1. Unraveling the complexities of servicing healthcare consumer receivables
Leslie Bender, CIPP/US, IFCCA, CCCA, CCCO
BCA Financial Services, Inc.

2. What do we mean by revenue cycle?

3. What makes healthcare complex?
Privacy: HIPAA and State Laws
First party versus third party
State laws or attorneys general compacts with caregivers protecting uninsured or underinsured patients
Medicare and Medicaid rules, possibly 501r
Healthcare providers’ own legal and regulatory priorities
Third party payors’ rules

4. A little more unraveling related to non-profit hospital patient accounts.

5. Additional wrinkle for non-profit hospitals
501r Compliance and Regulations. The Affordable Care Act (ACA) added new requirements that hospitals must comply with to keep their tax- exempt status under Internal Revenue Code 501r.
In addition to the general requirements for tax exemption under Section 501(c)(3) and Revenue Ruling , hospital organizations must meet the requirements imposed by Section 501(r) on a facility-by-facility basis in order to be treated as an organization described in Section 501(c)(3). These additional requirements are:
Community Health Needs Assessment (CHNA) - Section 501(r)(3),
Financial Assistance Policy and Emergency Medical Care Policy - Section 501(r)(4),
Limitation on Charges - Section 501(r)(5), and 
Billing and Collections - Section 501(r)(6).
The Patient Protection and Affordable Care Act (the ACA), enacted March 23, 2010, added new requirements codified under Section 501(r) for organizations that operate one or more hospital facilities (hospital organizations) to be described in Section 501(c)(3), as well as new reporting requirements and a new excise tax.

6. 501(r)(6) – Billing & Collections
The billing and collection practices applicable to hospital organizations are contained within Section 501(r)(6).
In accordance with Section 501(r)(6), a hospital facility may not engage in extraordinary collection actions (ECAs) against an individual for payment of care until reasonable efforts have been made to determine whether the individual may qualify as eligible for assistance under the hospital’s Financial Assistance Policy (FAP).
A hospital organization is prohibited from engaging in ECAs until reasonable efforts are made to determine an individual’s FAP eligibility and notify the individual about the hospital’s FAP.
In general, reasonable efforts include notification by the hospital organization of the hospital’s FAP and various written and oral communication with the patient specific to FAP eligibility within defined timeframes.

7. So what are ECAs?
Selling an individual's debt to a third party (with the exception of certain debt sales);
Reporting adverse information about an individual to consumer reporting agencies or credit bureaus;
Deferring or denying medically necessary care due to an individual’s nonpayment of or, under certain circumstances, requiring payment prior to providing, medically necessary care; and
Other actions that require legal or judicial process, including, but not limited to: foreclosures, attachments or seizures of bank accounts or other personal property, civil actions, attaching a lien on an individual's real property, and garnishing an individual's wages.
See, Treasury Regulations at Section 501(r)(6)(b)

8. Other 501r considerations
As a general rule – merely referring accounts to a collection agency in and of itself does not constitute an “extraordinary collection action.”
Hospitals must have written, legally binding contracts with their collection agencies that spell out what “reasonable efforts” must be taken before ECAs.
Things that are not ECAs include charging interest (classified as an activity associated with extending credit to patients), working with patients to obtain financial assistance applications before the application period expires, if the debt collector also acquired the debt it must obtain the same written assurances it had to give in the event it chooses to further sell the patient receivables.

9. 501r and debt sales
Very few collection agencies acquire healthcare debt.
In the instances in which an asset buyer acquires healthcare debt there are some additional 501r features that apply including these:
Purchaser may not engage in ECAs against the patient
Purchaser may not charge interest beyond the appropriate IRS published rates
The debt must be returnable or recallable by the hospital if the hospital determines the patient is FAP eligible; and
If the debt is not returned or recalled after a patient has been determined to be FAP eligible, the purchaser must adhere to procedures written into its purchase agreement to assure that the patient does not have an obligation to pay more than allowed under the FAP.
Important: if a debt sale does not satisfy these criteria it may be considered an ECA and reasonable efforts must be taken before the debt sale is consummated.

10. How does servicing a healthcare account differ?

11. Differences. Some mixed data and information includes:
Healthcare consumer receivables are generally “involuntary debt.”
Challenges in “root causing” whether and to what extent extraordinary healthcare accounts lead to bankruptcy or other dire financial situations – or if the accident, illness or injury that led to the extraordinary healthcare bills was the true root cause?
Hospitals, particularly non-profit hospitals, should provide care or treatment for free if patients have no means or third party sources for payment
Consumers feel differently about healthcare bills than other bills
Healthcare creditors feel and act differently than other types of creditors

12. A healthcare provider (the creditor) has its own unique compliance perspective
Typically the healthcare provider WANTS the patient to come back or NEEDS the patient to return.
Hospitals are bound by bricks/mortar
Physicians are licensed in specific jurisdictions.
The provider may have other accounts it does NOT place with a debt collector that it continues to service itself.

13. Healthcare provider may require the collection agency to mirror image its compliance program.
The healthcare provider’s compliance program may be geared to US Sentencing Commission Guidelines. The federal sentencing guidelines identify 7 criteria for effective healthcare compliance programs as follows:
Standards and procedures
Compliance officer oversight
Training and education
Monitoring and auditing
Reporting
Enforcement and discipline
Response and prevention.

14. What types of accounts may = medical or healthcare collections accounts?

15. Healthcare spending in the U.S.

16. Healthcare spending trends over time.

17. Some additional stats about the rising self-pay costs – stated otherwise, the amount of medical bills consumers are expected to pay..
While the ACA has resulted in more people having coverage – the patient pay responsibility even with coverage is increasing.
Meanwhile, the percent of folks with employer sponsored health plans with required out of pocket spending above $1000 per member has risen to 24%
One in ten workers spent over $2000
Top five categories of diseases accounting for large out of pocket expenses are the following:
Blood organ related diseases
Digestive diseases
Congenital anomalies
Cancers
Circulatory diseases
Followed closely by mental health issues
People being treated for blood organ related diseases have annual out of pocket costs of nearly $2000 while the remaining five are in the $1500/annually range
Data from Centers for Medicare/Medicaid Services and Kaiser.

19. Active accounts receivable services
Customer service activities
Patient registration
Eligibility
Appointment reminders/setting
Insurance verification
Call overflow
Extended business office
Important: these services are generally rendered “first party” meaning in according with the healthcare provider’s policies and procedures and as a de facto employee – typically in the provider’s name

20. Categories of healthcare debt services – sometimes called revenue cycle or accounts receivable management services

21. Past due patient receivables services
Traditional bad debt collections – accounts have been serviced by the healthcare provider until the provider’s accounting practices allow for charge off and are now with a debt collector and are being serviced as “debt” under the Fair Debt Collection Practices Act
Legal collections
Sales of patient receivables (typically two or more years after services rendered)

22. Both consumer financial protection laws and healthcare laws may apply.
Consumer financial protection laws may apply.
Healthcare laws may apply.

23. Examples of areas where both sets of laws apply.
Requests from consumer (or third party) for more information related to a bill.
Vendor management.
Disputes and complaints.
Language in communications, disclosures.

24. Scenarios where healthcare quirks play out
Patient requests details about medical bills
Patient lodges a complaint about medical care or treatment, about how an insurance company paid a claim, or about bills in general
Third parties
Family members
Law enforcers/regulators
Insurers
Legal representatives
Credit repair organizations

25. A complaint from a third party.
Family member, legal representative, or law enforcer or regulator lodges a complaint.
HIPAA and potentially state laws.
Notice to client
Litigation requests

26. All the data associated with healthcare accounts is generally protected by and subject to HIPAA and other privacy laws. Information on data breaches available through the Poneman Institute annual studies.

27. Thank you.