On December 29, 2014, the Internal Revenue Service released the final regulations on financial assistance policy and emergency medical care policy requirements. Enacted as part of the Patient Protection and Affordable Care Act in 2010 (the “ACA”), section 501(r) requires tax-exempt hospital organizations to have certain policies and procedures in place for each hospital facility, including limitations on charges and collection activities for individuals eligible for the financial assistance policy.
Financial assistance policy and emergency medical care policy
Section 501(r) was added to the IRS code and imposes new requirements on 501(c)(3) organizations that operate one or more hospital facilities Each hospital is required to meet several general requirements on a facility-by-facility basis including:
- Establish written financial assistance and emergency medical care policies;
- Limit amounts charged for emergency or other medically necessary care to individuals eligible for assistance under the hospital’s financial assistance policy; and
- Make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy before engaging in extraordinary collection actions against the individual.
- Policies must be widely available to the public and be publicized within the community served by the hospital.
Billing and Collections Requirements
According to the new regulations, a tax-exempt hospital organization is forbidden from engaging in extraordinary collection actions (“ECAs”) before the organization has made reasonable efforts to determine whether the individual is eligible for assistance under the FAP. Below are regulations and other information that is specific to billing and collections:
- provide that placing liens on certain personal injury recoveries from a third party is not an ECA;
- provide that the sale of an individual’s debt is not an ECA if prior to the sale the hospital facility enters into a written agreement with the purchaser containing certain protections;
- include as an ECA the practice of deferring or denying or requiring payment before providing medically necessary care because of nonpayment of prior bills for care covered under the FAP;
- make certain changes relating to the “reasonable efforts” requirement, including the requirement of providing notice to an individual about the FAP and potential ECAs and the requirement of observing an “application period” during which a hospital facility is required to process any FAP application submitted by the individual;
- make certain changes to the provisions relating to incomplete FAP applications; and
- provide that a hospital facility may in some circumstances presumptively determine that an individual is eligible for less than the most generous assistance available under the FAP based on information other than that provided by the individual.
As tax-exempt hospitals come under more and more scrutiny, it is imperative that compliance, operations and billing work together to ensure these policies are created, implemented and examined across the hospital organization. Please contact Wendy Kukla, Hollis Cobb Compliance Expert, with any questions or comments.