Emergency Medical Care and the Federal Tax Consequences

Transcription

1 Teleconference: IRS NPRM on Additional Requirements for Charitable Hospitals August 15, 2012 Ivy Baer

2 Today s Agenda Refresher about what the law requires Deep dive into the proposed regulation Financial assessment policy Emergency medical care policy Limitation on charges A limited safe harbor Billing and collection What has to happen before an extraordinary collection action Which regulations will come later?

3 Refresher on IRC 501(r) Imposes additional requirements on 501(c)(3) hospital organizations on a facility-by-facility basis i. Community Health Needs Assessment (CHNA) ( 501(r)(3)) ii. Financial Assistance Policy (FAP) ( 501(r)(4)) iii. Emergency Medical Care Policy iv. Limitation on Charges ( 501(r)(5)) v. Billing & Collections ( 501(r)(6)) 3

4 Effective Dates 501(r) additional requirements EXCEPT the CHNA requirement, Apply to taxable years beginning after March 23, 2010 Includes excise tax (rule to come later) CHNA requirements effective for taxable years beginning after March 23, 2012 IRS will publish a proposed regulation later Can rely on published guidance for now 4

5 Deep Dive into Proposed Reg Who Must Comply FAP Emergency Medical Care Limitation on Charges Billing & Collections

6 501(r)-speak You need to have an FAP (financial assistance policy) that includes an explanation of how you calculate the AGB (amounts generally billed) and specifies what happens before you begin an ECA (extraordinary collection action)

7 With apologies to Hair (and those of you old enough to remember)! IRS wrote the NPRM In the Fed Reg USA When they got there What did they see? Hospitals of America on FAP IRS USA FAP AGB AGB ECA IRS FFS ECA AGB FFS IRS

8 Who must comply w/ 501(r)? 501(c)(3) hospital organization that operates one or more hospital facilities Hospital facility is required by a state to be licensed, registered, or similarly recognized as a hospital Multiple buildings operating under a single license may be treated as a single hospital facility Only applies to hospitals in the 50 states and DC Government Hospital Organization Any government hospital organization recognized as a 501(c)(3)

9 Penalties? Stay tuned for guidance to address failure to meet one or more the regulatory requirements

10 FAP Applicable to all emergency and other medically necessary care In reality, is any care excluded? Must widely publicize 10

11 Widely publicize Includes 4 measures: 1. Free paper copies of FAP, application form, and plain language summary of FAP in public locations in hospital and by mail In English and any language of any population that constitutes more than 10% of residents of community served by hospital 2. Inform and notify visitors to hospital about FAP in a way reasonably calculated to attract attention of visitors

12 Widely publicize (con t) 3. Inform and notify members of community about the FAP in a manner reasonably calculated to reach individuals most likely to require assistance 4. Make FAP, application form, and a plain language of FAP widely available on web site. Posted conspicuously in English and languages of any population that constitutes more than 10% of residents of community served by hospital

13 How to Establish FAP Must be adopted by authorized body and implemented Authorized body: Governing body (board of directors, board of trustees, or equivalent) Committee of governing body permitted under state law to act on behalf of governing body Other parties authorized by governing body to act on its behalf, if permitted by state law Implementation = consistently carry out policy

14 For Multiple Facilities MUST have a separate FAP and emergency medical care policy for each facility, but may contain the same operative terms If communities served differ, then policies may have different AGBs and use different methods for determining AGBs If have a separate billing and collections policy, then also must have one for each facility

15 FAP Content FAP must include: Eligibility criteria (free/discounted care) Basis for calculating charges Method of applying financial assistance Available collections actions for nonpayment (if no separate billing/collections policy) Measures to widely publicize FAP to served community Plus, there must be an Emergency medical care policy 15

16 Emergency Medical Care Policy Written policy that requires the hospital to provide, without discrimination, care for emergency medical conditions (same definition as EMTALA) regardless of whether an individual is FAP-eligible Policy that complies with EMTALA OK but not sufficient MUST prohibit actions that discourage individuals from seeking emergency medical care

17 FAP Eligibility No criteria mandated FAP must state facility s criteria, specify all discounts and free care available; if applicable, amounts to which discounts will be applied FAP MUST state that if an individual is FAPeligible, he/she won t be charged more than AGB Under consideration: should hospital be required to consult with the community as FAP is developed?

18 Applying for Assistance FAP must describe: How to apply Information or documentation that may be required Contact information for obtaining help

19 Presumptive Eligibility Facility may be able to make FAP determination based on information other than that provided by individual as part of a complete application

20 Reasonable effort continues... Signed statement that individual does not wish to apply under FAP or receive notification does NOT constitute a determination of eligibility must still make reasonable efforts to determine eligibility before engaging in ECA

21 Basis for Calculating Charges Limited to amounts generally billed (AGB) to insured individuals Two methods to calculate AGB: Look Back Which Claims method Prospective method

22 Method 1: Look Back Based on past claims paid in full by either Medicare FFS ONLY OR Medicare FFS and all private health insurers paying claims at hospital Includes what insurers paid and what individuals paid (co-insurance, copayments, or deductibles)

23 Method 1: Calculation Calculation: One AGB for all emergency and medically necessary care OR For separate categories of care Calculate at least annually Begin applying AGB by 45 th day after the end of the 12-month period used to calculate AGB Can this be done?

24 Method 2: Prospective Calculation: Set AGB at amount that Medicare and Medicare beneficiary together would be expected to pay Has to be calculated per service

25 Pick Once... and Forever IRS proposes that a hospital picks one ABG calculation methodology and cannot switch But should a change be allowed under some circumstances?

26 Gross Charges Prohibition Prohibition on billing gross charges applies to any care not just emergency and medically necessary care provided to FAP-eligible individuals Gross charges can be included on hospital bill as starting point but can t be an amount an FAP-eligible is expected to pay for any services

27 Gross Charges Safe Harbor Not a violation to charge more than AGB if no completed FAP application and hospital continues reasonable efforts to determine FAPeligibility

28 Billing and Collections Before engaging in an ECA must make reasonable efforts to determine FAP-eligibility: 1. Notify individual about FAP 2. If have an incomplete application: provide information about completing application, including deadline, and ECA consequences 3. If have a complete application, make and document a determination about whether individual is FAP-eligible

29 Non-payment Either FAP or a separate billing and collections policy MUST describe actions the hospital will take in the event of non-payment (ECA and any other actions), including process and time frames Need to be aware of: Notification period Application period What s considered to be an ECA

30 What s an ECA? Requires a legal or judicial process: Lien on property; Foreclosure on real property; Attach or seize bank account or other personal property; Start a civil action; Cause an arrest; Subject individual to writ of attachment; Wage garnishment Also two other actions: Sale of debt to another party Reporting to credit agencies

31 Notification Period Notification: when hospital must notify individual about FAP Extends from date care provided to 120 th day after individual provided with first billing statement If meet notification requirements and send 30-day ECA warning, and no FAP submitted, can begin an ECA

32 Reasonable Effort re: Notice 1. Distribute plain language summary of FAP, offer FAP application before discharge from hospital 2. Include plain language summary of FAP with at least 3 billing statements and all other written communication about bill 3. Inform individual about FAP in all oral communications about bill 4. Provide at least 1 written notice about ECA no earlier than last day of notification period (at least 30 days before deadline in notice) 5. ECA may begin no earlier than last day of notification period

33 What s in the summary? Brief description eligibility requirements and assistance offered Web address, URL, physical location for FAP and application form Instructions on how to get free copy of FAP and application by mail Contact information at hospital and elsewhere for application assistance Statement about other languages in which FAP and application are available Statement that won t be charged more than AGB

34 Once application received Notification requirements end and hospital makes reasonable efforts to determine eligibility Hospital must accept and process FAP during application period that Extends from date individual provided with first billing statement through 240 days

35 Incomplete Applications Must make reasonable efforts to determine FAP eligibility: Suspend/do not initiate any ECAs Provide written notice about additional info needed At least 30 days before completion deadline provide at least 1 written notice about ECAs that will be taken if application not completed, or amount due not paid If still no complete application, and no payment by completion deadline, reasonable effort has been made and ECAs can begin

36 Complete Application If complete application submitted: suspend any ECA, make and document timely eligibility determination, notify individual in writing If individual eligible MUST: Provide billing statement with amount owed Refund any excess payments Take all reasonably available measures to reverse any ECA (except sale of debt)

37 Sell or Refer Debt to Third Party Need legally binding written agreement No ECAs until hospital has made reasonable efforts to determine FAP-eligibility If application submitted during application period must suspend any ECA awaiting eligibility determination If determination is that individual is FAP-eligible must adhere to procedures and ensure that individual won t pay more than is required under FAP Further sale requires written agreement that will abide by above

38 Reasonable Efforts and ECAs Date of care starts FAP notification period which ends 120 days after first billing statement. Must accept applications throughout application period which ends 240 days after first billing statement No app during notification period: Provide written notice about ECAs and deadline. Initiate ECAs if no app or payment by deadline App received: Determine eligibility and inform individual 38 Receive app after ECA begins: STOP ECA App incomplete: make reasonable efforts to have completed. If still incomplete at end of 240 days, ECAs can resume App complete If eligible: provide a billing statement and refund excess payments, if applicable If balance remains, notify individual of potential ECAs. Initiate ECAs if no payment If not eligible: notify individual of potential ECAs. Initiate ECAs if no payment

39 Comments Requested on: 1. Hospital facilities: Can multiple buildings operating under 1 licensed be defined as single facility? Should hospital organization in a single building but under more than 1 state license be treated as one or multiple facilities? 2. Alternative methods for government hospital to satisfy requirements 3. For FAP, must hospital take into account community needs determined in CHNA? Consult with members of community?

40 Comments cont 4. Alternative methods for calculating AGB 5. Should hospital be able to change its method of calculating AGB under certain circumstance and after certain period of time? 6. AGB look-back method 7. Safe harbor if charge more than AGB to individual who hasn t submitted complete application 8. Should the following constitute ECAs: deferring or denying care based on a pattern on non payment; requiring deposits before providing care; charging interest

41 Comments cont 9. Should there be any additional procedural protections as part of reasonable efforts to determine FAP-eligibility? 10. Other ways to balance individual s need for enough time to seek financial assistance with hospital s interest in efficient billing 11. Length of notification and application periods; should the 2 periods be concurrent? 12. Ways to encourage timely completion of incomplete FAP applications 13. Feasibility of reversing ECAs

42 Comments cont NOTE: this is not a comprehensive list. Refer to the NPRM for complete details and to review to regulation: 14. Ways to determine an individual is FAP-eligible other than by soliciting and processing FAPapplications 26/pdf/ pdf

43 If you want to comment Comments are due September 24, 2012 Submit to (IRS REG ) Please send a copy of your comments to ibaer@aamc.org

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