Healthcare Revenue Cycle Executives May Face New Legislation Rules For Collection

by Phil C. Solomon on July 3, 2012

in Hospital Charity Care,Hospital Legislation

Healthcare Revenue Cycle Executives Expecting New Legislation

According to InsideARM, U.S. Senator Al Franken introduced two new bills, which added new rules for medical debt collection companies. These rules may become a challenge to administer for healthcare revenue cycle executives. The bills propose direct changes to the FDCPA to carve out special rules for medical debt, and the other addresses protecting patients’ electronic information. It is still too early for the bills to be available in the Congressional online legislative portal, but Franken provided a summary of the FDCPA amendment bill, called the End Debt Collector Abuse Act.

The catalyst for this new bill proposal was likely prompted by alleged debt collection abuses by the healthcare revenue cycle firm,  Accretive Health on behalf of its client, hospital operator Fairview Hospitals and Health System in Minnesota.

Franken’s bill would go beyond the Treasury Department’s recent rule change proposal.  The Treasury Department’s Acting Assistant Secretary for Tax Policy Emily McMahon said, “In recent months, we have heard concerns about aggressive hospital debt collection activities, including allowing debt collectors to pursue collections in emergency rooms. These practices jeopardize patient care, and our proposed rules will help ensure they don’t happen in charitable hospitals. 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 proposed regulations submitted by the Treasury Department clarify hospitals’ responsibilities under the new statutory provision. The key elements of the proposed regulations:

Establishment and Disclosure of Financial Assistance Policy. Each tax-exempt hospital must establish a financial assistance policy that clearly describes the eligibility criteria for receiving financial assistance and how to apply for it.

Limitation on Collection Actions. A tax-exempt hospital is prohibited from engaging in certain collection methods (for example, reporting a debt to a credit agency or garnishing wages) until it makes reasonable efforts to determine whether an individual is eligible for the financial assistance it offers. Under these proposed rules, 1099 not for profit charitable hospitals must:

Revenue cycle executives must 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 apply for financial assistance before commencing certain collection actions;
  • Give the patient an additional 120 days (for 240 days total) to submit a complete application;
  • 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.

Limitation on Charges. A hospital may not charge individuals eligible for its financial assistance more for medically necessary care than the amounts generally billed to insured individuals.

Non-Discriminatory Emergency Medical Care Policy. Each hospital must have a written policy requiring the hospital to provide emergency medical care without discriminating against patients who may need financial assistance. To simplify hospitals’ compliance with this requirement, the proposed regulations provide that a policy that is consistent with the requirements of the Emergency Medical Treatment and Active Labor Act (EMTALA) is generally sufficient. The proposed rules require the policy to prohibit debt collection activities in the emergency department or in other hospital venues where collection activities could interfere with treatment.

Both proposals have already been met with push-back from the medical accounts receivable management community. A considerable detriment of this proposed bill allow for the potential delay of up to 240 days for collecting certain types of accounts at non-profit hospitals. This  would hamper a collection agency’s ability to maximize collection performance.

For more information, contact Phil C. Solomon at or call 404-849-8065.


{ 2 comments… read them below or add one }

Lori Kernutt July 3, 2012 at 8:35 AM

Very informative. Thank you!


Phil C. Solomon Phil C. Solomon August 27, 2012 at 6:13 PM

Thank you!


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