Healthcare Compliance:Affordable Care Act 501(r) and IRS Final Rule

When Section 501(r) was added to the Internal Revenue Code in 2010, focus on the Affordable Care Act (ACA) regulatory changes shifted to non-profit hospitals, namely imposing requirements to maintain tax-exempt status. The amended ACA affects organizations with one or more hospitals, which are reviewed on a facility-by-facility basis.

Final IRS ACA 501(r) regulations apply to taxable years beginning after December 29, 2015. These regulations will affect patient transactions from financial assistance to collections. Hospitals must: • Establish and widely publicize a Financial Assistance Plan (FAP) and emergency care policies. • Limit amounts charged for emergency or other medically necessary care to patients eligible under a FAP. • Make reasonable efforts to determine whether an individual qualifies for a FAP before engaging in extraordinary collection actions. • Conduct and publish the results of a community health needs assessment at least once every three years.

One of the biggest issues under 501(r) is how your collection partner will contact patients regarding outstanding bills. Hospitals need policies that describe how and when they—and their third-party collection partners—contact patients. To that end, the content in this document provides an overview of ACA

Financial Assistance Plan and Extraordinary Collection Activities

501(r) and highlights specific requirements in each section that pertain to medical billing and collections. It also maps how JCC can help you plan for compliance with this complex regulation. We partner with clients to create and monitor collection procedures that meet tax-exempt requirements and strengthen your position as a provider of compassionate, quality care.

The final 501(r) regulations require hospitals to offer a plain language summary of the organization’s established FAP during the intake or discharge of patients. In addition, billing statements must include a conspicuous written notice that informs patients of your established FAP and its availability. Beginning on the date of their first post-discharge billing statement, patients are granted a notification period of up to 120 days to determine whether they would like to apply for financial assistance and start the application process. The patient then receives an additional 120-day application period to submit the application forms. An important aspect of FAP is that absolutely no extraordinary collection activities (ECAs) may occur during the combined 240-day notification and application periods, unless reasonable efforts have been satisfied by the healthcare facility.

Moreover, hospitals are required to process applications submitted within this window of time.

What Constitutes an ECA?

The regulations define ECAs to include the following: • Employing legal or judicial process to obtain payment for a bill covered under FAP • Selling debt to a third party • Reporting adverse information to credit agencies • Deferring or denying medical care based on non-payment for previously FAP-covered care • Requiring payment before providing medically necessary care

Securing Your ACA 501(r) Compliance

Financial assistance policy

(FAP) and emergency

medical care policy

A plain language summary of the

FAP

A FAP application form and instructions

hfma National Institute

ECA Protocol and Reasonable Efforts

ECAs may only commence when the hospital, its third-party collection vendor, or its legal partner has made a reasonable effort to determine a patient’s FAP eligibility, and that patient is deemed ineligible. Should a hospital intend to proceed with an ECA, it must make a reasonable effort to determine whether the patient is eligible for FAP assistance. While the finer requirements of “reasonable effort” remain unclear under the ACA 501(r), it appears, at a minimum the following steps are necessary to complete this requirement: • Include plain language summary with all (and at least 3) billing statements and written communications about the bill during the notification • Inform patients about FAP in all oral communications about their bill during the notification process of FAP assistance • Provide the patient with at least a 30 day notification of the intent to perform ECA’s and listing out the specific ECA’s that may be completed

The most critical aspect of this regulation is that all ECA’s are suspended between the completed FAP application submission and a

In addition to implementing processes and procedures that reflect the language of ACA 501(r), hospitals can turn to a third-party to collect patient debt. Your tax-exempt status is critical and has implications that extend beyond business practicalities. It is one factor that allows you to provide the utmost service to your patients and community. The complexities of new regulations and what is at stake make it ever more critical to select a vendor that is 100% compliance-ready.

JCC views ACA 501(r) as an opportunity to protect your tax-exempt status while solidifying your positive standing with the patients and communities you serve. Your patients likely reside in your area and should feel comfortable to turn to you again for future needs. Our experience has shown that account resolution, when handled

appropriately, improves the overall patient-provider relationship. Through innovation, education, and support, we can assist your patients in resolving their accounts in a manner that protects you and your patients.

Compliance-Ready Resources and Training

Important Decisions:

• What ECA’s will your facility allow JCC to perform? • How will your facility ensure that reasonable efforts have been completed for each date of service? • What dates are you able to supply to JCC to identify the notification and application period? • How should JCC direct your patients to apply for FAP? • How will your facility communicate any

formal determination of eligibility.** Note - that if your facility never intends to pursue any ECA’s you do not need to prove reasonable efforts.

new and ongoing FAP applications to JCC?

A partnership with JCC means that patients expressing financial hardship will receive professional assistance that reflects your values. When you provide us with your toll-free number and/or website address, our collection agents are able to act seamlessly on your behalf, helping patients resolve their debt.

JCC collection agent, supervisor, and management training and continuing education programs are essential to total compliance. All new Collection Agents are required to attend our comprehensive, in-house training. We track progress and conduct annual tests to evaluate program completion and effectiveness. Curriculum topics include: • What is 501(r)? • How does 501(r) affect non-profit hospitals? • How does 501(r) affect JCC? • Client-Specific Handling • FAP Handling • Extraordinary Collection Activities • 501(r) Timelines

JCC managers regularly complete the same training tests as their team members to stay current on industry changes and be optimally prepared to field employee questions. Our Collection Agents assigned to your accounts will be prepared to use your provided, plain-language FAP summary. Our initial written communication with a patient will include this language:

The Healthcare Services Provider(s) listed above may provide financial assistance for eligible persons who cannot afford to pay for medical care. Financial assistance eligibility is based upon documented family circumstances and family size. If you need assistance in contacting the Healthcare Services Provider regarding their financial assistance policy, please contact us at <<phone #>> and we will provide contact information for the appropriate Healthcare Provider(s).

Collection agents will also be equipped with carefully written and approved scripts. Any changes or special alerts appear instantly on the agent’s screen.

Make JCC Your Partner in ACA 501(r)

When we assist you with 501(r) compliance, our people, processes, and technologies minimize your administrative and resource burdens. Let us partner with you so that you are free to focus on what you do best.

About J.C. Christensen & Associates

J.C. Christensen & Associates, Inc. (JCC) provides highly effective and professional

Compliance-Ready Inventory Management

with Artiva

JCC leverages the Artiva collection system from Ontario Systems to design and automate workflows for optimal compliance within a changing regulatory landscape. The technology allows us to record and monitor calls and substantiate the delivery of alerts and/or scripts.

The results of monitored calls are maintained in a Complaint and Dispute Management Application (CDMA), which provides 360-degree complaint and dispute resolution.

Account numbers can be individually loaded such that reporting is delivered to you based on individual episodes of care. Importantly,

data fields can be designated fCC leverages

J.C. Christensen& Associates, Inc.

Accounts Receivable ManagementJCC

AN ARRAY SERVICES GROUP COMPANY200 14th Ave E, Sartell MN 563771.800.692.7374

info@jcccollect.com

Copyright © 2015, all rights reserved NEW

the Artiva collection system from Ontario Systems to design and automate workflows for optimal compliance within a changing regulatory landscape. The technology allows us to record and monitor calls and substanti-ate the delivery of alerts and/or scripts.

third-party debt collection services. Since its onset in 1977, JCC has excelled in the healthcare market. Our sensitivity to patient satisfaction and dedication to sound business practices are evident in the results we deliver to our loyal clients. We want to partner with your healthcare organization so that you can focus on what you do best. Your success is our mission.