Presented by: Marie Murphy Manager, Health Care Revenue Cycle Consulting (r) Regulations and Financial Assistance Policies

Agenda 501(r) Background Definitions Financial Assistance Policies Limitations on Charges Billing and Collections

501(r) Background The Patient Protection and Affordable Care Act requires hospitals under §501(c)(3) to meet requirements to maintain tax exempt status Community Health Needs Assessment (CHNA) Financial Assistance (FAP) and Emergency Care Policies Limitations on Charges Billing and Collections Policies and Practices

501(r) Background Proposed Regulations issued on June 22, 2012 to provide guidance on: Financial Assistance and Emergency Care Policies Limitations on Charges Billing and Collection Policies and Practices Proposed Regulations issued on April 13, 2013 to provide guidance on: Community Health Needs Assessments Consequences for failing to meet requirements Final Regulations issued December 29, 2014

501(r) Background Compliance with 501(r) law required for tax years beginning after March 23, 2010 Regulations provide guidelines for interpreting the law Must be in compliance with final regulations for tax years beginning after December 30, 2015

501(r) Background Failure to meet requirements results in loss of tax exempt status under 501(c)(3) for the noncompliant hospital facility Exceptions for minor omissions and errors that are inadvertent and due to reasonable cause Requires correction and disclosure

501(r) Background Applies to a Hospital Organization Organization that is recognized (or seeks to be recognized) under IRC §501(c)(3) that operates one or more hospital facilities Must meet the rules separately with respect to each hospital facility Includes governmental hospital with dual status Confirm 501(c)(3) status by reviewing Master File on IRS website

501(r) Background Hospital Facility State licensed, registered, or similarly recognized as a hospital: Multiple buildings operated under a single state license are considered a single hospital facility Does not include a facility outside the US

501(r) Background Operating a Hospital Facility Through organization own employees or contracting out to another organization Sole member or owner of a disregarded entity that operates a hospital Ownership (directly or indirectly) of a capital or profits interest in an entity treated as a partnership that operates a hospital unless: Organization does not have control and treats income from partnership as unrelated business income Partnership operated for educational and scientific purposes and has not engaged primarily in operation of hospital

Financial Assistance Policy-Statute Policy must be in writing and include: Eligibility criteria for financial assistance and whether such assistance includes free or discounted care The basis for calculating amounts charged to patients The method for applying for financial assistance If the hospital organization does not have a separate billing and collections policy, the actions the hospital may take in the event of nonpayment Measures to widely publicize the policy within the community served by the hospital facility

Financial Assistance Policy Requirements Applies to all emergency and medically necessary care provided by the facility and any partnership, disregarded entity that provides care in the hospital facility Policy must be widely publicized In addition to requirements under the Code, must include: Information obtained from sources other than the individual and whether and how hospital uses prior FAP-eligibility determinations List of providers, other than hospital, delivering emergency or other medically necessary care and whether they are covered under the FAP

Eligibility Criteria and Basis for Calculating Financial assistance available, including discounts and free care (under the FAP) and the amounts to which discounts will apply All eligibility criteria that an individual must satisfy to receive assistance Method used to determine the amount generally billed (AGB) Percentage of discount and how calculated or How to obtain information in writing Indication that once eligible for financial assistance, may not be charged more than AGB

Method for Applying for Assistance Describe how an individual applies for financial assistance FAP or FAP application must include a list of any required information or documentation to be submitted with the application Provide contact information (telephone and physical location) for resource who can assist with the application process Hospital office or department Nonprofit or government agency

Actions Taken for Nonpayment Action the hospital (or authorized party) may take relating to obtaining payment including extraordinary collection actions (ECAs) Process and time frame used to determine if an individual is eligible for financial assistance Who in the organization is responsible for determining if reasonable efforts have been made to assess the patient’s eligibility so collection actions may begin If information is described in a separate billing and collection policy Indicate how members of the public may obtain a free copy of this separate policy

Widely Publicizing the FAP Post the FAP, FAP application, and plain language summary on facility, hospital, or other website Hospital website must provide link to other website along with clear instructions for accessing website Must not require special hardware or software or require a fee to download or creating an account with personal information Make paper copies of the FAP, FAP application, and plain language summary available upon request and free of charge by mail and in the hospital emergency room and admissions areas

Widely Publicizing the FAP Notify and inform those members of the community most likely to require assistance Notify and inform visitors and patients Offer a copy of the plain language summary as part of the intake or discharge process Include conspicuous written notice on all billing statements with telephone number of department to provide information and website address where copies can be obtained Provide conspicuous public display (reasonably calculated to attract attention) to notify patients about FAP availability in emergency room and admissions areas

Accessibility to Non-English Speakers Must translate FAP, FAP application, and plain language summary into the primary language spoken by populations of limited English proficiency Language group made up of the lesser of 1,000 individuals or 5% of the community served May use any reasonable method to calculate population

Plain Language Summary Brief description of eligibility requirement and assistance offered Brief summary of how to apply for assistance Web site address and physical locations to obtain FAP and application form Instructions on how to receive copy of FAP and application by mail Contact information (telephone and physical location) for resource who can assist with the application process Hospital office or department Nonprofit or government agency Statement of availability of translations Statement that FAP may not be charged more than AGB for emergency and medically necessary

Emergency Medical Care Policy Hospital facility must provide, without discrimination, care for emergency medical conditions to individuals regardless of their eligibility under the FAP Will meet requirements if policy requires care be provided under existing federal laws such as the Emergency Medical Treatment and Labor Act (EMTALA) Must prohibit the hospital facility from engaging in actions that discourage individuals from seeking emergency medical care

Establishing the Policies Adopted by an authorized body of the hospital Governing body or a committee thereof Other party authorized under governing body as permitted under state law Implemented by the hospital facility by consistently carrying out the policy May be established by more than one facility if identical across facilities May have different AGB percentages or methods of calculating AGB

Limitation on Charges-Statute Must limit amounts charged for emergency or other medically necessary care to a FAP- eligible individual to not more than the amounts generally billed (AGB) to individuals with insurance covering that care Prohibits the “use of gross charges”

Limitation on Charges Choose method to determine AGB Look Back Method Prospective Medicare Other method specified in future regulations or guidance Different facilities can use different methods Facility can change method at any time Need to update FAP with information on method used Limitation applies to the amount patient is personally responsible for paying after deductions, discounts, and insurance have been applied

Look-Back Method Based on actual allowed by either: Medicare fee-for-service Medicare fee-for-service and all private health insurers; or Medicaid alone or with either of the above Calculated at least annually based on claims allowed Select a 12 month period to use for the calculation Must begin applying to gross charges for FAP-eligible patients within 120 days of the end of the calculation period

Look-Back Method Calculation: Sum of all claims allowed by health insurers for emergency and other medically necessary care from either: Medicare and payments from Medicare beneficiaries OR Medicare and all private health insurers including co- payments, co-insurance, or deductibles from beneficiaries or insured individuals Divided by: Sum of the associated gross charges related to those claims

Look-Back Method May calculate multiple AGB percentages May calculate off of all medical claims versus just medically necessary and emergency May calculate one AGB percentage for all hospitals covered under the same Medicare number

Prospective Method Based on the billing and coding process the hospital facility would use if the FAP-eligible individual were Medicare fee-for-service Medicaid beneficiary or Both AGB is set at the amount the hospital facility determines would be the total payment for the care from Medicare or Medicaid reimbursement and Beneficiary payments

Gross Charges Must charge FAP-eligible individual less than gross charges for any medical care covered under the FAP Billing statements may state gross charges as a starting point before applying various allowances, discounts, and deductions Amount personally responsible for paying must be less than gross charge

Safe Harbor Will not violate limitation on charges rule if charge more than AGB to FAP-eligible individual if Charge was not made or requested as a pre- condition of providing medically necessary care to a FAP-eligible individual Patient has not completed application Must correct amount charged when found to be FAP- eligible (if > $5)

Billing and Collection-Statute Requires that a hospital facility not engage in “extraordinary collection actions” (ECA) against patients before reasonable efforts have been made to determine if the person qualifies for financial assistance

Extraordinary Collection Actions Selling of debt to another party unless Purchaser is prohibited from engaging in ECA Purchaser is prohibited from charging more than FMV interest Debt is returnable to hospital if patient is FAP eligible; and If debt not returned, purchaser ensures patient pays no more than obligated to pay under FAP Reporting adverse information to credit agencies or bureaus Deferring, denying, or requiring payment before providing medically necessary care due to outstanding bills

Extraordinary Collection Actions Require legal or judicial process Liens on property Foreclosure on real property Attaching or seizing bank accounts Commencing civil action Causing arrest Subjection to writ of body attachment Garnishing wages

Reasonable Efforts Presumptive FAP determinations based on third-party information or prior eligibility If determine patient is eligible for less than the most generous discount under the FAP Must notify the patient regarding the basis for the presumptive determination and how to apply to obtain more generous assistance Provide reasonable time to apply for more assistance before starting ECAs Must review applications submitted during the application period

Reasonable Efforts Notification and Processing Applications Notify an individual about its FAP for at least 120 days from the date of first post-discharge billing statement; Properly address an incomplete FAP application; AND, Make a determination of eligibility on all complete forms If individual fails to submit FAP application by end of notification period and notification requirements were met, hospital may engage in ECA Must still accept and process FAP during application period

Notification Requirements At least 30 days before initiating ECAs: Written notice is provided Informs about the ECAs the facility intends to take if individual does not submit a FAP application or pay the amount due Includes a plain language summary of the FAP Hospital makes reasonable effort to orally notify the individual about FAP and how to obtain assistance with the FAP application process Indicate a deadline

Notification Requirements Deferring or denying care due to nonpayment Not required to make notice at least 30 days before initiating if: Provides FAP application form and written notice of FAP assistance indicating a deadline for submission for the previously provided care (later of 30 days of the notice or 240 days from the first post-discharge billing for previous care) Must provide a plain language summary Hospital makes reasonable effort to orally notify the individual about FAP and how to obtain assistance with the FAP application process Must process application on expedited basis once received Still subject to rules under EMTALA for emergency care

Reasonable Efforts Application Period Begins on the first day of care and ends on the 240 th day after the hospital facility provides the individual with the first post-discharge statement If an individual submits a complete or incomplete FAP application during the application period, the hospital must process the application and determine eligibility

Reasonable Efforts If an individual submits an incomplete FAP application during the application period, the hospital facility meets its reasonable efforts requirement if the hospital facility: Suspends any ECAs against the individual related to care at issue Provides a written notice of additional information needed and contact information for assistance Provides a reasonable amount of time to submit information

Reasonable Efforts If an individual submits a complete FAP application during the application period, the hospital facility meets the reasonable efforts requirement if it: Suspends ECAs Makes and documents a determination of FAP eligibility in a timely manner Notifies the individual in writing of the determination of FAP eligibility and basis for determination

Reasonable Efforts If individual is FAP-eligible, the hospital must: Provide a billing statement that indicates Amounts the individual owes as a FAP-eligible individual (if eligible for discounted care) How the amount was determined How to get information regarding AGB Refund any excess payments made by the individual for the care at issue (if >$5) Take reasonable measures to reverse any ECAs taken against the individual Exception for sale of debt

Third Party Agreements If a hospital facility refers or sells debt to another party, reasonable efforts are deemed to be made if the hospital obtains a legally binding written agreement from the other party that they will: Refrain from ECAs against individual until the hospital facility has met reasonable efforts requirements Suspends ECAs against the individual if they submit a FAP application during the application period If determined to be FAP-eligible, other party will do the following in a timely manner: Adhere to procedures to ensure the individual does not pay more than required to pay under FAP Takes reasonable measure to reverse any ECAs, AND Obtains written agreement from any sub-parties that the sub- party is adhering to the above requirements

General Provisions Reasonable efforts are not made if determination that non-FAP eligible based on unreliable information or information obtained under duress or coercive practice Can meet requirements by making determination based on completed application even if not all notification requirements were met May postpone determination of FAP eligibility during period where Medicaid eligibility is being determined

Conclusion Questions? Comments?

Contact Information Marie Murphy This presentation is presented with the understanding that the information contained does not constitute legal, accounting or other professional advice. It is not intended to be responsive to any individual situation or concerns, as the contents of this presentation are intended for general informational purposes only. Viewers are urged not to act upon the information contained in this presentation without first consulting competent legal, accounting or other professional advice regarding implications of a particular factual situation. Questions and additional information can be submitted to your Eide Bailly representative, or to the presenter of this session.