Wednesday, June 27, 2012

Proposed Rule Would Curb Nonprofit Hospital Debt Collection

The United States Treasury Department released a proposed guidance last week that, if enacted, would make changes to the debt collection process by nonprofit hospitals.

The new rules, which are regulation on a provision in the 2010 Affordable Care Act, were released last Friday, according to a blog post on National Public Radio's (NPR) website. The changes would require hospitals to take the following actions before requesting payment from patients:

  • Provide patients with a plain language summary of the financial assistance policy before discharge and with the first three bills;
  • Give patients at least 120 days following the first bill to submit an application for financial assistance before commencing certain collection actions;
  • Give the patient an additional 120 days (for 240 days total) to submit a complete application; and,
  • If a patient is determined eligible for financial assistance during these 240 days, refund any excess payments made before applying for aid and seek to reverse any collections actions already commenced.
In a statement, Acting Assistant Secretary for Tax Policy Emily McMahon said the proposal was made because their had been many reports of aggressive hospital debt collection activities, including allowing collectors into emergency rooms.

"These practices jeopardize patient care, and our proposed rules will help ensure they don't happen in charitable hospitals," she said. "These rules also require charitable hospitals to establish and publicize financial assistance policies, and give hospitals the flexibility to establish programs that meet the needs of their communities."

The American Hospital Association (AHA), a trade group, has already come out in opposition to the proposed rules. Melinda Hatton, the group's general counsel, say the changes put too much of the blame on hospitals for the actions of third-party debt collectors. She also said that the penalties for being in violation were too severe, with with hospitals standing to lose their tax exemption.

At a hearing on the proposed changes in the U.S. Senate, Accretive Health Vice President Greg Kazarian apologized to patients about these aggressive tactics, but also said that their actions were exaggerated during investigation. A patient of Kazarian's company, Deb Waldin, said during the hearing that she was approached by a debt collector while she was in extreme pain from kidney stones.

You can read the full story on NPR.

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