version On the hospital facility s website or Hospital Organization On a 3 rd party site if conspicuously-displayed link with clear instructions Access, download, view, and print hard copies No special hardware or software required No fee No account or personally identifiable information to access Provide direct website address or URL when asked Paper copies available for inspection without charge upon request Available until two subsequent CHNA s are posted and available Do not have to translate Do not have to proactively publicize in the community (r)(3): IMPLEMENTATION STRATEGY CONTENT Implementation Strategy steps include: Address each significant need identified in the CHNA Approval by Authorized body Plan to Address Hospital s intended action Anticipated impact of action Plan to evaluate impact Identify programs and resourcesrces Plans for any collaboration Ongoing feedback Plan not to Address Brief explanation Resource constraints Lack of expertise Low priority assigned Lack of identified intervention Addressed by others Other info based on facts or circumstances 12 6

7 501(r)(4) REQIREMENTS: FINANCIAL ASSISTANCE POLICY Financial Assistance policy (FAP) Written policy adopted and implemented by governing body Widely publicized Eligibility criteria for financial assistance (Only required to describe - no requirements on specific criteria) Basis for calculating charges (r)(4) REQIREMENTS: FAP Method for applying for financial assistance Actions in event of nonpayment (unless provided in a separate policy) Other 3 rd party sources used to determine eligibility (Must disclose in policy) 14 7

8 501(r)(4) REQIREMENTS: FAP List of any providers delivering emergency or medically necessary care in the hospital and if those providers are covered or not covered by the FAP (Suggest including as appendix) NOTE Physician groups that are separate taxable organizations - 501(r) will NOT apply. Physician groups that are substantially-related entities or disregarded entities, - 501(r) WILL apply (r)(4): WIDELY PUBLICIZED FAP Documents Widely available on the web without charge FAP, FAP application form, and plain language summary (PLS) PLS must include website and physical location where individual can obtain copies of FAP and FAP application form; physical location of hospital facility staff who can provide assistance in filling out FAP application; and how to apply for Financial Assistance. Paper copies available upon request without charge by mail and in public locations (i.e., ED and admissions areas at minimum) Translated into other languages (any language meeting this criteria) 1,000 people or 5% of the community served by the hospital (lesser of two) 16 8

9 501(r)(4): WIDELY PUBLICIZED (CONT.) Notify and inform individuals receiving care by: Offering paper copies of the PLS at intake or during discharge process Written statement on billing invoice that financial assistance is available, telephone number of office, and website location for this info Public display (signage) in public locations of hospital (ED and Admissions at minimum) (r)(4) REQIREMENTS: EMERGENCY MEDICAL CARE POLICY Emergency medical care policy Written policy (adopted and implemented) Hospital must provide, without discrimination, care for emergency medical conditions to individuals regardless of financial eligibility Prohibits hospital from engaging in actions that discourage individuals from seeking emergency medical care 18 9

10 501(r)(5): LIMITATION ON CHARGES/AGB Limitation on charges Hospital organization cannot use gross charges and must limit amount of charges for emergency or medically necessary care to less than amounts generally billed to individuals with insurance covering such care. Amounts Generally Billed (AGB) 2 methods: Look-Back Method; OR Prospective (Medicare or Medicaid) Method 19 LOOK-BACK METHOD Look-Back Method AGB % = Annual Claims Allowed Annual Charges (ER/medically necessary or all medical care services used) Claims Allowed Uses Medicare FFS alone or Medicare FFS together with all private health insurers paying claims to hospital facility AGB % must be calculated at least annually 20 10

11 LOOK-BACK METHOD (CONT.) Multiple AGB % allowed (i.e., inpatient, outpatient, by department) Begin using AGB % by 120 th day after end of 12 month period used 12 months of allowed claims; NOT 12 months based on date of service Recommend starting with this method (more conservative and can be changed) 21 PROSPECTIVE METHOD Prospective Method Set AGB as the amount expected to be paid/ allowed for services under Medicare fee-for-service or Medicaid beneficiary or both Include in FAP if using both and the circumstances that would occur 22 11

12 501(r)(5): GROSS CHARGES Individuals eligible for financial assistance must be charged less than gross charges Any medical care covered under financial assistance policy Billing statements can list gross charges as a starting point Amount expected to pay should be less than the gross charge 23 AGB ITEMS TO REMEMBER AGB discount applies to all FAP-eligible individuals. FAP-eligible is considered charged only the amount he/she is responsible for paying after all deductions and discounts (including discounts available under the FAP) have been applied less any amounts reimbursed by insurers. AGB represents the maximum amount a hospital facility can charge, but final regulations allow a facility to charge less than AGB. AGB can be changed any time, but must update the FAP to describe the method when doing so. Medically necessary care definition based on state law, generally accepted standards of medicine in the community, or an examining physician s determination

13 AGB ITEMS TO REMEMBER (CONT.) If an individual doesn t meet the criteria of the FAP, the individual isn t eligible for financial assistance and 501(r) doesn t apply. Self-pay doesn t also mean eligible for financial assistance in most cases. Self-pay patients must apply for financial assistance to be eligible. Only those discounts specified in the hospital s FAP (subject to AGB limitation) may be reported as financial assistance on Schedule H of Form (r)(6) REQUIREMENTS Billing and collection procedures May not engage in extraordinary collection actions (ECAs) before organization has made reasonable efforts to determine whether individual is eligible for assistance

14 501(r)(6): WHAT ARE ECAs? Extraordinary Collection Actions (ECAs) Selling individual s id debt to a 3 rd party Reporting adverse information to a consumer credit reporting agency or bureau Deferring/denying/requiring payment before providing medically necessary care Lien, Foreclose, Seize an individual s bank account, Arrest, Writ of body attachment (issue warrant for arrest); and Garnish wages other legal action (r)(6) REQUIREMENTS Reasonable Effort to Determine Eligibility Use 3 rd party info or prior FAP eligibility ibili to make a presumptive determination Notifies the individual about the FAP before ECA is initiated (120 days from after first billing statement, and notice sent 30 days prior regarding ECA) Notifies individual about incomplete application submitted during application period (now 240 days after first billing statement), how to complete the application, and reasonable opportunity to complete 28 14

15 ACTION ITEMS FOR CONSIDERATION If 12/31 year end, then all components must be completed now (1/1/16). If 6/30 year end, must be compliant by 7/1/16. Have they completed a CHNA? (required every 3 years) Do they have their FAP policy, FAP application, and PLS posted online and in compliance? Remember definition of widely publicized AGB calculated and in use Billing and collection activity requirements 29 QUESTIONS? 30 15

16 CONTACTS Maddie Gookins, MLT (ASCP), COC Senior Manager Blue & Co., LLC Lindsey Ladyman Senior Consultant Blue & Co., LLC