Section 501r – Final Regulations and the Medical Debt Advisory Task Force

Tina HansonExecutive Vice President, State Collection Service, Inc.

May 7, 2015

Wisconsin AAHAM Spring Conference

• Two decades of experience in the receivables management industry

• Served on the HFMA/ACA International Medical Debt Collection Task Force

• Served as the Chair of ACA International’s Education Council, Ethics Committee, R&D Committee

• ACA International Instructor of the Year (2011)

Today’s Speaker

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Tina HansonExecutive Vice President

State Collection Service, Inc.

• How did we get here?

• How have the industry and Washington responded?

• Overview of the HFMA Medical Debt Best Practices Flow Chart

• 501r and how it fits into the Diagram

• What is next?

Agenda

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• Problems with very complex billing processes with numerous variables

• New legislation and regulations

• Increased demand for better financial assistance policies and more transparent policies

How Did We Get Here?

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How Did We Get Here?

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• Consumer complaints specifically around credit reporting discrepancies

• Media attention

• Consumer Financial Protection Bureau, or CFPB

Consumer Financial Protection Bureau

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• Created under Dodd-Frank Act of 2010

• Treated as an independent federal agency

• Mission to make markets for consumer financial products and services work for Americans

• Has rulemaking, supervisory and enforcement authority

• Tasked with monitoring and responding to consumer complaints regarding consumer financial products or services

CFPB – What is Happening Now?

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December 11, 2014Consumer Financial Protection Bureau issues report with findings that 43 million Americans have medical collections on their credit reports. Director Richard Cordray states, “The CFPB is taking action to improve credit report accuracy. Getting medical care should not make your credit report sick.”

December 29, 2014Final Regulations issued by Department of Treasury and IRS. Transition period – final regulations apply to tax years beginning after December 29, 2015. For earlier years (meaning now), hospitals may rely on a reasonable, good faith interpretation of the statute.

Recent federal actions related to medical collections

What is Happening Now?

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• The message in DC– Congressman Blaine Luetkemeyer (R-MO)

Member of the House Financial Services Committee Member of the House Small Business Committee Operation Choke Hold

• FCC– Request for TCPA clarification

• CFPB– Congressman Neugebauer (R-TX)

Chairman, Subcommittee on Financial Institutions and Consumer Credit

Legislation to over see the CFPB

A Convergence of Issues…

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Consumer Trends:• Increased Use of HDHPs• Tighter Lending Standards

Environment Ripe for

Legislative/ Regulatory

Action

Provider Challenges: • Non-Standardized Account

Resolution Processes• Opaque Pricing• Challenges Accessing

Financial Assistance

The Medical Account Resolution Process

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The Medical Account Resolution Process

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Overall Considerations

Billing and Collections Regulations-501(r)(6)

• Extraordinary Collection Actions (ECA) – Any action taken by hospital to obtain payment for care

covered under FAP that requires legal or judicial process, or

– Involves selling an individual’s debt to another party, or – Involves reporting adverse information to consumer

credit reporting agencies or credit bureaus. – Deferring or denying or requiring payment before

providing medically necessary care because of an individuals nonpayment of one or more bills for previously provided care

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Overall Considerations

Billing and Collections Regulations-501(r)(6)

• Extraordinary Collection Actions (ECA) – Actions that require a legal or judicial process include,

but are not limited to Placing a lien on property Foreclosing on real property Attaching or seizing a bank account or other personal

property Commencing a civil action Causing arrest or body attachment Garnishing wages

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Overall Considerations

Billing and Collections Regulations-501(r)(6)

• Extraordinary Collection Actions (ECA) do NOT include– Certain debt sales– Liens on certain judgments,

settlements, or compromises (e.g. hospital liens)

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Overall Considerations

Billing and Collections Regulations-501(r)(6)

• Certain debt sales are not ECAs if the hospital enters into a legally-binding written agreement with the purchaser of the debt pursuant to which:– The purchaser is prohibited from engaging in any ECAs to obtain

payment for care – The purchaser is prohibited from charging interest on the debt in

excess of the rate at the time the debt is sold – The debt is returnable to the hospital upon a determination by the

hospital facility or the purchaser that the individual is FAP eligible – If the debt is not returned, there must be procedures in place to

insure the patient does not pay more than he or she is responsible for paying as a FAP eligible individual

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Overall Considerations

Billing and Collections Regulations-501(r)(6)

Hospital facilities may initiate ECAs against an individual as early as 120 days after the first post-discharge bill without failing to meet the requirements of section 501(r)(6), provided the required notifications have been given prior to the initiation of the ECAs.

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Overall Considerations

Billing and Collections Regulations-501(r)(6)

Hospital facilities need only incur the additional costs that may be associated with the provision of a plain language summary one time and only with respect to the smaller pool of patients against whom the hospital facility actually intends to engage in ECAs, not with respect to all patients against whom it might one day want to engage in ECAs. As a result, the final regulations significantly reduce the burden on hospital facilities in notifying individuals about their FAPs.

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Overall Considerations

Billing and Collections Regulations-501(r)(6)

The final regulations state that hospital facilities may not engage in ECAs against an individual before making reasonable efforts to determine whether the individual is FAP-eligible. It should be noted that individual here includes account guarantors and hospital facilities include any purchaser of an individual's debt, any debt collection agency, or any party to which the hospital has referred the debt.

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Overall Considerations

Billing and Collections Regulations-501(r)(6)

• FAP notification requirements – plain language summary– Written statement notifying individual that hospital offers financial

assistance under a FAP and includes all the following (in clear, concise, easy to understand language): Brief description of eligibility requirements and assistance offered Direct website address and physical locations where copies of FAP and

application form can be obtained Instructions on how to obtain free copies of FAP and application by mail Contact information of hospital staff who can provide information about the

FAP and the application process as well as nonprofit organizations or government agencies capable of providing assistance with FAP applications

Statement of the availability of translations of the FAP, application, and plain language summary in other languages

Statement that no FAP eligible individual will be charged more than AGB for emergency or other medically necessary care

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Overall Considerations

Billing and Collections Regulations-501(r)(6)(reasonable notification efforts continued)

The final regulations clarify that, in the case of any written notice or communication that is mailed, the communication will be considered ‘‘provided’’ on the date of mailing. A communication may also be considered provided on the date it is sent electronically or delivered by hand.

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Overall Considerations

Billing and Collections Regulations-501(r)(6)(reasonable notification efforts continued)

• May print notices on billing statements, as long as they are conspicuously placed and of sufficient size to be clearly readable.

• Obtaining a signed waiver from an individual will not constitute the determination that an individual is not FAP-eligible and will not satisfy the requirements to make reasonable efforts before beginning ECAs.

• If you sell or refer the debt during the 240-day application period, you must have a legally binding agreement with the party that no ECAs will be taken, until reasonable notification has occurred, and all applications submitted during the application period will be processed.

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Overall Considerations

Billing and Collections Regulations-501(r)(6)(reasonable notification efforts continued)

• Hospital can provide notification simultaneously for multiple episodes of care. However, cannot begin ECA until 120 days after the most recent episode of care.

• Notification before deferring or denying care due to nonpayment of prior care: – Must provide written notice and FAP application – Include deadline, after which hospital will no longer process the

FAP application for previously provided care. Deadline may be no earlier than the later of 30 days after the notice, or 240 days after the date of the first post-discharge statement.

– If individual submits application on or before deadline, must process it.

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Overall Considerations

Incomplete Applications

• Suspend any ECAs

• Provide written notice that describes what additional information or documentation is required and includes a contact number for additional assistance

• If the individual completes the application within the

application period (or, if later, within a reasonable timeframe to respond to additional requests), the hospital must process the application.

What’s Next?

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• Credit reporting

• CFPB regulation

• Complaint management and oversight

• Get close to your collection vendors and other third party vendor service providers as they are an extension of you

Questions?

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Your feedback is appreciated!

Thank you!

Tina Hanson – Executive Vice PresidentState Collection Service, Inc.2509 South Stoughton Road, Madison, WI 53716Phone: (800) 477-7474 x314Email: tinah@stcol.com