Bad Debt, Charity & Disproportionate Share

Transcription

1 Bad Debt, Charity & Disprprtinate Share September 11, 2013 Kathy L. Hughes, MBA, CHFP, FHFMA G2N, Inc. Senir Client Partner Bill Clark, CPA, FHFMA BKD Senir Managing Cnsultant Tulsa Office Michael Thmas BKD Managing Cnsultant Luisville Office T Receive CPE Credit Participate in entire webinar Answer plls when they are prvided If yu are viewing this webinar in a grup Cmplete grup attendance frm with Title & date f live webinar Yur cmpany name Yur printed name, signature & address All grup attendance sheets must be submitted t training@bkd.cm within 24 hurs f live webinar Answer plls when they are prvided If all eligibility requirements are met, each participant will be ed their CPE certificates within 15 business days f live webinar 2 1

2 Agenda Increased Scrutiny f Bad Debt & Charity New Rules Affrdable Care Act IRS Final Rule Additinal Guidance Tls & Training fr Staff 2014 Disprprtinate Share Payment Methdlgy Medicare Cst Reprt Wrksheet S-10 Issues 3 Increased Scrutiny Affrdable Care Act (ACA) March 23, 2010 IRS Cngress Media State gvernments Class Actin Suits General Public 4 2

3 Why? As federal & state deficits rise, gvernment lks fr additinal revenues in the frm f increased tax revenue frm healthcare Sme lawyers have wrked with unhappy debtrs t challenge tax-exempt status in rder t reap gains r just reduce healthcare debts Healthcare reimbursement is cmplex & peple want t understand but ften d nt Many miscnceptins smetimes brught n by the industry itself r media 5 New Rules New rules by IRS FASB AICPA audit guide instructins n bad debt & charity HFMA Principles & Practices Bard Statement

4 Basic Definitin Bad debts result when a patient wh has been determined t have financial capacity t pay fr healthcare services is unwilling t settle debt Charity care is prvided t a patient with a demnstrated inability t pay Cmplex decisin requiring judgment 7 501(c) (3) Hspitals IRS cde Sectin 501(r) was added by ACA 4 general requirements Establish written financial assistance & emergency medical care plicies Limit amunts charged fr emergency r ther medically necessary care t individuals eligible fr assistance under hspital s financial assistance plicy 8 4

5 501(c) (3) Hspitals Make reasnable effrts t determine whether an individual is eligible fr assistance under hspital s financial assistance plicy befre engaging in extrardinary cllectin actins against individual Cnduct a CHNA & adpt an implementatin strategy at least nce every 3 years 9 IRS Rule Financial Assistance Plicy (charity care) Eligibility criteria & whether free r discunted Basis fr calculating amunts charged t patients Methd fr applying fr financial assistance If n billing & cllectins plicy, FAP must state actins that may be taken fr nnpayment Measures t publicize plicy within cmmunity served 10 5

6 IRS Rule Requires a hspital t limit charges fr emergency & ther medically necessary care prvided t financial assistance-eligible patients t n mre than thse generally billed t individuals with insurance Prhibits using grss charges fr that billing Impses new billing & cllectin requirements n hspitals 11 Additinal Guidelines fr Bad Debt & Charity FASB 954 Issued July 2011 Presentatin & Disclsure f Patient Service Revenue, Prvisin fr Bad Debts, & the Allwance fr Dubtful Accunts fr Certain Health Care Entities Biggest change Classify bad debts as a deductin frm patient service revenue which will impact yur Days in AR AICPA Audit Guide 2011 Charity care is nt t be reprted in net revenue r net receivables Disclse yur charity care plicy & amunt prvided 12 6

7 Additinal Guidelines fr Bad Debt & Charity Healthcare Financial Management Assciatin P&P Statement 15 issued December 2012 Charity care must be valued at cst, even thugh charges are used fr recrdkeeping The methd used t cnvert charges t cst needs t be disclsed in ftnte t financial statements 13 Revised Financial Assistance Plicy Apprved & supprted by administrative leadership & many times Bard f Directrs Shuld be widely knwn t staff, physicians, & cmmunity such a plicy exists Hspital plicies generally share sme characteristics & nw are specifically detailed by IRS Based n percentage f Federal Pverty Guidelines Sme hspitals include giving financial assistance t patients after insurance r prmpt pay discunts Sliding scales based n incme 14 7

8 Revised Financial Assistance Plicy Other things that shuld be included Wh can apprve & by what dllar level Hw lng apprval fr financial assistance lasts Hw will assets figure int decisin Minimum balance size t apply Presumptive charity 15 Revised Financial Assistance Plicy Include in plicy varius means yu use t cmmunicate yur plicy Pst signs Website Infrm them at scheduling, registratin Financial cunselrs r staff t assist Infrm again with billing statements Prpsed IRS rule says plicy must cntain at least 4 ways 16 8

9 Revised Financial Assistance Plicy IRS rule indicates hspital has t seek persn ut; nt wait fr them t ask fr assistance Include prcess after determinatin is made Need t include yur billing & cllectin practices if yu dn t have a separate plicy Rule clearly states what yu can & cannt d as it relates t cllectins 17 Revised Financial Assistance Plicy Include in plicy hw eligibility is determined Credit scre nt perfect Incme verificatin-nt perfect Cmbinatin Presumptive charity fr thse that dn t cperate? IRS prpsed rule indicates that hspital has t seek persn ut; nt wait fr them t ask 18 9

10 Revised Financial Assistance Plicy Nrmally include Identificatin infrmatin fr respnsible party # & ages f husehld family members Incme supprted by W2 s r tax return cpy Mnthly expenses including medical bills Assets such as bank balances, real estate, stcks & bnds, IRAs Place fr cmments 19 Staff Training At a minimum, all staff shuld be aware hspital prvides charity care & has a written plicy available t anyne upn request (Annual HIPAA training?) Additinal training is required fr registratin staff, financial cunselrs, patient accunts staff 20 10

11 Staff Training Can these staff members answer these questins What is charity care Hw des smene apply Hw d we determine if a patient qualifies If a persn has questins, wh d they call Is there a time limit n when they can apply What medical services qualify 21 Staff Training Is there a time limit when a patient can apply fr charity care? A patient can apply fr assistance at any time A patient must apply within 90 days f the service Whenever patient finds a pen Only when patient is in cllectins 22 11

12 Disprprtinate Share CMS has surprised mst with their methdlgy fr cmputing new DSH payments Creates big winners & lsers But is it in line with Affrdable Care Act & legislative intent? 23 Disprprtinate Share Changes mandated by Sectin 3133 f Affrdable Care Act 25% f DSH payment remains the same (Empirically Justified DSH) Rescrambles 75% f DSH egg (Uncmpensated Care Payment) 25% f Original DSH Payment 75% Of Original DSH Payments Change in Uninsured Uncmp Care Cst Rati Ttal New DSH Payment 24 12

13 Empirical DSH Payment Nthing changes except payments will nly be made at 25% f current rate Hspitals must meet 15% threshld in rder t qualify fr these payments & Uncmpensated Care payments 25% f Original DSH Pmt 25 Uncmpensated Care DSH Distributin f 75% pl based n 3 Factrs Office f Actuary estimates $9.579 Billin Pl CMS must decrease pl by change in uninsured ppulatin Reduces Pt by 5.7% Remaining Pl apprximately $9.033 Billin A hspital s Uncmpensated Care divided by aggregate amunt f Uncmpensated Care fr all hspitals eligible fr payment 75% f Original DSH Pmts Change in Uninsured Uncmp Care Cst Rati 26 13

14 Uncmpensated Care DSH, cnt. Uncmpensated Care = Charity Care + Bad Debt What is ging t be the data surce? Wrksheet S-10 lgical chice? Cncerns ver accuracy f data Belief that S-10 is an apprpriate data surce when data is reliable = Get Prepared! CMS is utilizing its authrity t seek alternative data surces t define uncmpensated care Inpatient Medicaid Days plus inpatient Medicare SSI days as prxy Medicaid Days Based FFY 2010 Medicare cst reprts Medicare SSI days will use 2011 CMS files 27 Uncmpensated Care DSH, cnt. CMS Prxy shrtcmings: Cmpletely ignres utpatient uncmpensated care Cmpletely ignres cst f services prvided Des nt recgnize that different states have different Medicaid eligibility requirements Punishes states chsing nt t expand Medicaid Lwer Empirical DSH Lwer Uncmpensated Care prxy (in future years) Theretically states chsing nt t expand wuld see increased uncmpensated relative t states expanding 28 14

15 Uncmpensated Care DSH, cnt. Limitatin f review Hspitals will nt be able t challenge any factrs used n Uncmpensated Care payments Operatin Cnsideratins 29 Payments will be made n a per discharge amunt Eliminates Medicare Advantage Payment cncerns Estimated based n 3 year average f Medicare vlumes Payments will be based n Federal Fiscal Year Settlements made n hspital cst reprt CMS Table 3 Fall belw (r abve) DSH threshld Wrksheet S

16 Wrksheet S Wrksheet S-10 Net Revenue inpatient & utpatient payments received r expected fr cvered services delivered during this cst reprting perid Lines 2, 9, 13, 22 Prvider must prject future payments Including patient respnsibility 32 16

17 Wrksheet S-10 Charity Care Line 20 Clumn 1 ttal initial payment bligatin f uninsured patients (including patients with cverage frm an entity that des nt have a cntractual relatinship with prvider) wh are given a full r partial charity write-ff Clumn 2 patient deductibles and/r cinsurance amunts given a charity write-ff Curtesy discunts may nt be included 33 Wrksheet S-10 Charity Care Line 20 (cntinued) Charges fr nn-cvered services prvided t patients eligible fr Medicaid r ther indigent care prgram can be included if such inclusin is specified in hspital s charity care plicy & patient meets hspital s charity care criteria Includes charges fr days exceeding a length f stay requirement Must answer questin n line 24 & cmplete line

18 Wrksheet S-10 Bad Debt Line 26 Enter ttal facility (entire hspital cmplex) charges fr bad debts written ff r expected t be written ff (bad debt expense) Includes HHA, SNF, IRF, IPF, etc. Bad Debt Line 27 Enter Medicare reimbursable bad debts (e.g. WS E part A line 65) 35 Issues with Wrksheet S-10 Expected payment amunts must be reprted fr services delivered during this cst reprting perid Bad debt reprting is fr entire hspital cmplex, but there is n mentin f this fr ther line numbers; entire facility is used elsewhere If a change ccurs in a patient s bad debt status in a subsequent year, it shuld be reprted in cst reprt perid when services were delivered (retrspective review needed) Updated S-10 needed prir t audit (may be similar t wage index prcess) 36 18

19 Issues with Wrksheet S-10 CMS recgnized cncerns abut accuracy & cnsistency f S-10 data in 2014 IPPS Prpsed & Final Rules Recgnized cmmenters suggestins t clarify & revise reprting instructins & will review Reiterated intentin t prceed with use f S-10 t determine uncmpensated care csts (and Factr 3) in future 37 Issues with Wrksheet S-10 MedPAC recmmended a blend f insured lwincme days & uncmpensated care data ver a transitin f several years t sle use f Wrksheet S- 10 uncmpensated care data in determining Factr

20 Kathy L. Hughes, MBA, CHFP, FHFMA Senir Client Partner, G2N, Inc Michael Thmas Managing Cnsultant, BKD Bill Clark, CPA, FHFMA Senir Managing Cnsultant, BKD Cntinuing Prfessinal Educatin (CPE) Credits BKD, LLP is registered with the Natinal Assciatin f State Bards f Accuntancy (NASBA) as a spnsr f cntinuing prfessinal educatin n the Natinal Registry f CPE Spnsrs. State bards f accuntancy have final authrity n the acceptance f individual curses fr CPE credit. Cmplaints regarding registered spnsrs may be submitted t the Natinal Registry f CPE Spnsrs thrugh its website: The infrmatin in BKD webinars is presented by BKD prfessinals, but applying specific infrmatin t yur situatin requires careful cnsideratin f facts & circumstances. Cnsult yur BKD advisr befre acting n any matters cvered in these webinars

21 CPE Credit Up t 1 CPE credit will be awarded upn verificatin f participant attendance; hwever, credits may vary depending n state guidelines Fr questins, cncerns r cmments regarding CPE credit, please the BKD Learning & Develpment Department at training@bkd.cm 41 21