ccipowerinside.com A New Era of Healthcare: 501(r) Final Regulations June 19, 2015 Laurie Shoaf, CRCE

ccipowerinside.com OBJECTIVES Review components of the 501r Regulation Define core elements of a compliant financial assistance policy Outline options for computing amounts generally billed Identify the reasonable efforts required before initiating extraordinary collection actions Q&A

ccipowerinside.com DISCLAIMER STATEMENT Information herein is believed, but not guaranteed, to be reliable, accurate and complete. Any opinions expressed herein reflect a judgment made as of this date and are subject to change. Neither CCI, its managers and governors, is making any representations, warranties, or guarantees with respect to the information contained herein or any action taken or not taken in reliance thereon and, in no event, shall such parties be liable for any loss, injury or damage arising therefrom, including, but not limited to, consequential, punitive or other similar damage claims.

ccipowerinside.com IRC 501(R) Section 501(r) (3) – Community Health Needs Assessments Section 501(r) (4) – Financial Assistance and emergency medical care policies Section 501(r) (5) – Limitations on charges for low-income patients Section 501(r) (6) – Billing & collections for low-income patients

ccipowerinside.com IRC 501(R) An organization that has the provision of hospital care as its principal function or purpose constituting the basis for its exemption under section §501(c)(3) Licensed within 50 states and D.C. Dual status Government hospitals must comply with 501r –However, may voluntarily terminate 501(c)(3) status Hospital facility defined as

ccipowerinside.com IRC 501(R) Multiple hospital facilities that share the same state license may share a single FAP Separate hospital facilities within the same building may have identical FAPs as long as the policy is accurate for all facilities and a joint policy clearly states that it is applicable to each facility Whether or not 501r requirements apply to hospital-owned physician practices or other entities depends on how the entities are classified for federal tax purposes. If the organization is a separate taxable corporation, 501r would not apply Unique Situations

ccipowerinside.com IRC 501(R) If a hospital facility outsources the operation of its emergency room to a third party and the care provided by that third party is not covered under the hospital facility’s FAP, the hospital facility may not be considered to operate an emergency room for purposes of the factors considered in Rev. Rul. 69–545 (1969–2 CB 117) Emergency Room

ccipowerinside.com TIMEFRAME FOR COMPLIANCE By beginning of first tax year after December 29, 2015 First impacted hospitals are calendar year entities that must be in compliance on January 1, 2016 “Reasonable interpretation” is required until then

ccipowerinside.com FIRST AUDIENCE POLL QUESTION Where is your hospital on evaluating compliance with 501r regulations? –Haven’t started yet –Just started –Almost done –Finished –Unsure

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Written Policy Adopted by authorized body Method for applying Other sources used to make FAP determination Policy relating to Emergency Medical care Eligibility Criteria Basis for calculating amounts charged Actions that may be taken for non- payment List of providers delivering emergency or medically necessary care

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Eligibility Criteria Written Policy Adopted by authorized body Method for applying Other sources used to make FAP determination Policy relating to Emergency Medical care Basis for calculating amounts charged Actions that may be taken for non- payment List of providers delivering emergency or medically necessary care

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Written Policy Adopted by authorized body Method for applying Other sources used to make FAP determination Policy relating to Emergency Medical care Eligibility Criteria Basis for calculating amounts charged Actions that may be taken for non- payment List of providers delivering emergency or medically necessary care

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Written Policy Adopted by authorized body Method for applying Other sources used to make FAP determination Policy relating to Emergency Medical care Eligibility Criteria Basis for calculating amounts charged Actions that may be taken for non- payment List of providers delivering emergency or medically necessary care

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Written Policy Adopted by authorized body Method for applying Other sources used to make FAP determination Policy relating to Emergency Medical care Eligibility Criteria Basis for calculating amounts charged Actions that may be taken for non- payment List of providers delivering emergency or medically necessary care

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Written Policy Adopted by authorized body Method for applying Other sources used to make FAP determination Policy relating to Emergency Medical care Eligibility Criteria Basis for calculating amounts charged Actions that may be taken for non- payment List of providers delivering emergency or medically necessary care

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Written Policy Adopted by authorized body Method for applying Other sources used to make FAP determination Policy relating to Emergency Medical care Eligibility Criteria Basis for calculating amounts charged Actions that may be taken for non- payment List of providers delivering emergency or medically necessary care

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Written Policy Adopted by authorized body Method for applying Other sources used to make FAP determination Policy relating to Emergency Medical care Eligibility Criteria Basis for calculating amounts charged Actions that may be taken for non- payment List of providers delivering emergency or medically necessary care

ccipowerinside.com FINANCIAL ASSISTANCE POLICY At a minimum, all emergency and other medically necessary care Medically necessary care may be defined by using: –Medicaid definition –Generally accepted standards of medicine –As defined under state laws Written FAP Must Apply to

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Description of all financial assistance offered and eligibility criteria for each category Method for applying for financial assistance and documentation requirements –May grant assistance based on evidence other than that described in FAP –May obtain information orally from applicant rather than in writing –Presumptive determinations allowed Written FAP Must Include

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Explain basis for calculating amounts charged to patients –IRS recognizes discounts might be offered outside of FAP, such as an uninsured or prompt pay discount –Those discounts do not have to comply with 501(r) –They also do NOT count as “community benefit” on schedule H of the 990 or for evaluating a hospital’s tax exempt status Written FAP Must Include

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Presumptive eligibility requirements outlined in the Final regulations require a hospital facility to: –Describe information obtained from sources other than individuals seeking assistance that the hospital uses, and –Whether and under what circumstances it uses prior FAP-eligibility determinations, to presumptively determine that individuals are FAP eligible Written FAP Must Include

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Description of actions may take in the event of non- payment, only in the case where a hospital facility does not have a separate billing and collections policy An Emergency Medical Care Policy can be included in the same document as an FAP or an already existing document related to EMTALA Written FAP Must Include

ccipowerinside.com FINANCIAL ASSISTANCE POLICY List of providers, other than the hospital, delivering emergency or other medically necessary care in the facility and to specify which providers are covered by the hospital FAP (and which are not) Adopt the FAP by an authorized body of the hospital organization Final regulations eliminate the requirement that the FAP list the measures taken to widely publicize the FAP Written FAP Must Include

ccipowerinside.com FINANCIAL ASSISTANCE POLICY 1.Make the FAP, FAP application form, and a plain language summary widely available on the hospital Web site 2.Make paper copies of the FAP, the FAP application form, and a plain language summary available upon request and without charge, both for distribution in public locations in the hospital, at a minimum in the emergency room and admissions and by mail Four Measures to Widely Publicize the FAP

ccipowerinside.com FINANCIAL ASSISTANCE POLICY 3.Inform and notify visitors to the hospital about the FAP –Includes notification about the FAP through a conspicuous public display (or through other measures reasonably calculated to attract visitors’ attention) –Final rule adds the requirement for hospitals to widely publicize their FAPs by providing FAP information to patients before discharge and with billing statements Four Measures to Widely Publicize the FAP

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Final regs require only that a hospital ‘‘offer’’ (rather than ‘‘provide’’) a plain language summary as part of the intake or discharge process A hospital will not have failed to widely publicize its FAP because: –An individual declines to take a plain language summary that the hospital facility offered on intake or before discharge or –Indicates that he or she would prefer to receive or access a plain language summary electronically rather than receive a paper copy Four Measures to Widely Publicize the FAP

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Final regs no longer require a full plain language summary with all billing statements Requires only that a hospital’s billing statement include: –Conspicuous written notice that notifies and informs about the availability of financial assistance under the FAP –Telephone number of the office or department that can provide information about the FAP and FAP application process and –Web site address (or URL) where the copies of the FAP documents may be obtained Four Measures to Widely Publicize the FAP

ccipowerinside.com FINANCIAL ASSISTANCE POLICY 4.Inform and notify members of the community served by the hospital about the FAP in a manner reasonably calculated to reach those members of the community who are most likely to require financial assistance Four Measures to Widely Publicize the FAP

ccipowerinside.com PLAIN LANGUAGE SUMMARY Brief description of eligibility requirements and assistance offered Direct website address and physical location where copies of the FAP and FAP application are available Brief summary of how to apply for assistance under the FAP How to obtain free copy by mail Contact information of either the hospital office or department that can provide assistance with the FAP application process Availability of translations Statement that no FAP-eligible patient will be charged more than AGB

ccipowerinside.com TRANSLATION OF FAP DOCUMENTS Documents must be made available in: –English and –In the primary language of populations with limited English proficiency (LEP) that constitute more than 5 percent of residents, or 1000, whichever is less, of the population served May use any reasonable method to determine limited proficiency populations Translation Threshold Changed in Final Rule

ccipowerinside.com FINANCIAL ASSISTANCE POLICY Prepare FAP documents Adopt the FAP by an authorized body of the hospital organization Translate documents when language minority constitutes more than 5% of the patient population or 1000 individuals Identify actions to widely publicize the FAP Summary of High Level Tasks

ccipowerinside.com LIMITATION ON CHARGES Hospital facility must limit the amounts charged for any emergency or other medically necessary care it provides to a FAP-eligible individual to not more than AGB Also requires a hospital facility to limit the amounts charged to FAP-eligible individuals for all other medical care covered under the FAP to less than the gross charges for that care Amounts Generally Billed

ccipowerinside.com LIMITATION ON CHARGES AGB Methods Prospective Method Look-back Method

ccipowerinside.com LIMITATION ON CHARGES Final regs do not allow for a system wide AGB –If a health system bills Medicare under one provider number it is allowed to calculate one AGB –Different facilities operated by same organization may use different methods May change the method used to determine AGB at any time FAP should be updated to reflect changes prior to implementing Amounts Generally Billed

ccipowerinside.com LIMITATION ON CHARGES Options include: –Medicare-fee-for-service –Medicare-fee-for-service and all private insurers who pay claims to hospital –Medicaid, either alone or in combination with insurers listed above Health Insurers Used in Look-back Method

ccipowerinside.com LIMITATION ON CHARGES Begin using by 120 th day after end of 12- month period LB method uses only claims that have been resolved May choose to use claims allowed for all medical care rather than just emergency and other medically necessary care Look-back Method

ccipowerinside.com LIMITATION ON CHARGES Estimate the amount that would be paid by Medicare and a Medicare beneficiary using the same billing and coding process the hospital uses for Medicare beneficiaries The final rule allows the use of Medicaid, either alone or in combination with Medicare Prospective Method

ccipowerinside.com LIMITATION ON CHARGES Hospital will remain compliant if more than AGB is charged in these conditions: –Individual has not been determined as FAP eligible –Complete FAP application has not been submitted –If patient made a payment prior to submitting an FAP application, excess collected is refunded (unless amount is less than $5.00) Safe Harbor – Charges in Excess of AGB

ccipowerinside.com SECOND AUDIENCE POLL QUESTION Which method does your hospital use (or plan to use) to calculate AGB? –Look-back –Prospective –Unsure

ccipowerinside.com BILLING AND COLLECTION POLICY Make Reasonable Efforts Determine FAP Eligibility Extraordinary Collection Actions (ECAs)

ccipowerinside.com POST DISCHARGE & APPLICATION PERIOD Extraordinary Collection Actions Post Discharge Period Days 240 Days Application Period 121 – 240 days First ”Post Discharge” Billing Statement Reasonable Efforts

ccipowerinside.com BILLING – POST DISCHARGE Reasonable efforts to determine whether a patient is FAP-eligible include: –A notice informing patients about the availability of financial assistance on billing statements –In the case of a patient who submits an incomplete FAP application, provide the patient with information relevant to completing the FAP application; and Reasonable Efforts

ccipowerinside.com BILLING – POST DISCHARGE –In the case of an patient who submits a complete FAP application, make a determination as to whether the individual is FAP-eligible; and –When using Presumptive Eligibility to make a determination follows three specific provisions Reasonable Efforts

ccipowerinside.com BILLING – POST DISCHARGE Conditions that must be met when less than the most generous assistance is provided: 1.Notify patient about the basis for presumptive eligibility determination and how can apply for more generous assistance under the FAP 2.Provide a reasonable period of time for patient to apply for more generous assistance before initiating ECAs to obtain the discounted amount owed for the care 3.Process a complete FAP application by the end of the application period or, in a reasonable time period Presumptive Eligibility

ccipowerinside.com BILLING – POST DISCHARGE At least 30 days before initiating ECAs: –Written notice to inform the patient about the intended ECA the hospital may take if they do not submit a FAP application or pay the amount due by a date that is no earlier than the last day of the 120 day period –Include a plain language summary of the FAP with the written notice –Make a reasonable effort to orally notify patient Reasonable Efforts

ccipowerinside.com BILLING – POST DISCHARGE When a patient submits a complete or incomplete FAP application during the application period Or when the hospital documents that it met the components of reasonable efforts and the patient does not submit a FAP application by the end of the 120 day period If all of the requirements have been met and the patient has failed to submit a FAP application by the end of the 120 day period, the hospital may engage in Extraordinary Collection Actions Reasonable Effort Met

ccipowerinside.com BILLING -APPLICATION PERIOD Hospital must accept and process financial assistance applications Begins on date care is provided and ends 240 th day after first post-discharge billing statement –Certain exceptions for incomplete applications ECAs are permitted beginning on 121 st day Reasonable Efforts

ccipowerinside.com BILLING -APPLICATION PERIOD ECAs include action that requires a legal or judicial process that include, but are not limited to: Reporting a debt to a credit agency or agencies; Placing a lien on an individual’s property; Foreclosing on an individual’s real property; Attaching or seizing an individual’s bank account or any other personal property; Commencing a civil action against an individual; Cause an individual’s arrest; and Garnishing an individual’s wages Extraordinary Collection Actions

ccipowerinside.com APPLICATION PERIOD DAYS The final rule retained the general rule that the sale of an individual’s debt to another party is an ECA If the following conditions are met by the purchaser prior to a sale, then the sale of patient debt is NOT considered an ECA: –Agrees not to engage in any ECAs –Agrees not to charge interest in excess of rate in effect under section 6621(a)(2) at time debt is sold –Debt must be returnable or recallable by hospital –If individual is determined to be FAP eligible and the debt is not returned or recalled by the hospital, the purchaser must adhere to procedures that the patient pays as FAP eligible Extraordinary Collection Actions

ccipowerinside.com BILLING -APPLICATION PERIOD Deferring or denying, or requiring payment before providing medically necessary care because of non- payment of previously provided care under the FAP Extraordinary Collection Actions – New in Final Rule

ccipowerinside.com BILLING -APPLICATION PERIOD Hospital will have made reasonable efforts if: Provide a notice about potential ECAs that could be resumed if the application is not completed and the balance is not paid Provide an accompanying plain language summary of the FAP Provide contact information where they can obtain assistance to complete the FAP application Processing Incomplete FAP Applications

ccipowerinside.com BILLING -APPLICATION PERIOD Hospital will have made reasonable efforts if: ECAs are suspended Financial determination is made Provides a revised billing notification Refunds excess payments (unless less than $5.00) Takes all reasonably available measures to reverse ECAs Processing Completed FAP Applications

ccipowerinside.com THIRD AUDIENCE POLL QUESTION Have you made changes to your billing and collection policy to accommodate 501r provisions? –Yes –No –Unsure

ccipowerinside.com BILLING AND COLLECTION Create, revise or establish a compliant billing and collections policy and make certain it is appropriately approved Review billing statements Review agreements with collection agencies related to ECAs that an agency may take High Level Tasks

ccipowerinside.com CLOSING THOUGHTS Create an internal implementation team Develop a timeline for implementation Conduct a gap analysis against current policies Implement processes to continually monitor ongoing compliance Remember to consider potential state laws

ccipowerinside.com QUESTIONS x1250 Laurie Shoaf