1. Real World Issues with Financial Assistance
Aksarben Chapter - AAHAM
Friday, April 22, 2016
Andrew D. Kloeckner
© 2016 Baird Holm LLP

2. Overview of IRC § 501(r)
Patient Protection and Affordable Care Act - § 9007
Requirements of § 501(r)
Written financial assistance policy (FAP)
Limitations on charges
Prohibition on certain collection efforts
CHNA
© 2016 Baird Holm LLP

3. Overview of IRC § 501(r) Final regulations – December 29, 2014
Effective dates - first tax year following December 29, 2015
Calendar year tax payers – effective now
Fiscal year tax payers – effective at start of new tax year
© 2016 Baird Holm LLP

4. Scope of FAP
All emergency and medically necessary care provided by hospital organization within licensed hospital space
Wholly-owned disregarded entities
Wholly-owned physician practice groups (LLCs)
Not separate 501(c)(3)s or taxable entities
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5. Eligibility Criteria
FAP must specifically set forth eligibility criteria
Financially indigent?
Medically indigent?
Require Medicaid application?
© 2016 Baird Holm LLP

6. Eligibility Criteria FAP-eligible care categories
Medically necessary and emergency care
May limit FAP-eligible services, but must do so by defining “medically necessary care”
State law;
Generally accepted medical standards in community;
Examining physician’s determination
© 2016 Baird Holm LLP

7. Covered Providers
Must list providers who do and do not participate in FAP
Patients may not understand difference between employed and independent physicians
May include in separate document
Update quarterly
May list by entity
Free and published on website
Information on how to access
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8. Limitation on Charges
May not charge FAP-eligible patients more than AGB for eligible care
Either look-back method or prospective method
Look-Back
Prospective
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9. Look-Back Method All insurance plus Medicare claims
Avg. of 3 best commercial insurers not acceptable
Calculated based on “claims allowed” basis
Calculated once per year
Implemented within 120 days of 12 month period
Look-Back
Allowable insured amounts =
Total gross charges for claims in numerator
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10. Medicare fee-for-service beneficiary amounts
Prospective Method
Charges limited to Medicare rates
Prospective
Medicare fee-for-service beneficiary amounts =
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11. Amount of Financial Assistance
Total hospital bill provided to patient
$5000 Deductible
Contractual Adjustments
Total Bill After Contractual Adjustments
Amounts Generally Billed
15% co-insurance
Insurance Reimbursement
Patient applies and is eligible for financial assistance; patient should be responsible for no more than the Amounts Generally Billed
© 2016 Baird Holm LLP

12. Application Period
Need only accept financial assistance application during “Application Period”
240 days from date of first post-discharge bill; or
If later, 30 days from date of final notice
Notice of ECAs; patient has 30 days to apply under FAP
(Day 260)
New deadline for patient to apply
(Day 290)
“Application Period”
Potentially last day to accept completed application (Day 240)
First post-discharge bill
(Day 0)
Extension
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13. Completed Applications
Must stop ECAs
Make determination within a reasonable time
FAP-eligibility determination limited to information requested in FAP/application or otherwise provided by patient
Comprehensiveness of requested information is important
© 2016 Baird Holm LLP

14. Incomplete Applications
Notice to patient including:
Reasonable response time
Information on obtaining assistance with filling out application
Required to cease ECAs, if any, until:
Patient completes application, or
Patient fails to respond to request for information within stated time period
If patient provides requested information within Application Period, process application
© 2016 Baird Holm LLP

15. Collection Actions
Must state in the FAP (or billing and collection policy) ECAs and non-ECAs that may be taken
Reporting to credit agency
Anything requiring judicial action
Sale/referral of debt
Be careful about bank referral programs
Programs requiring payment of past bills prior to providing current medically necessary care are ECAs
© 2016 Baird Holm LLP

16. Collection Actions No application submitted No ECAs for 120 days
Provide 30-days’ written notice containing:
Availability of financial assistance;
Plain language summary;
ECAs actually intended to be taken against individual patient; and
Deadline for initiation of ECAs
Oral notification to patient of FAP at least 30 days prior to ECA
© 2016 Baird Holm LLP

17. Completed Application Submitted
Written notice to patient of FAP determination
“Reasonable” time period to process application
First post-discharge bill
30-day ECA notice provided
Hospital sends revised bill to patient, taking into account discounts under FAP and reverses any ECAs taken
Hospital
Timeline
ECAs begin
Suspend any ECAs
Patient Timeline
Completed Application Submitted
Receives written notice; written notice contains (1) level of financial assistance; and (2) basis for granting assistance
120 Days
© 2016 Baird Holm LLP

18. FAP Eligible - Revised Bill
Contents of revised bill:
New balance, accounting for financial assistance;
Calculation of new balance; and
Description of AGB, or instructions on how to locate AGB calculation
Hospital must refund
(unless less than $5.00)
$2500
$1250 $0
Patient paid bill before FAP determination
Patient bill after FAP determination
© 2016 Baird Holm LLP

19. Presumptive Eligibility
Each episode of care handled separately; any forward looking statement is “presumptive eligibility”
“FAP application will apply to care provided in the next __ months”
Must be coupled with presumptive eligibility language
If no application submitted:
Option #1 - Maximum amount of assistance available (i.e., free care)
Option #2 - Using previous financial assistance applications from patient to grant assistance
Prior applications cannot be a basis for FAP denials
© 2016 Baird Holm LLP

20. Multiple Episodes of Care
Backwards looking
Each instance of treatment must be addressed separately for FAP determinations subject to presumptive eligibility for future care
May elect to apply notification requirements on “per patient” and not “per episode of care” basis for prior care
New episodes of care will “restart” 120-day prohibition against ECAs
© 2016 Baird Holm LLP

21. Collection Actions Actions of a third party attributed to hospital
Timeframe in which accounts will be referred
Ability to get accounts back to hospital if patient qualifies
Costs of ECAs when suspended/reversed
Contractual protections for hospital
Must have written contract with certain provisions in place
© 2016 Baird Holm LLP

22. Board Adoption Board must adopt:
FAP
Billing and collection policy
Emergency medical care policy
Adoption required when policy is revised/updated
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23. Multiple Hospitals Facilities must have separate policies
Each must be formally adopted
May adopt an identical policy
Information must be accurate for each facility
AGB calculations must be facility specific
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24. Publication/Notification
Plain language summary, FAP, and financial assistance application available by:
Mail at no charge;
Public locations in hospital;
Hospital’s website;
Conspicuous public displays
Plain language summary offered either at admission or discharge
Conspicuous statement on each bill
© 2016 Baird Holm LLP

25. Publication/Notification
Populations/communities likely requiring financial assistance
Hospital facilities must “notify and inform” these communities
Minimally, a hospital must inform communities about FAP and provide information on how to obtain:
FAP copies
Application
Plain language summary
© 2016 Baird Holm LLP

26. Translation
Hospitals must translate FAP, financial assistance application, plain language summary, and billing & collection policy
Translation determination threshold:
Lesser of
1,000 individuals, or
5% of community served or likely to be encountered by hospital
Reasonable method to determine translation requirements - documentation
© 2016 Baird Holm LLP

27. Real World Issues with Financial Assistance
Aksarben Chapter - AAHAM
Friday, April 22, 2016
Andrew D. Kloeckner
© 2016 Baird Holm LLP