Operationalizing HRSA s Sliding Fee Discount Program Requirements Marcie H. Zakheim Partner
DISCLAIMER This training has been prepared by the attorneys of Feldesman Tucker Leifer Fidell LLP. The opinions expressed in these materials are solely their views and not the views of any other organization. The materials are being issued with the understanding that the authors are not engaged in rendering legal, financial or other professional services. If legal or financial advice or other expert assistance is required, the services of a competent professional should be sought. 2
PRESENTER: MARCIE ZAKHEIM Partner at Feldesman Tucker Leifer Fidell, specializing in, among other things, federal grants and grant-related requirements (in particular the requirements of and related to Section 330 of the Public Health Service Act) and nonprofit corporation law; Counsel to National Association of Community Health Centers, and numerous Primary Care Associations and health centers nationwide for 18 years; and Provides advice and technical assistance services on compliance with federal rules and requirements related to the operation, administration and governance of health centers and health center consortia; assists with development of federal grant applications; and analyzes and provides comments/advice on legislation, regulations and policies impacting health centers and the health care industry in general. Contact Information: Mzakheim@FTLF.com or 202.466.8960 3
AGENDA I. Overview and Introduction II. Establishing Your Fee Schedule III. Establishing Your Sliding Fee Discount Schedule IV. Show Me the Money Establishing Your Billing and Collection Policies 4
Overview & Introduction 5
WHERE DO THESE RULES COME FROM? Health center statute [42 USC 254b(k)(3)(F) & G] and regulations [42 CFR 51c.303(f) & (g)] Schedule of fees consistent with locally prevailing rates or charges and designed to cover reasonable costs of operation Corresponding schedule of discounts Adjusted on the basis of the patient's ability to pay Full discount for individuals and families with annual incomes at or below 100% of Federal Poverty Guidelines (nominal fee as long as it is consistent with project goals) No discount for individuals and families with annual incomes more than than twice FPG (i.e., greater than 200%) 6
WHERE DO THESE RULES COME FROM? Health center statute [42 USC 254b(k)(3)(F) & G] and regulations [42 CFR 51c.303(f) & (g)] Reasonable efforts (including systems for eligibility determination, billing and collection) to collect: Payments from patients in accordance with fee and discount schedules; and Appropriate reimbursement under Medicare, Medicaid, CHIP and any other public assistance program or private health insurance program without application of discounts Assure no patient will be denied health care services due to an individual's inability to pay and reduce or waive fees as necessary to ensure such access 7
SFDP POLICY Final PIN 2014-02 issued September 22, 2014 was effective upon issuance Primary resource for HRSA s sliding fee discount program (SFDP) policy, superseding all prior guidance on the same subject Does not supersede billing requirements under Medicaid, Medicare or other programs (including other grant programs) Does not supersede any requirements specified in applicable Funding Opportunity Announcements or Notices of Awards 8
SFDP POLICY Applies to all Section 330-funded health centers (including sub-recipients and special population only grantees) as well as FQHC look-alike entities, and to all patients served by the health center Can consider target population s unique characteristics and specific barriers to care in establishing and evaluating operating procedures What s the difference?? policy reflects the board s priorities and direction and procedure is how the policy is implemented Applies only to activities provided within the health center s scope of project 9
SFDP POLICY Main goal = improve access by minimizing financial barriers to care BUT also have to maximize revenue balance is key! SFDP is a total program with several elements including Structure of the fee and discount schedule, and nominal fee Process to determine eligibility for the SFDP Application of SFDP to in-scope services, referral arrangements, and service-related supplies and equipment Billing and collection policies (including reductions to patient cost-sharing) as applicable, payment incentive policies and policies to discharge of patients for refusal to pay 10
DISTINCTION FROM PREVIOUS GUIDANCE Beyond basic structural requirements, SFDP policy affords health centers a lot of flexibility to determine what s best for the center and its patients and community CAUTION with greater flexibility comes greater responsibility / accountability!!! Document all decision-making Always be able to demonstrate that choices / decisions maintain/further patient access and do not result in barriers to care Involve the board to greatest extent possible 11
OPERATIONAL IMPLICATIONS Increases depth and breadth of policies and procedures and expands level of detail Requires greater level of coordination among various health center functional areas (finance, administration, front desk operations) Potential practice management system limitations and configuration hurdles (interfaces, EMR templates) Must ensure appropriate training for providers and coders to accurately capture visit Increased staffing and/or enhanced systems?? Increased costs?? 12
IT ALL STARTS WITH THE BOARD Full board approval (and periodic review) of all required SFDP policies is primary mechanism to ensure that the SFDP remains patient centered, improves access to care and assures that no patient is denied services due to inability to pay Eligibility criteria, including definitions of family/income and frequency of re-evaluation Documentation and verification requirements Structure of the Sliding Fee Discount Schedule (SFDS) and as applicable, nominal fee Billing and collection policies Policies to waive/reduce fees 13
IT ALL STARTS WITH THE BOARD Board does not have to approve supporting operating procedures that implement these policies, but should get feedback as part of the board s evaluation responsibility Board should review evaluations of the SFDP (e.g., patient satisfaction surveys, focus groups, collection rates) and update policies or direct the CEO as appropriate 14
Establishing Your Fee Schedule 15
STRUCTURE OF THE FEE SCHEDULE Fee schedule must address all in-scope services (required and additional) and be used as the basis for seeking payment from patients as well as third party payers Fees must be set to cover reasonable costs and must be consistent with locally prevailing rates or charges for the service Key question how do we do balance both? 16
HOW TO DEVELOP YOUR FEE SCHEDULE Step #1: Determine services that will have distinct fees Can combine certain services into single fee (such as services with related supplies, lab), if consistent with prevailing standards of care Can use global fee for services that require multiple visits (such as prenatal care) May include distinct fees for non-service in-scope elements (such as outreach) if they are typically reimbursed separately Third Party and Commercial Payers review contracts and set charge schedule to align with costs mindful of contract reimbursement terms 17
HOW TO DEVELOP YOUR FEE SCHEDULE Step #2: Determine actual costs of providing required and additional services included in scope Step #3: Consider locally prevailing rates for these services Look at charges of other community providers for the same or similar services (can use similarly situated communities if no comparable providers in center s community) Sources may include Medicare, Medicaid, private providers, or commercial sources Document that you have conducted this review! 18
COSTS V. PREVAILING CHARGES Relative weight given to reasonable costs and locally prevailing charges may vary depending on the situation of the health center For example, new health centers may rely more heavily on locally prevailing charges until they have a reliable determination of their own actual costs of operations On the other hand, if prevailing charges/rates are lower than costs, to remain competitive may need to put greater weight on prevailing rates than costs 19
COSTS V. PREVAILING CHARGES General rule of thumb : except under exceptional circumstances, should always look at and try to cover costs first All health centers must adjust fees, as appropriate, based on regular cost analyses, as well as changes in the local health care market Be creative may be able to bundle certain services to balance costs and competition 20
Establishing Your Sliding Fee Discount Schedule 21
SLIDING FEE DISCOUNT SCHEDULE After developing fee schedule, time to establish the sliding fee discount schedule (SFDS) based on ability to pay Purpose to address financial barriers (as opposed to fee schedule, which covers costs) Goal ensure that uniform and reasonable fees and discounts are consistently applied to all patients Frequency should be reviewed/revised at least annually to reflect annual update to the Federal Poverty Guidelines (FPG) and to ensure effectiveness 22
STRUCTURE OF THE SFDS SFDS must have at least three discount pay classes between 101% - 200% of Federal Poverty Level (FPL) that are tied to gradations in income levels Flexibility to determine number of pay classes and types of discounts (i.e., can be % of fee or flat / fixed fee for each class) as long as not barrier to care If using different SFDS for distinct types/categories of services (e,g,, medical, behavioral health, dental), can have different # of pay classes / types of discounts for each Multiple SFDS among different sites? NO 23
STRUCTURE OF THE SFDS No discounts for patients with annual incomes above 200% FPL If receiving non-330 funds that require discounts above 200%, may reduce patient payments accordingly and apply those other funds to make the center whole Query what if the terms and conditions of other funds do not require discounts above 200%? Query what about excess program income? Can you use EPI to subsidize care? 24
STRUCTURE OF NOMINAL FEE No more than a nominal fee for patients at or below 100% FPG Nominal fee is not required requirement is full discount but health center board can elect to charge nominal fee if not a barrier to care Nominal fee must be less than the fee paid by patient in lowest rung of SFDS 25
STRUCTURE OF NOMINAL FEE Nominal is defined as a flat fee that does not reflect the true value of the service and is considered nominal from patients perspective examples include Patient surveys Patient board members Co-payments for public insurance program for low income individuals Nominal fee is not a payment threshold, minimum charge/fee or co-payment language matters (do not refer to minimum fee in policy/procedure) 26
ELIGIBILITY VERIFICATION Income and family size are the sole factors in determining eligibility for SFDP no exceptions! Must assess all patients (need this for UDS purposes) Cannot consider other factors (such as insurance status or population type) in eligibility determination, BUT can consider unique characteristics of target population (e.g., HCH) and service area (e.g., high cost of living) in developing supporting operating policies and procedures Cannot use asset or net worth (combining assets and income) tests 27
ELIGIBILITY VERIFICATION Board must define income and family size and the necessary documentation include definitions in SFDP policy Flexibility, as long as no barrier to care Income can be defined using / adapting definitions from other sources, such as Census Bureau, IRS, other federal programs Family size can include individuals not living with patient but supported by patient s income Self-declaration? Can have full self-attestation (no limitations) v. partial selfattestation (only good for first visit) v. no self-attestation Up to individual health center and its board 28
ELIGIBILITY VERIFICATION Cannot require patient to apply and be turned down for insurance or related third party coverage before offering SFDP HOWEVER, If a patient is informed about availability of SFDS and chooses not to provide required eligibility verification information, may charge the patient full fee 29
ELIGIBILITY VERIFICATION Process must be efficient, respectful and culturally appropriate eligibility verification process should not present a barrier How much information do we need on the eligibility verification form? Should we ask for social security # and/or insurance status? Why? When in doubt simplify! And always document the process and assess periodically for compliance and effectiveness Patient s eligibility should be updated at least annually or when patient s circumstances change, whichever comes first 30
SERVICES WITHIN SCOPE OF PROJECT Applies to all services furnished within scope of project for which a charge has been established All required and additional services listed on Form 5A in any column (I, II, and III) Type of service or mode of delivery is irrelevant for application of the SFDP, provided that the service is in-scope Can have different SFDS / nominal fees for distinct services/modes of delivery, as long as each meets structural requirements and is applied uniformly to similarly situated patients 31
REFERRAL ARRANGEMENTS Services provided through in-scope referral arrangements (Form 5A, Column III) Must be offered based on discount schedule consistent with SFDS / nominal fee OR Health center supports the cost of care by paying the referral provider the difference between the provider s charge and what the patients should pay under discount schedule 32
REFERRAL ARRANGEMENTS Referral providers SFDS does not have to mirror the center s SFDS, provided that it: Meets the structural requirements in the PIN Is applied uniformly to similarly situated patients Takes into consideration patient access Referral provider can offer deeper discounts DOES NOT APPLY TO REFERRAL ARRANGEMENTS NOT LISTED ON FORM 5A 33
REFERRAL ARRANGEMENTS Outstanding questions: In meet the structural requirements in the PIN, does the referral provider s SFDS have to include at least 3 tiers, etc., or just conform to eligibility requirements set forth in regulation? What about referral providers with their own charity care / indigent care policies if those policies apply equally to all individuals earning incomes at or below 200% FPL, is that sufficient? Same as above only the charity care policy is established by State law (such as indigent care pools)? 34
SERVICE-RELATED SUPPLIES & EQUIPMENT Service-related supplies and equipment charged separate from the underlying service (e.g., dentures, crowns) can be discounted under a structure different from SFDP Applies to supplies and equipment related to but not included in the underlying service as part of prevailing standards of care Does not apply to general diagnostic lab services only lab charges associated with supplies/equipment Charge should be less than prevailing charge (should offer some discount), but can be higher than normal discount (such as recoupment of costs) 35
SERVICE-RELATED SUPPLIES & EQUIPMENT Service-related supplies and equipment (cont.) Should include availability of waivers / payment reductions / payment plans to ensure access (even if requiring a portion of payment in advance of service) Must inform patient prior to providing service that the supplies / equipment will be charged separately and what that charge will be (and if payment plans are available, what those are) 36
SERVICE-RELATED SUPPLIES & EQUIPMENT: RESTORATIVE DENTAL EXAMPLE Professional services charged based on regular SFDS and nominal fee for that service SFDS and nominal fee can be different from medical services and preventive dental services as long as they meet all structural requirements, are applied to all patients uniformly, and do not create barriers to care Supplies/equipment (dentures, crowns) can be charged based on cost recoupment Price should reflect a discount from locally prevailing charges Must establish procedures to reduce payments or provide payment plans as necessary to ensure access Query can you require payment in advance of service? (see billing and collection slides) 37
Show Me the Money: Billing and Collection Policies 38
BILLING AND COLLECTION POLICIES Must maximize revenue from public and private third party payers must make every reasonable effort to collect such payments without application of discounts Must fully charge all third-party payors Cannot require patients to enroll in insurance but educate them of benefits!! Ensure compliance with FQHC Medicare and Medicaid guidelines and maximizing rates 39
BILLING AND COLLECTION POLICIES Must make reasonable efforts to bill and collect payments from patients Billing and collection policies and procedures cannot become barrier to care or result in denial of care due to inability to pay Reasonable efforts may vary based on elements unique to the health center (such as its target population and location) General community versus transient populations Rural / sparsely populated versus city / urban 40
BILLING AND COLLECTION POLICIES Collection procedures can include Encouraging up-front payment (partial or for costs of supplies / equipment, full) at time of service (but cannot deny care if patient does not have payment at time of service) Follow-up letters and phone calls Requiring patients with overdue balances to speak with financial counselor prior to next visit (as long as care is not denied) Establishing grace periods and / or payment plans Query should collection procedures be different for nominal fee patients?? 41
PATIENT COST-SHARING Patients in plans with high deductible and co-pay that were previously uninsured and meet poverty guidelines what kind of discount should you offer? Not required to offer full slide to insured patients; however, if patient cost-sharing amount is more than he/she would have paid as an uninsured individual (based on his/her SFDS pay class), at a minimum, must reduce cost-sharing amount to applicable SFDS pay class amount (subject to legal/contractual limitations) 42
PATIENT COST-SHARING Permitted but not required to: Discount if cost-sharing does not exceed SFDS pay class Apply a full slide to cost-sharing Provided that all similarly situated patients are treated uniformly 43
PATIENT COST-SHARING Example: Patient X has a co-payment of $50 The fee schedule indicates that the charge for the service received by Patient X is $100 Based on eligibility process, Patient X would qualify for SFDP and Patient X s SFDS pay class would provide for 75% discount (in this case, $100 - $75 = $25 payment) Since Patient X s payment under SFDS would be $25, at a minimum, co-payment must be reduced to $25 (subject to contractual / legal limitations) 44
PATIENT COST-SHARING Outstanding questions If a particular plan prohibits discounting costsharing, can you offer discounts on the costsharing amounts charged by other plans? How is this fair? How do account for this discount? Is it included under SFDS amounts or other adjustments? Does your current practice management system have the capacity for these determinations? Can you use EPI or other funds to subsidize costsharing for patients earing above 200% FPL? 45
WAIVING PATIENT CHARGES Must establish board-approved policies and procedures that identify circumstances to waive or reduce fees to ensure access Must apply consistently and uniformly based on the defined objective criteria (such as documentation of financial need that does not fit into the SFDS) To avoid inconsistency and arbitrary decision, define who has authority to make determinations and do not deviate Apply to patient balances under both SFDP and full fee (no distinction) 46
PAYMENT INCENTIVES May establish board-approved policies to incentive payment (such as cash/prompt pay discounts) Must be available to all patients equally regardless of SFDS pay class Query does this include patients charged based on SFDS / nominal fee? PIN indicates yes need further clarification 47
DISCHARGING PATIENTS May discharge patients for refusal to pay only after reasonable efforts have been made to secure payments and/or bill for amounts owed to the health center for services provided must establish What constitutes refusal to pay objective criteria only and appearances should not count Individual considerations in making such determinations Collection efforts to be taken, including grace periods, payment plans, meetings with financial counselors and document all such efforts Board must approve patient discharge policies 48
DISCHARGING PATIENTS May establish related policies for determining how and when patients may be permitted to rejoin the regular practice at a future date Remember to consult private counsel regarding state requirements (such as patient abandonment laws) and other obligations (contracts, professional licensure) that may arise PATIENT DISCHARGE SHOULD BE LAST RESORT! 49
Marcie H. Zakheim, Esq. Mzakheim@FTLF.com Feldesman Tucker Leifer Fidell LLP 1129 20 th Street N.W. Suite 400 Washington, D.C. 20036 (202) 466-8960 50