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TCPA & Patient’s Right to Revoke Consent

Even though it might seem a bit implausible at first glance; imagine the following scenario.  A passenger chooses to offer consent to an airline that they frequently fly with to receive calls or text messages from the airline regarding upcoming flights that they have booked.  At some point during a subsequent flight, the passenger decides that they no longer wish to receive any calls or texts from the airline.  

Based on the latest Federal Communication Commission’s (FCC) Declaratory Ruling pertaining to revoking consent, the passenger could legitimately flag down a member of the flight crew mid-flight; and provide them with their name and phone number while letting them know that they no longer wish to receive calls or texts from the airline.  After that point, if a call or text were to come through, the passenger would have the capability of suing the airline based on the Telephone Consumer Protection Act (TCPA).

While the illustration might seem a bit far-fetched, this is the issue at hand regarding the topic of revocation in the FCC’s Declaratory Ruling on July 15, 2015.  The ruling, which deals with revoking consent is very broad, making it problematic for companies to comply with; particularly larger companies with multiple offices throughout the country.  

However, because of the language used in the creation of the rule, there is so much room for mistakes that many companies that actually have the express consent to contact a consumer on a cell phone will choose instead not to do so.  The eventuality will be that consumers, or patients, in this case will no longer be able to receive contact through phone call or text to their cell phones.

Obtaining consent in the first place is very clear; but revoking that consent is a completely different subject.  The tide has turned against businesses when it comes to this topic.  The ruling points out that “we clarify that a called party may revoke consent at any time and through any reasonable means.  A caller may not limit the manner in which revocation may occur.”  The Commission further added “Consumers have a right to revoke consent, using any reasonable method, including orally or in writing.”

Many people today are tied to their cell phone for reminders on just about every aspect of their daily lives, from doctor appointments, to automated payments and credit or debit card alerts from a banking institutions.  In today’s world, many would be adversely impacted if businesses were to stop texting consumers simply because the situation regarding consent and its revocation have become too much to deal with.  

Provider offices should ensure that they and their vendor partners are mindful of the following best practices:

-Proof of consent is necessary and should be noted within the system.

-Protocols for tracking consent are a must.  Recordings are necessary for vocal consent and written consent should be scanned into the system.  

-Protocols for revocation of consent are also necessary.  All methods of revocation of consent should be covered; including live notification, vocally, through traditional mail, via fax or email, through SMS (text messaging), through website portals.

-Everyone who will ever work with this patient’s file again must be aware that the patient has revoked their consent.  Also, the cell phone numbers of those who have revoked their consent should be immediately removed from any automatic dialers.

-If the patient has multiple accounts and the consumer is not clear about which account they wish to revoke consent for, all of the accounts should be flagged as consent revoked.

Although the rules regarding consent revocation appear difficult to live up to, if a medical facility or their vendor partners have a plan set up and well documented and can prove that the plan is a regular part of their business practice; the challenge can be met.


ICD 10 Coding System Takes Effect October 1

Medical Office Staff

Next month, the ICD-10 coding system, which will have a significant impact on all aspects of the healthcare revenue cycle, will take effect.  The implementation of the new coding system on Oct. 1 comes after several delays. The system was announced in 2009 and initially scheduled to start in 2013. The system was then scheduled to take effect on Oct. 1, 2014, but was delayed by Congress as part of a bill that also pushed back Medicare reimbursement cuts.

Now healthcare providers are in the home stretch of preparing for the system, which brings a higher level of specificity to the codes used to report medical diagnoses and inpatient procedures. All HIPAA-covered entities are required to make the transition and use the codes for billing Medicare or Medicaid. Private payers are also expected to require use of ICD-10.

The International Classification of Diseases, or ICD, is used to standardize codes for medical conditions and procedures. According to Centers for Medicare and Medicaid Services (CMS), diagnosis and billing medical codes in the U.S. have not been updated in more than 35 years and contain outdated, obsolete terms.  ICD-10 uses 68,000 codes compared to 13,000 available in ICD-9; however, providers do not need to use all of the codes. This new system will allow for more specific diagnoses and more flexibility if new codes need to be added.

ICD-10 will bring the U.S. up to speed with other industrialized countries, virtually all of which currently use the coding system.  During the last several years, providers, payers and other leaders working in the healthcare revenue cycle have completed a coordinated effort to prepare for ICD-10.  

CMS has coordinated end-to-end testing of the codes among Medicare Fee-for-Service healthcare providers, clearinghouses and billing agencies, with overall success in the acceptance of test claims. The acceptance rate during testing in April (88 percent) was higher than in January, with an increase in test claims submitted and a decrease in the percentage of errors related to both ICD-9 and ICD-10 diagnosis codes, according to CMS.

In response to requests from the provider community, CMS announced the release of additional guidance on new ICD-10 codes for medical diagnoses and inpatient procedures. It also made changes to prevent some claim denials during the first year the system is in place.  “Many physicians have been concerned about adopting this code set because of the heavy investment of time and resources and the potential for claims disruptions that could interfere with patient care,” said American Medical Association (AMA) President Steven Stack.

CMS and AMA are also providing additional resources and guidance to help providers make sure they are prepared for the new ICD-10 codes.  The guidance will allow for flexibility in the claims auditing and quality reporting process as the medical community gains experience using the new ICD- 10 code set, according to a CMS news release.  Together with the AMA, CMS will provide educational resources including webinars, on-site training, articles and national provider calls to help physicians and other healthcare providers learn about the updated codes and prepare for the transition.

“As we work to modernize our nation’s healthcare infrastructure, the coming implementation of ICD-10 will set the stage for better identification of illness and earlier warning signs of epidemics, such as Ebola or flu pandemics,” said CMS Acting Administrator Andy Slavitt in a news release. “With easy-to-use tools, a new ICD-10 ombudsman, and added flexibility in our claims audit and quality reporting process, CMS is committed to working with the physician community to work through this transition.”

CMS will also offer ongoing Medicare acknowledgment testing for providers through Sept. 30 and additional in-person training for small physician practices.  “We appreciate that CMS is adopting policies to ease the transition to ICD-10 in response to physicians’ concerns that inadvertent coding errors or system glitches during the transition to ICD-10 may result in audits, claims denials, and penalties under various Medicare reporting programs,” Stack said.

CMS also has a Road to 10 website directed at smaller physician practices and provider training videos that offer helpful ICD-10 implementation tips.  

More information: (ICD-10 QuickStart Guide.) (Five Facts on ICD-10.)


Healthcare Collections Closely Scrutinized as Regulation Looms

Healthcare collections has grown to the point of being the second largest source of revenue in the collection industry.  In fact, healthcare collections now accounts for as much as $5.5 billion annually.  Factors such as bankruptcy policy that allows medical debt to be discharged; a market that remains splintered; and growth rates make it clear that healthcare ARM companies and medical system leadership should see the healthcare space as a reliable area of growth.

The Consumer Financial Protection Bureau (CFPB) has been rather uninvolved in the process of medical debt collection until very recently.  The primary target of the CFPB has been the research of loans secured by consumers for things such as mortgages, automobiles, and through credit cards.  Medical debt collections have typically remained unnoticed by the Federal Trade Commission (FTC) as well opting instead to focus on the enforcement of the Federal Debt Collection Practices Act (FDCPA). 

Recent developments make it seem likely, however, that a closer review and inquiry is likely by 2016.  One such event worth noting happened in December of 2014, when the CFPB conducted a hearing in Oklahoma City about collection practices of medical collectors and the issue of credit reporting.  That same month, the chairperson of the FTC announced that their focal point for the coming year would be on mergers taking place between medical providers and hospitals.  The spark for such attention is said to be based on a concern that mergers could eliminate competition; thus increasing prices for patients.

Another development pointing to an increase in scrutiny came recently by way of a press release from the White house during The White House Conference on Aging assigning the CFPB with the task of “protecting the older Americans from financial exploitation and elder abuse”.  An advisory report is expected to be released by the end of this year to give support to financial institutions helping them recognize, prevent and report this type of abuse.

The current strategy of the FTC is likely to hinder the rate of medical provider acquisitions and mergers in the foreseeable future.  This also appears to suggest that more robust and comprehensive regulations for the collection of medical debt are on the way.  With that being the case, now may be the perfect time for medical providers to ensure that their ARM vendor has a powerful solution for meeting compliance standards.


Healthcare Records: CMS Proposes Simplified Electronic Health Reporting Rule

The Centers for Medicare and Medicaid Services has issued a new proposed rule for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Program to “allow providers to focus more closely on the advanced use of certified HER technology to support health information exchange and quality improvement.”  According to CMS, electronic health records are the next step in the continued progress of healthcare that can strengthen the relationship between patients and clinicians.

The new proposed rule would streamline reporting requirements by:

  • Reducing the overall number of objectives to focus on advanced use of EHRs.
  • Removing measures that have become redundant, duplicative or have reached widespread adoption.
  • Realigning the reporting period beginning in 2015 so hospitals would participate on the calendar year instead of the fiscal year, and
  • Allowing a 90-day reporting period in 2015 to accommodate the implementation of these proposed changed in 2015.

“The proposed rule is just one part of a larger effort across [the Department of Health and Human Services] to deliver better care, spend health dollars more wisely, and have healthier people and communities by working in three core areas: improving the way providers are paid, improving the way care is delivered, and improving the way information is shared to support transparency for consumers, healthcare providers and researchers and to strengthen decision making,” according to CMS.

Initially, the proposed rule required a full-year of electronic health record reporting in 2015. CMS reduced the reporting period from one year to 90 days after repeated requests from hospital advocates, according to the Health Care Financial Management Association.

A draft of the final rule could be issued this summer, according to the HFMA.  More information: and


Consumer Reporting Agencies Announce Changes to Medical Debt Reporting

Three of the major U.S. consumer reporting agencies, Equifax, TransUnion and Experian, recently announced a new National Consumer Assistance Plan, which includes changes to reporting consumers’ medical debts. The plan became effective in the state of New York starting March 8 after cooperative discussions and a settlement agreement between the agencies and New York Attorney General Eric Schneiderman.

It will eventually be implemented nationwide, according to the attorney general’s office.  Equifax, TransUnion and Experian are consumer reporting agencies that maintain consumer credit reports on approximately 200 million consumers. The CRAs compile credit information via voluntary submissions from data furnishers, such as collection agencies.

According to the Consumer Financial Protection Bureau, 43 million people in the U.S. have medical collections on their consumer credit reports. In December 2014, the bureau also announced it would require reports from the major CRAs on accuracy and how disputes from consumers are being handled.  Medical debt is a huge market in the credit and collection industry. In fact, healthcare-related debt accounted for nearly 38 percent of all debt collected in 2013 and 52 percent of all debt collected in 2010, according to surveys by ACA and Ernst and Young.

The new plan for the CRAs aims to enhance their ability to collect complete and accurate consumer information and will provide consumers more transparency and a better experience interacting with credit bureaus about their consumer credit reports.  During discussions in the months leading up to the agreement, the New York attorney general and other state attorneys general allowed the CRAs to collaborate in an unprecedented manner to share industry best practices and develop a plan that will offer consistent and meaningful benefits to consumers.

ACA International, as part of a Medical Debt Collection Task Force led by the Healthcare Financial Management Association, contributed to developing best practices, released just over a year ago, to help make paying medical bills an easier and fairer proposition for consumers. The best practices for healthcare providers and their business partners include following up with CRAs when a consumer’s account is resolved.

The National Consumer Assistance Plan announced by Equifax, TransUnion and Experian also includes following up with CRAs, and focuses on enhancements in two primary areas: consumer interaction with national CRAs and data accuracy and quality.  The settlement agreement between the New York attorney general and the CRAs that likely resulted in the National Consumer Assistance Plan states, “CRAs shall prevent the reporting and display of medical debt identified and furnished by collection furnishers when the date of the first delinquency is less than 180 days prior to the date that the account is reporting to the CRAs.”

This means medical debts won’t be reported until after a 180-day waiting period from the date of delinquency.  Date of delinquency, as defined in the Fair Credit Reporting Act, is “the month and year of the commencement of the delinquency on the account that immediately preceded collection activity, charge to provide or loss, or similar action.”  This date needs to be determined by the provider and furnisher based on the underlying financial agreements and the creditor’s policies for when an account becomes “delinquent.”

Typically, the date of delinquency will precede the date of placement with the agency.  The 180-day waiting period for reporting medical debts in the agreement will allow insurance payments to be applied, according to the New York attorney general. The CRAs will also remove previously reported medical collections that have been or are being paid by insurance from consumers’ credit reports.  

Debt collection agencies whose healthcare provider clients request that they report consumers’ accounts to the three CRAs also rely on them to follow up when the account is paid.  Tom McGregor, president and CEO of DataTrac Receivables Recovery in Anderson, S.C., said deleting consumers’ paid medical accounts from their report altogether might not address the issue of improving their credit rating.

“We all understand that typically a medical incident or a bill incurred as a result of medical necessity is not a voluntary purchase, such as going to Best Buy and buying a TV,” McGregor said.  “Since we’re negatively impacting their credit file when we place [an] item, why shouldn’t it be positively impacted when we mark it paid?”

McGregor spent 12 years of his career working in credit reporting and, at that time, he thought more data was better.  “Then the emphasis switched to accuracy of data—you didn’t want to delete anything unless it was [from] a mistake or error,” he noted.  He said the agreement between the CRAs and attorney general, in terms of deleting consumers’ paid accounts, seems like a quick fix more than a solution.  “The accuracy is critical; there is no doubt about that. If the data is not accurate, it is useless to begin with,” McGregor said. “It looks to me that it could ultimately compound a bad problem rather than resolve it.”

Implementation of the agreement requirements will occur over three years and 90 days from the March 8 effective date and includes three phases.  Requirements for medical debt collections, including the delay of sending accounts to CRAs and removing paid medical bills from consumers’ credit reports, are included in phase three. CRAs have until the completion date to meet those requirements.  CRAs have within six months from the effective date to complete phase one and 18 months from the effective date to complete phase two of the implementation plan.  “The implementation date is going to be important on this,” said Mark Rukavina, a principal at Community Health Advisors in Chestnut Hill, Mass.

As more details on the agreement emerge, it is important for agencies working in healthcare collections and their healthcare provider clients to communicate about their expectations and plans going forward.  Healthcare providers that do allow collection agencies they work with to report patients’ unpaid medical accounts to CRAs should contact them to make sure they are working on systems to comply with the agreement.

“A lot of the details aren’t completely clear at this point,” Rukavina said. “It would be prudent for hospitals to be talking to their agencies about this, and it would be prudent for agencies to let their hospitals know that they are fully aware of the agreement.”



Price Transparency: American Hospital Association Issues Price Transparency Toolkit for Providers

In response to the increasing consumer demand for informative and clear price information about their healthcare, the American Hospital Association has developed a new resource for healthcare providers, Achieving Price Transparency for Consumers: A Toolkit for Hospitals.  According to the AHA’s Community Connections blog, the increase in higher deductible health plans and coinsurance is causing consumers to pay more of their healthcare costs out of pocket.  

“This means that consumer demand for meaningful and transparent price information will only continue to grow,” according to the blog. “To meet this demand, hospitals and health systems must take a critical look at where they currently fall on the price transparency spectrum and take steps to improve how they communicate pricing information with patients and their community.”

The goal of the AHA in developing the toolkit is to prompt conversation and action by allowing hospitals to evaluate their current programs and have access to examples of what other providers do to ensure price transparency, as well as sample price transparency tools.  In addition to examples of other providers’ price transparency plans, the toolkit has a self-assessment checklist, Web-based tools, and studies on price transparency and guides that have been provided to consumers.  More information:


CMS Delays ‘Two Midnights’ Rule

Enforcement of the controversial “two midnight” payment policy for short visits to the hospital has been delayed until the end of April.  

This action should allow Congress the opportunity to pass a package that repeals a sustainable growth-rate formula set in motion by Medicare when the body meets on April 13.  This new piece of legislation encompasses a delay of six months in the enforcement of this payment rule, a point that many hospitals find impairs their clinical decisions and thus unfair.

The CMS has been asked to offer additional advice on payment for short stays at the hospital by the healthcare community when proposed payment rules are released for 2016.  These rules should go in to effect on October 1.  

The policy in question presupposes that an admission into the hospital was valid if the patient’s stay lasted long enough to cover two midnights and that if this was not the case, then outpatient observation would be required.  The reason this policy was created originally was to address a spike that appeared in observation stays; thought to be a reaction to hospital fear that Medicare auditors would question patient admissions.

Originally CMS first announced the two-midnight policy back in 2013.  However, actual enforcement of the rule has been delayed time and again through both regulatory and legislative action.  The most recent delay came to an end in March.


Changing the Price Transparency Landscape

Price transparency is not a new concept for healthcare providers, but as more consumers have insurance thanks to the Affordable Care Act—as well as high deductible plans with, in some cases, higher out-of-pocket costs—providers are working to improve access to accurate cost information. 

According to a report from The Commonwealth Fund released in November 2014, 21 percent of adults with health insurance spent 5 percent or more of their income on out-of pocket healthcare costs over the past year (excluding premiums), and 13 percent spent 10 percent or more. Low-income adults were the most likely to have high out-of-pocket costs, with 41 percent of those making less than $11,490 a year spending 5 percent or more of their income on out-of-pocket healthcare costs and 31 percent spending 10 percent or more.

As a result of these higher out-of pocket costs, patients have more interest in determining what they will pay in advance, and that trend is also fueling efforts to improve price transparency.  According to the Healthcare Financial

Management Association, which has a task force on price transparency, “The intended outcome of price transparency is to provide patients and other care purchasers with the information they need to make an informed choice of provider.

Price transparency is just one component of the information that care purchasers need to make this choice; the quality and safety of services a provider delivers, for example, are other important components of the information a care purchaser needs.”  From a healthcare provider perspective, improving price transparency may mean evaluating who within a health system is best able to provide cost information for patients, according to Torrey Sundall, the enterprise executive director of patient financial services for Sanford Health, a health system based in South Dakota.

“I would describe it as a healthcare provider’s opportunity to improve the patient experience by providing that education and information upfront to a patient so that they can make an informed decision regarding their care from a cost standpoint,” Sundall said. “A lot of the healthcare providers across the nation [are assessing] their internal capabilities of providing [an] accurate and timely quote or estimate. And you’re seeing a lot of providers who are trying to figure out ways to improve that, whether it’s through internal efforts or engaging in a third-party vendor system.”

Providers and representatives of insurers, consumers and others in the healthcare industry involved with the

HFMA’s Price Transparency Task Force are also focusing more on the extent patient interest in their out-of-pocket costs is fueling the trend in access to information. That focus, along with how overall price transparency can be achieved and challenges with the process, is evaluated in the HFMA’s Patient Friendly Billing® 2006 report, Consumerism in Healthcare: Achieve a Consumer-Oriented Revenue Cycle.

“In that report, we go through what price transparency is from a patient perspective,” said Terry Rappuhn, leader of HFMA’s Patient Friendly Billing® and a former hospital system administrator.  “It has examples and objectives on what hospitals can do to achieve price transparency.”  Rappuhn stressed that efforts to improve price transparency are always evolving and will continue to get better.

“There has been an increase in interest from patients and consumers on prices as a result of the high-deductible health plans,” Rappuhn said. “That’s been happening for a number of years and…it’s going to continue to evolve. You can’t just flip a switch and say, ‘Tomorrow I am going to have price transparency.’  You have to build it. That’s why I think it’s evolving and it will continue to get better.”

According to the HFMA report, providers can achieve price transparency by providing consumers information that is meaningful to them. “Ultimately, the objective is to provide patients with easy and timely access to information that clearly explains their financial obligation to pay for health services—in most cases, in advance of receiving those services,” according to the report.

In regards to providing meaningful information, patients must understand how their individual plan benefits impact a price estimate, Sundall said. For example, if an insured patient is price shopping multiple providers and that patient only has gross charges from the providers, he may make a decision that actually results in more expensive care.

The most accurate information on out-of-pocket expenses is available by taking into consideration the allowed amount from individual insurance plan benefits. It takes a coordinated understanding.  However, as a patient’s likely first point of contact, providers have to work to issue the best price information available as an out-of-pocket cost estimate.

It can be challenging because the cost for one procedure could vary based on the patient’s condition, the services they need, any complications that occur and even the type of supplies a provider may use to complete the procedure. “Those complexities can make it very difficult to come up with a price estimate that doesn’t have a wide range to it,” Sundall said. “I think patients are looking for that estimate that is as accurate as possible. But sometimes just due to the complexity or the potential complexity of the services, you have to provide that patient with a range of those potential costs. 

The challenge there is having appropriate communication with the patient so that they understand that this is just an estimate, not a guarantee of what their charges will be. There may be an unknown variable that is not determined until after the provider has started the procedure. ”

Providers issuing estimates can recommend that patients contact their insurance company next to determine coverage for the service and out-of-pocket costs, and ultimately make the best informed decision on where to receive their medical care.  “What’s important is for a patient to really understand their own insurance benefits. 

[And] there is a level of coordination that’s needed between the provider and the payer to arrive at an accurate quote of what that person’s actual out-of-pocket responsibility is going to be,” Sundall said.

The Affordable Care Act and Price Transparency

Under the Affordable Care Act, hospitals are required to make available a list of their standard charges for items and services, according to an American Hospital Association report from July 2014, Price Transparency Efforts Accelerate: What Hospitals and Other Stakeholders are Doing to Support Consumers.

Under section 501(r) of the Affordable Care Act, which regulates nonprofit hospitals’ ability to maintain their tax-exempt status, hospitals are also required to establish and widely publicize written financial assistance (FAP) and emergency medical care policies. The 501(r) regulations were finalized in December 2014, and the final rules apply to a hospital facility’s taxable years beginning after Dec. 29, 2015.

Sundall stressed that price transparency is more than just providing a list of charges for services, but the requirements in the Affordable Care Act will prompt healthcare providers who have not focused on price transparency to this point to increase and improve their efforts.

“Appropriate scripting and communication will be important now that the 501(r) requirements have become final,” Sundall said. “Typically you want to provide a price estimate to a patient as soon as possible so they have the knowledge ahead of time to make an informed decision. But then you also have to maintain compliance with 501(r) and make sure you’re educating that patient about your financial assistance policy. You likely have to educate that patient about your financial assistance policy before engaging in discussions regarding your expectation of payment.”

The Affordable Care Act has also contributed to employers offering high-deductible health plans to their employees, leading to more inquiries about costs.  According to The Commonwealth Fund report, as healthcare premiums rise, many employers and individuals are selecting insurance plans with higher deductibles and copayments in an attempt to keep premium costs in check. Overall, 13 percent of people with private health insurance whose plans include a deductible now have deductibles equivalent to 5 percent or more of their income; that figure includes 25 percent of adults with low incomes and about 20 percent of adults with moderate incomes($11,490 to $45,960 a year for a single person).

Over the next few years, assessing how health insurance is working for consumers will be a critical measure of the Affordable Care Act’s success, according to The Commonwealth Fund.  But the healthcare law is increasing consumers’ awareness about their medical expenses.  “The Affordable Care Act is impacting the demand for price transparency,” Rappuhn said. Additionally, the 501(r) requirements are doing more to influence providers’ price transparency efforts.

“The 501(r) requirements, I think, [are] causing the hospitals to really step back and be more systematic about both price transparency and what they communicate to patients,” Rappuhn said. “It does require more transparency in what your financial assistance policies are, and that’s a good thing.”

Challenges and the Future of Price Transparency

Overall, Sundall said all health systems want to find a way to improve the patient experience by providing them with accurate cost information in advance.  “When you do that, I think you’re going to have greater patient retention; the patient in general is going to be happier with their care and want to come back to you for future healthcare needs,” he said.

According to the HFMA report, there are many important questions to answer about price transparency:

Will consumerism in healthcare bring about a decline in healthcare consumption, as patients become more discerning about purchasing healthcare services?

Will consumerism facilitate necessary preventative care?

Will providers and payers be able to provide meaningful price and quality information to allow consumers to make decisions about healthcare value?

Will consumers be willing and able to assume the administrative complexities and financial burdens of consumer-directed health plans?

Will providers find ways to compete with convenient care centers offering pricing advantages?

Will the widespread use of health savings accounts generate sustainable savings?

Rappuhn said the most important goal for price transparency is to work on it with consumers’ needs in mind. “I think for this year, the message is to keep working on price transparency as hard and fast as you can because it’s continuing to be more and more important,” Rappuhn said. “Whatever you’re doing, you just have to continue to get better and make it broader.”


IRS Finalizes Charity Care Rules

In less than a year, nonprofit hospitals will be required to comply with final regulations on access to financial assistance policies, billing and collection procedures and notification periods, as well as creating community health needs assessments, among other things, under section 501(r) of the Patient Protection and Affordable Care Act of 2010 in order to maintain their tax exempt status.

The Internal Revenue Service and U.S. Department of the Treasury issued proposed regulations offering guidance on the statutory requirements of 501(r) in 2012 and 2013, and they sought comments on the proposals before publishing the final rules on Dec. 31, 2014.  

The final rules were effective Dec. 29, 2014, and apply to a hospital facility’s taxable years beginning after Dec. 29, 2015. For taxable years beginning on or before Dec. 29, 2015, the regulations expressly allow a hospital facility to rely on its reasonable, good-faith interpretation of 501(r).  The following is a summary of some of the additional key final rules published in the Federal Register.

Community Health Needs Assessments

Section 501(r) requires a hospital to conduct a community health needs assessment (CHNA) at least once every three years and to adopt an implementation strategy to meet the community health needs identified through the assessment.  CHNAs must be made widely available to the public by:

  • Conspicuously posting the report on a website.
  • Making a paper copy available for public inspection upon request (and without charge).

Financial Assistance Policies

Hospitals are also required to establish and widely publicize written financial assistance policies (FAP) and emergency medical care policies.  To ensure patients have the information they need to seek financial assistance, the FAP must be “widely publicized” within the community it serves, which may be satisfied by making them available on a website and in paper form upon request.

The final regulations require a hospital facility’s FAP to:

  • List the providers, other than the hospital facility itself, such as private physician groups or third-party providers delivering emergency or other medically necessary care within the hospital facility.
  • Specify which providers are and are not covered by the hospital facility’s FAP.

A hospital’s FAP must also specify the eligibility criteria for financial assistance and if it includes free or discounted care, and the basis for determining amounts charged to patients. Individuals eligible for financial assistance cannot be held personally responsible for more than the amounts generally billed (AGB) to patients with insurance, including Medicare, Medicaid or private commercial insurance.

A hospital must include a conspicuous written notice that informs patients about the availability of financial assistance on each billing statement. The notice must include both a telephone number of the office or department that can provide information about the FAP and FAP application process and the direct website address where copies of the FAP, application form and plain language summary may be obtained.

Extraordinary Collection Activities and Notification Periods

Hospitals are required to make reasonable efforts to determine whether an individual is eligible for assistance before engaging in extraordinary collection actions (ECAs), such as selling debt or garnishing the patient’s wages.

Extraordinary collection actions include obtaining payment of a bill for care covered under the FAP through a legal or judicial process; selling an individual’s debt to another party or reporting adverse information about an individual to credit agencies; or deferring, denying or requiring payment before providing medically necessary care based on nonpayment for previously provided FAP-covered care.

There are several notification requirements in place before hospitals, as well as their third-party debt collection partners, can begin ECAs and to contact patients regarding outstanding bills.  Providers must notify patients about

FAPs before discharge and during the 120-day billing period after receipt of the first post-discharge billing statement.

Additionally, patients have up to the 240th day after the first post-discharge billing statement to apply for financial assistance.  If the patient applies within that time, the hospital needs to suspend ECA activity until it makes a determination whether the individual is eligible for financial assistance.

In accordance with the language of the Fair Debt Collection Practices Act, the final regulations amend the initially proposed requirement for written ECA notifications.  A hospital facility is now only required to provide written notification of those ECAs that it (or other authorized party) actually “intends to take” rather than a description of each and every ECA a hospital “may” take in the future. Additionally, the final regulations specify a hospital facility (or third party collecting a hospital facility’s debt) need not provide this notice unless it actually intends to initiate an ECA.

Revocation of Hospital’s Tax-Exempt Status

Failure to meet any of the requirements set forth in the final regulations may have grave consequences, including the revocation of a hospitals’ tax-exempt status and an excise tax for failing to conduct a CHNA or adopt the CHNA’s implementation strategy.

“However, if a hospital fails to meet a requirement, but the failure is neither willful nor egregious, the hospital can correct and publicly disclose the error to have it excused, thus avoiding revocation of tax-exempt status, but the excise tax would still apply,” said U.S. Department of Treasury Deputy Assistant Secretary for Tax Policy Emily McMahon in a blog post on the department’s website.

The rules indicate the IRS will consider all relevant facts and circumstances when determining whether revocation of tax-exempt status is warranted as a result of a failure to meet one or more 501(r) requirements, including whether the organization’s practices and procedures were routinely followed and were reasonably designed to promote and facilitate overall compliance with 501(r), as well as whether the noncompliance once identified was promptly corrected.

Overall, the IRS stressed the final rules follow the same format of what was proposed in 2012 and 2013 while making the process for hospital facilities easier.  “In practice, many of these requirements took effect shortly after the [Affordable Care Act] passed in 2010,” McMahon said. 

“Charitable hospitals have been required to make a good-faith effort to comply with the statutory requirements since the law was passed, and have been able to rely on the Treasury’s proposed regulations pending finalization. These final rules adopt the same framework of proposed regulations but simplify the compliance process for charitable hospitals, while continuing to provide meaningful guidance on protections for patients and requirements to assess community health needs.”

More information: and



News & Notes

OIG Will Review Two-Midnight Rule

The Office of the Inspector General will review the two-midnight rule in 2015, HealthLeaders Media reports. Under the rule, Medicare beneficiaries who are admitted to the hospital for fewer than two nights should be treated as outpatients. The OIG has found that short inpatient stays cost millions of dollars in excess payments to hospitals.

Survey: Uninsured Lack Understanding of Affordable Care Act Coverage

Some people who stand to benefit from the Affordable Care Act struggle to understand how coverage works, according to the Kaiser Family Foundation. For example, many of the uninsured respondents to the survey could not correctly answer questions that required calculating the amount an insured person would have to pay for a hospital stay (61 percent) or an out-of-network lab test (91 percent) based on the plan’s cost-sharing requirements.

Spending Per Privately Insured Grew in 2013

Privately insured Americans spent more on medical services in 2013 even though they used fewer of them, according to the Health Care Cost Institute. Healthcare spending averaged $4,915 per enrollee in 2013, up $185 from the year before.  Moderate growth in private insurance spending has occurred since 2010.


Mnet Financial Survey Measures Provider Views to Ensure Exceptional Service

Mnet Financial has released a new client survey to medical providers across the country to evaluate the views and practices of medical business offices that make use of their services.  The survey is designed to analyze data such as which products the provider is using, the support and responsiveness of the client services and account management teams, as well as the convenience and ease-of-use of products designed for patients and providers alike.

“Mnet Financial is known throughout the healthcare world for providing exceptional service to our clients” said Mnet Financial CEO David Hamilton.”  “We believe that the best way to maintain such a great reputation is to stay connected with each one of our clients; regularly searching out areas of service that we can improve upon” said Hamilton.  “That’s really the whole point of the surveys that are being sent out to the providers we work with; we want to provide best-in-class service but we need client feedback to ensure consistent improvement” Hamilton said.

So, if you are currently a client of Mnet Financial, it's likely you have received your invitation to take the survey.  But what if you’re not the kind of person who likes to vocalize your opinions about processes and vendors?  The survey can be completely anonymous and is only personalized if the person filling it out chooses to provide their personal information and requests to be contacted by Mnet Financial.

The survey is extremely simple to fill out and easy to access.  Since reports show the majority of people would prefer to complete a survey online, the Mnet Financial survey is sent to clients through an email containing a link taking that person directly to the survey website.  The survey is also very short and to-the-point and is designed to take up a minimal amount of a provider’s time.

“We look at the feedback that comes from the providers we interact with as extremely valuable” said Stacey Vink, Compliance Officer at Mnet Financial.  “Busy professionals are taking time out of their hectic schedules to help shape the customer experience for themselves and other providers throughout the country.  We are extremely grateful for each and every survey that is completed because it helps us raise the bar that much higher” Vink said.

Once Mnet Financial has analyzed and evaluated the results from the survey, a full report of the findings is going to be published for Mnet News readers and the public as well.  After that, Mnet Financial will use the feedback that they have received to enhance the customer experience for both patient and provider.

If you haven't yet received your invitation to complete the survey and would like to do so, please find the survey here:

Click here to take survey



Legislation: Congresswoman Introduces Bill to Help Healthcare Providers Comply with Meaningful Use

Rep. Renee Ellmers (R-N.C.) has introduced legislation to ensure that healthcare providers receive the flexibility they need to comply with the Department of Health and Human Services Meaningful Use Program requirements.

According to Ellmers, HHS published a rule in August requiring that healthcare providers perform a full-year electronic health record reporting period in 2015.

“Healthcare providers have faced enormous obstacles while working to meet numerous federal requirements over the past decade,” Ellmers said.

“Obamacare has caused many serious problems throughout this industry, yet there are other requirements hampering the industry’s ability to function while threatening their ability to provide excellent, focused care.”  Ellmers’ legislation, The Flex-IT Act of 2014, will allow providers to report their Health IT upgrades in 2015 through a 90-day reporting period as opposed to a full year.

“By adjusting the timeline, providers would have the option to choose any three-month quarter for the HER reporting period in 2015 to qualify for meaningful use,” Ellmers said.  To date, only 9 percent of hospitals in the U.S. and 1 percent of eligible healthcare professionals have demonstrated the ability to meet meaningful use Stage 2 requirements using certified electronic health record technology, according to Ellmers.

Additionally, the mandates of the meaningful use program are causing financial hardships for healthcare providers.  “The Meaningful Use Program has many important provisions that seek to usher our healthcare providers into the digital age,” Ellmers said. 

“But instead of working with doctors and hospitals, HHS is imposing rigid mandates that will cause unbearable financial burdens on the men and women who provide care to millions of Americans. Dealing with these inflexible mandates is causing doctors, nurses and their staff to focus more on avoiding financial penalties and less on their patients.”  More information:

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