April Wilson
Rev Spring

Understanding the detailed requirements for 501(r)(4)(6)

While the debate continues as to when and how compliance will be enforced, there are steps that healthcare revenue cycle management professionals can take to get ready. Here are five steps you can take right now to better meet the requirements of 501(r). 

Step 1: Be Understandable

Your Financial Assistance Policy is the first thing you’ll want to review. Is it written in a language that is easy for everyone to understand? If your policy is written in Legal or Business language, you will need to revise it to a 9^th-grade reading level. If you want to get a feel for how difficult your policy is to read, try putting it into one of the many free online tools that are available to help you with this task. For example, this paragraph scores at a 9^th grade level, according to one website. 

Step 2: Be Everywhere.

You want your patients to be able to find the Financial Assistance Policy, now that you’ve edited it to be easier to read. This means you need to promote it, everywhere. You should include it with all of your patient communications, particularly with every billing statement. (If you don’t include it with your statement, your statement will need to include clear instructions on where to find it or request a copy.)

It should be easy to find on your website, preferably available right from your main website navigation. If you aren’t sure if the link to your financial assistance policy is easy to find, consider asking a friend or family member to find it while you sit next to them and watch their process. While 501(r) compliance doesn’t require that level of testing, it’s a quick way to spot any issues with where you’ve put the policy on your website. 

Step 3: Be Upfront

Before someone leaves your hospital, make sure that they are provided with a written copy of your Financial Assistance Policy and a Charity Application. Best practices suggest that you provide this even if you do not have enough information on the patient to determine eligibility for financial assistance. If you might take Extraordinary Collections Actions for non-payment, make sure those actions are explicitly detailed in that communication packet. If more than 10% of your residents speak a language other than English, you will need to make all of these materials available in that language as well. 

Step 4: Be Ready

You may not have collected enough information at intake to make the determination whether or not someone is eligible for financial assistance. However, according to 501(r), this does not exempt you from providing assistance. You cannot deny any patient charity because you are missing information – even if you have sent several communications requesting it. Leverage tools like Presumptive Charity Scoring to help make those determinations. Charity scores pull information from various sources about your patient to give you most of the data you need to make a decision for financial assistance. 

Step 5:  Be Proactive

Based on April 2013 guidelines from the IRS, making a good faith effort to comply with 501(r) can prevent your hospital from being penalized. Additionally, if a health system is comprised of multiple hospitals, if one hospital fails to comply, the entire system will not be penalized.

About the Author

April Wilson has a long history of measuring and optimizing customer communication for top brands, and she has built her career around evangelizing the power of data and using consumer insights to change behavior.

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At least as far as Senate Minority Leader Mitch McConnell and House Speaker John Boehner are concerned, that responsibility does not belong with the Independent Payment Advisory Board (IPAB), an independent panel created by the Patient Protection and Affordable Care Act. The technocrats who will serve on the panel do not deserve to decide the medical fate of Americans, they declared.

In today’s Inside Patient Finance post on Forbes.com, “Who Do You Want to Cut Medicare, Politicians or Technocrats,” I make the case that the decision has already been made for us. Healthcare already is run by both politicians and technocrats. The Republicans, therefore, are fighting against principles they acquiesced to almost 20 years ago.

That said, their politicizing of IPAB had been an effective tactic. As the Washington Post reported earlier this year, recruiting qualified medical professionals and economists for the panel has been difficult. According to the Post:

“It is supposed to be 15 members, with limited salaries who can’t do any outside work,” says Peter Orszag, the former director of the Office of Budget and Management under Obama who was a key proponent of IPAB. “It will be challenging to find top 15 health-care experts are who would want that job.”

“You’re joining an organization that has uncertain authority with the certainty of being deeply political and widely criticized,” says Bob Kocher, a former Obama health policy adviser. “It doesn’t make sense for current thought leaders in American health care to want this.”

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At least that’s the headline, but what the study really shows is that Medicare reimbursement rates drive all reimbursements to healthcare providers across the board.

A new study sponsored by the National Institute for Health Care Reform found that when the growth of Medicare reimbursement rates slows, so, too, do the reimbursements from private insurers.

The backers of the study heralded the results as proof that slowing Medicare growth, a major facet of healthcare reform, does not shift costs onto private insurers and therefore onto consumers. But digging deeper into the data instead proves that some cost-shifting does occur, but proportionate to Medicare reimbursement growth.

“The payment rate data showed a large and growing gap between private and Medicare payment rates,” writes the study’s author, Chapin White, a senior health researcher at the Center for Studying Health System Change. That gap is growing. In 1995 the difference between Medicare reimbursement rates and private insurance rates was 45 percent. By 2009 the gap was up to 57 percent.

What White did find was that when the growth of Medicare reimbursement rates slowed there was a correlation in the growth in private insurance reimbursement rates. The “myth” that’s White study has exploded is that when Medicare growth slows, private insurers make up the difference.

This “myth” is in truth a fallacy, one that healthcare providers have always known. Providers do not drive healthcare costs, Medicare does.

“The Affordable Care Act permanently slowed the growth in Medicare hospital payment rates, producing large savings for the federal government,” White writes in his conclusion. “One criticism of those rate cuts is that private insurers will get stuck with the tab. My results indicate the opposite.”

While White’s study is good news for taxpayers, good news for the federal government, and good news for insurers, it is bad news for providers and demonstrates that the only “cost shifting” that is occurring when Medicare reimbursement rates are cut or slowed is on healthcare providers.

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But let’s take a moment and talk about credit scores and credit reporting. It’s the mechanism — flawed as it might be — that we currently use to gauge a consumer’s credit-worthiness. There’s a long history of American Exceptionalism: owning a home isn’t so much something one earns as much as it’s somehow wrapped into those “inalienable rights” the Founding Fathers went on about. Other inalienable rights: a college education, regardless the ridiculousness of the degree; ranch dressing, regardless of the health toll it would take; giant sodas, New York City be damned; freedom of expression sans the requisite freedom to let other people express.

And I mention all of this because I think it might actually not be a smart move to excise medical debt from credit reports any earlier than any other kind of debt would make its way off of a credit report. The report is, as I said a paragraph ago, gauging a consumer’s credit-worthiness; paying off a hefty medical debt on top of whatever potpourri of other debt you’ve left simmering may not actually leave you in the most solid position, financially, to take on additional credit.

You can read the whole thing here: http://www.forbes.com/sites/insidepatientfinance/2013/04/30/medical-debt-actually-should-affect-credit-scores/

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Our inaugural post, “Healthcare of the Employee vs. Health of the Business: What If No One Wins?,” takes a look at “this uncomfortable positioning of the healthcare of the employees against the health of the business that remains when we talk about healthcare reform in this country.”

As Mike Bevel points out at the beginning of the piece, there are unlikely to be any quick and easy answers in how to reconcile the needs of small business with the needs of employees and affordable healthcare. This doesn’t mean we shouldn’t think about it and question pretty much all sides of the issue, though.

We hope you’ll join us.

The post insidePatientFinance on Forbes: When It’s Employees vs. Business, Is There Really a Winner? appeared first on insidePatientFinance.

Last week it was Medicare Advantage. The health insurance lobby turned defeat into the status quo, winning a modest increase instead of a promised cut. Yesterday it was oncology providers, who launched a public relations blitz to overturn the sequester reimbursement cuts. We’ll see how successful their efforts will be when President Barack Obama announces his proposed federal budget, which reportedly will include an additional $400 million in cuts to Medicare (Medicaid appears to be spared).

The campaign by the oncology industry is especially ill-timed, as only a week earlier distinguished members of that medical fraternity in an op-ed piece in the New York Times were calling for reform of their profession and in particular how many of their brothers and sisters are driven by revenue. Twenty physicians signed their name to the op-ed article, writing:

Many cancer patients, after getting a diagnosis of a terrifying disease, pursue any potentially promising therapy, regardless of the price. But the main cost driver is the fee-for-service payment system. The more doctors do for patients, the more reimbursement they receive. Surgeons earn more for every procedure. Oncologists typically make more money if they use newly approved drugs and the latest radiation treatments than if they use cheaper, older alternatives that work just as well. (This is because they get paid back the cost of the drug, in addition to an extra 6 percent of that cost — the more expensive the drug, the higher the compensation.)

“The physician’s cash cow is chemotherapy,” is how one physician put it, as quoted in The Cost of Hope, an investigation into cancer healthcare by Pulitzer-Prize winning author Amanda Bennett. She describes the salad days of oncology, which lasted until 2005 when Congress changed the reimbursement formula on chemotherapy to today’s “cost of the drugs plus six percent.”

Oncology represents one of the largest, if not the largest, specialty in the healthcare industry. On dollar out of every 20 spent on healthcare goes toward treating cancer. In the New York Times op-ed article, the authors propose five steps to reform cancer treatment in the United States:

• Change fee-for-service to bundled payments.
• Require transparency of costs so physicians and others can see and compare costs, especially with regard to tests and procedures such as scans and chemotherapy drugs.
• Enact quality monitoring of patients and treatments “to ensure that there is neither under- nor over-utilization of care.”
• Encourage more “high touch” oncology practices, which are currently not covered by many insurers but will identify and treat cancer in its early stages, thus resulting in tremendous cost savings.
• Finally, implement better incentives for research.

It is important to note that the authors of New York Times op-ed article never once suggested “Don’t cut Medicare reimbursements.” Yet oncology professional organizations are campaigning for exactly that, despite members from their own ranks claiming that abuse of that system is rampant. Worse, those demanding Congress rescind the sequestration reductions offer no suggestions where the funds will come from to pay for those cuts. In the past, restored cuts have usually come from other healthcare providers.

Last week insurers got theirs; perhaps next week the oncology industry will likewise be rewarded. It will be a pyrrhic victory, because cuts made in one sector of healthcare industry will likely be added to cuts made to others, usually hospitals and physician groups. Politicians love it when groups end up fighting amongst themselves for scraps of funding. Once divided, we are conquered, and it will, in the end, hurt us all.

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“More than 700 union workers went on strike in Olympia, Washington, to protest [Providence Health & Services'] unilateral decision while at the bargaining table to switch employees from an affordable health care plan to a high-deductible plan. These workers at Providence St. Peter Hospital — which include everyone but the doctors, registered nurses and social workers — and the Providence SoundHomeCare and Hospice earn an average of $31,000 annually.”

That’s the beginning of a piece on Bill Moyers’s — yes, that Bill Moyers — site: When Hospital Workers Can’t Afford Health Care.

It comes from The Nation, and it details the challenges even healthcare workers have getting healthcare.

Workers’ deductibles increased on January 1 from $750 to $3,000 for family coverage, with higher co-pays as well.

Greg Kaufmann, the writer of the piece, details the economic disparity that seems to undercut this decision: “The problem isn’t that Providence is lacking in resources: the company reported $286 million in profits in 2011, and the CEO’s compensation rose from $3.1 million in 2010 to $6.4 million in 2011; the senior VP and chief administration officer’s pay rose from $1.5 million to $3.3 million; and the executive VP, western Washington region, saw his pay increase from $2.4 million to $3.5 million.”

You know who isn’t providing healthcare? The CEO of the hospital. He’s facilitating it, sure, by running a hospital that employs skilled people. But he’s not down there inserting catheters or dispensing pain meds. I’m not suggesting he’s not worth the extra $3.5 million; but maybe he’s not worth that at the expense of higher healthcare costs for the people in the trenches, so to speak.

Add this to the list of issues not generally acknowledged, but deeply effecting, the ways in which healthcare is broken in this country.

The post When Healthcare is Too Expensive for Healthcare Workers Something is Wrong appeared first on insidePatientFinance.

That said, it’s almost worth watching.

The documentary premiered last year, but last Sunday it received national television exposure when it was broadcast on CNN.

“Escape Fire” is structured as all these documentaries are: Experts with impressive credentials describe the problem, there are human stories to tug at the heartstrings, and a narrator to handle all the exposition. These standard documentary tropes are bent to serve the filmmakers’ agenda: The experts have strong points of view that are controversial, yet the filmmakers never interview anyone who disagrees with them; the human stories are incomplete — CNN even went so far as to have its own staff medical expert reveal that in at least one case, the documentary was disingenuous; and the “narrator” is a “healthcare journalist” who is made to seem as if she is speaking extemporaneously but in reality was reading a script.

But here are three reasons the documentary might be worth watching:

1. Safeway’s health insurance program. The documentary spends several minutes examining Safeway, a western grocery store chain, rewards employees who practice healthy behaviors or health outcomes such as non-smoking, low body fat, and low cholesterol. Non-union employees receive discounts on their contribution toward health insurance if the meet certain markers, and the corporation has found that its expenditures related to employee health have been flat for several years, unlike their counterparts who have seen double digit increases in expense.
2. You can’t legislate behavior. Sen. Ron Wyden (D-Ore.) makes the wisest statement about one of the biggest challenges to reducing healthcare costs: “People have a constitutional right to be foolish.”
3. “Medicare is the Rosetta Stone.” So said Dr. Dean Ornish, who is an advocate of making healthcare a focus on having patients reduce stress, engage in healthy behaviors such as diet and exercise, and eliminating unhealthful behaviors such as smoking. Medicare drives American healthcare, and is the reason we have a dearth of primary care physicians, an excess of specialists, and a populace that is ignorant of the cost of healthcare.

“Escape Fire” is available on DVD or by download from iTunes.

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But no one seems concerned about “Health Inequality in America.”

The United States annually spends $3 trillion on healthcare, and half of that amount is consumed by less than five percent. Furthermore some 75 percent of our healthcare dollars go to people with chronic conditions.

Where is the outrage?

Many of those expensive conditions that drain our limited healthcare resources were not innocent children with cancer, victims of terrible accidents, or individuals with hereditary birth defects. Instead they were self-inflicted and preventable, caused by smoking, alcohol and drug abuse, sedentary lifestyles, and poor diet choices.

It’s easy, apparently, to get angry about how 5 percent of the population owns more than 50 percent of the total wealth in this country; but no one is shocked that five percent of the population receives 50 percent of the healthcare, most of which is paid by the rest, in the form of taxes, higher insurance premiums, or substandard healthcare.

If Americans took more responsibility for eliminating threats to their health we could cut healthcare expenditures in this country as much as 25 percent by some estimates. That theoretical $750 billion could benefit those who were not ill by lifestyle choices, but by poverty or bad luck. It could help middle class families whose finances are ripped apart by catastrophic illness. That three-quarters of a trillion dollars could be used to transform healthcare providers into wellness centers that not only treat diseases but promote healthy lifestyles.

We need a healthcare system that rewards healthy behavior in place of the one we have today that transfers the cost of those who engage in unhealthy behavior among the rest.

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Unfortunately the report, “Implementation of the Affordable Care Act in Minnesota: Preliminary Projections of Reductions in Uncompensated Care by 2016,” throws out data for PR effect rather than as thoughtful analysis. Many of the conclusions fall short of making sense.

For example:

“Without implementation of the ACA, hospital-based uncompensated care is likely to continue to grow because of a number of factors including: (1) projected further growth in health care costs; (2) population growth; (3) likely growth in insurance products that shift a greater share of costs to patients in the form of increased cost sharing; and (4) factors related to ACA requirements that incent hospitals to provide community benefits [emphasis mine].” But if there was no ACA, those requirements in number four would not exist.

The report employs some very shaky math to demonstrate how hospital uncompensated care without the ACA in 2016, the year when the health insurance exchange in Minnesota is expected to have reached mature enrollment, is projected to increase to between $319 million and $411 million. Those are big numbers, but more accurate analysis would be to describe percentages of those respective range of increases, which is 10 million (3 percent) and 100 million (24 percent).

Thanks to the ACA, more individuals will be insured and as a result uncompensated care will decrease, the report states. This could have been said in one sentence and I doubt anyone would disagree with that conclusion. But the data does expose a large area of risk where all healthcare providers should begin preparing. This statement in particular caught my eye: ”Nearly half of uncompensated care (44 percent or $135 million in 2011) is provided by hospitals on behalf of insured patients.” The report adds this additional breakdown, “Much of the uncompensated care costs for insured patients (41 percent) is for charity care, with the remainder accounted for by bad debt.”

Again, with a little math and using data from the report, one can calculate that of all bad debt expense ($156 million in 2011), more than one-half came (51 percent or $80 million) came from insured patients.

The conclusion I would draw is that uncompensated care will decline, but the number of patients contained within uncompensated care pool will not. And while a greater number of patients unwilling or unable to pay for their healthcare will now have some insurance, healthcare providers can expect that the number of delinquent accounts sliding into bad debt will not decrease. If a provider is sending 100,000 bills per year to collections, under healthcare reform that is unlikely to decrease. The administrative expense will be the same (or more likely grow as populations served increase).

The authors of this report don’t even come close to those conclusions because the analysis they conducted had an ulterior motive. At the end the authors expose what they are selling: The Minnesota Basic Health Plan, which expands subsidized insurance to individuals between 133 percent and 200 percent of federal poverty guidelines. Yes, if more patients are insured, uncompensated care will fall because those costs are shifted, dollar for dollar, onto the taxpayer. Again, that could have been said in a sentence. Analysis to promote an agenda is propaganda, and should be beneath a state agency.

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