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Webinar Recap: Evaluating your Financial Assistance Policy and Preparing for 501(r)

On Tuesday, August 26, Etactics hosted a panel discussion via a webinar. The topic addressed was evaluating your Financial Assistance Policy and Preparing for 501(r). Our panelists included Keith Hearle, who is the founder and president of Verité Healthcare Consulting, LLC located in the Washington D.C. area, and Joe Ferrara, who is the Director of Process Automation Solutions at Etactics.

Hospitals are experiencing increasingly strict guidelines and scrutiny on financial assistance policies as well as how they are communicating this to their patients. In 2010, the Affordable Care Act was signed; it created 501(r) affecting the internal revenue cycle. This took effect almost immediately after the president signed the bill. A final 501(r) rule will lay out specific financial assistance and collections requirements that nonprofit hospitals must meet.

Keith laid out that there is such a heavy focus on charity care because policymakers believe that charity care is the most important community benefit. Lawmakers think that tax-exempt hospitals should be offering the same discounts to low-income patients, that they offer to commercial insurers.

The Notice of Proposed Rulemaking general requirements are:

  • A written Financial Assistance Policy
  • A written Emergency Medical Care Policy
  • A separate Billings and Collections Policy

Policies must be adopted by the board and consistently carried out. Keith discussed that he has seen organizations not take these policies to the board. Keith stressed the policies MUST be taken to the board and approved, that they are policies of the organization. Each hospital needs to write a Financial Assistance Policy which includes specific sections. Keith then went in-depth to look at each section in the FAP and its requirements.

Eligibility Verification and Calculating Charges
Each facility needs a method to determine patients are not being charged more than the amount “generally billed” to insured patients. This can be accomplished by one of two methods. The first method is the “look-back” method which must state the actual AGB discounts and how percentages were calculated. The other method is “Medicare Prospective” method. Keith went in-depth about these methods later in the presentation (slide 23-24).

Method of Applying for Financial Assistance
The FAP must describe how an individual applies for financial assistance by either displaying directions in the FAP or written on the FAP application form. Financial assistance cannot be denied if an applicant does not submit information that was not required in writing.

Actions in Event of Nonpayment
501(r) limits the actions that the hospital facility may take to obtain payments. The hospital must prove the time frame given to take action, and the reasonable effort made to determine if an individual is FAP-eligible before engaging in any type of Extraordinary Collections Actions. An in-depth look into ECAs was discussed halfway through the presentation (Slide 27). Keith stressed if this is not included in the FAP, it needs to state it is not in the FAP and be listed in a separate Billings and Collections Policy.

Widely Publicized in the Community
Next, Keith said that hospitals need to widely publicize that they offer charity care in at least four ways (slide 17-18).

Keith also explained the Emergency Medical Care Policy, which is the policy that requires hospitals to provide care for emergency medical conditions whether they are FAP-eligible or not, and prohibits actions discouraging individuals from seeking emergency medical care.

Keith finished up with 16 different actions that organizations could be taking today in advance of the final rule to get ready for it because, “We don’t know how much time the IRS is going to give us to get into compliance.” He said it’s important to be studying the regulations, and to observe your organizations policies compared to the opposed rules, get the board ready to vote on these rules, and get these policies ready for public dissemination at a “fourth grade level.”

“Our third party vendors must be following these hospital policies as well, because if they do not, it will come back to haunt us,” Keith stated for hospitals to be aware.

Joe Ferrara gave Etactics’ point of view on how hospitals will be affected by these new rules coming into place. Etactics’ Intellistatements solution’s goal is to help hospitals facilitate compliance, consistency and collect more in the process.

Joe explained in terms of communicating the FAP, one of the capabilities Intellistatements offers is to provide the policy of the FAP to patients with the initial statement. Intellistatements gives practices and hospitals the capability to block excessive statements and utilize external data. Joe explained how Etactics can automate 501(r) by using statements, letters, live courtesy calls and automated reminder calls.

Intellistatements has the ability to sequence patient communication based on the billing cycle. For example, if the billing cycle is thirty days and no payment is received in thirty days, Etactics can automatically send out a second notice but with the verbiage ramped up. The organization does not need to inform Etactics it is a ‘second’ or ‘third’ notice because the system already knows based on the billing cycle.

Joe explained that Etactics can send customized letters with statements, and that it does not need to necessarily say “Second Notice” but may state an organization’s Financial Assistance Policy.

Etactics intellistatements also has the power to send live courtesy calls to people who are so many days into the billing cycle. These soft calls have customized scripts to follow. Etactics can also set up payment plans, such as coupon books that some demographics still prefer to use. Joe also explained the Propensity to Pay Scoring which in short, is a risk assessment of how likely a person is willing to pay. When determining the communication sequence to set up the billing cycle, this can be a very useful tool.

Joe stressed that, “Because of the Affordable Care Act, we want to make sure as a business entity, we get paid as soon as possible and anytime we can reduce human intervention and automate things, we can make sure we win the race against time. The longer it takes for us to have a meaningful conversation with somebody, the less likely we are to get paid the amount that was due or get paid at all.”

Joe gave a packaging example in-depth towards the end of the presentation explaining Etactics can package the sequence based on Propensity to Pay (low-level vs high-level).