MEDICAL DEBT

1. MEDICAL DEBT CHANGES ON THE HORIZON? WVHFMA WINTER EDUCATIONAL MTG JANUARY 23, 2014

2. OVERVIEW • ACA INTERNATIONAL & HFMA JOINT TASK FORCE ON MEDICAL DEBT • IRS REGULATIONS • HOW IT MAY AFFECT YOUR BAD DEBT VENDORS • QUESTIONS

3. Legal Disclaimer This presentation is for informational and educational purposes only. The content of this presentation is not intended to serve as legal or other advice and should not replace the advice of your own legal counsel.

4. NATIONAL HEALTHCARE COSTS 2012 – ESTIMATED --- Estimated National Health Expenditures of approximately $2.8 trillion --- Of total expenditures, $320 billion was paid out of pocket (i.e. deductibles, co-payments, co-insurance)

5. NATIONAL HEALTHCARE COSTS 2020 – PROJECTED --- Estimated National Health Expenditures of $4.4 trillion --- Of total, $411 billion is estimated will be paid out of pocket

6. MEDICAL BILL COLLECTIONS In 2012, 32 million American adults were contacted by a collection agency for unpaid medical bills. Source: The Commonwealth Fund Biennial Health Insurance Survey (2012)

7. Medical Collections and Credit Reports More than half (52%) of accounts in collection are medical bills. More than one-third (36%) of medical collections had balances due, when reported, of $100 or less. An Overview of Consumer Data and Credit Reporting, Avery et al Federal Reserve Bulletin, Summer 2003

8. MEDICAL DEBT COLLECTION TASK FORCE What is it? Group including representatives from healthcare finance, 3rd party collections and patient advocate organizations led by HFMA and ACA International to help make paying medical bills an easier and fairer proposition for consumers. 15 members on the Task Force.

9. MEDICAL DEBT COLLECTION TASK FORCE • INTENDED TO IMPROVE THE MEDICAL ACCOUNT RESOLUTION PROCESS. • THESE ARE VOLUNTARY GUIDELINES AND COMPLEMENT EXISITNG FEDERAL, STATE AND LOCAL LAWS GOVERNING THE RECOVERY OF MEDICAL DEBT. • PROVIDE GUIDANCE ON RESOLVING FINANCIAL OBLIGATIONS BEFORE, DURING & AFTER A PATIENT VISITS A HOSPITAL OR OTHER SETTING.

10. MEDICAL DEBT COLLECTION TASK FORCE • GOAL OF THE TASK FORCE • TO IDENTIFY A COMMON SET OF ACCOUNT RESOLUTION BEST PRACTICES THAT ALIGN WITH HFMA’S PATIENT FRIENDLY BILLING PRINCIPLES AND EMERGING FEDERAL REQUIREMENTS TO SIMPLY THE PROCESS FOR PATIENTS.

11. MEDICAL DEBT COLLECTION TASK FORCE GOALS (CONTINUED) Keep in mind the various laws not only in practice today, but look ahead in anticipation of future legislation. Keep the patient experience as the number one priority.

12. MEDICAL DEBT COLLECTION TASK FORCE SUMMARY OF SOME OF THE BEST PRACTICES • IMPROVE PATIENT EDUCATION AND COMMUNICATION. • Take responsibility for educating patients about their payment options and responsibilities. Be proactive about communicating available financial assistance policies and procedures.

13. MEDICAL DEBT COLLECTION TASK FORCE SUMMARY OF BEST PRACTICES (CONTINUED) - MAKE BILLS PATIENT-FRIENDLY All financial communication should be clear, concise, correct and patient friendly. (HFMA’s Patient Friendly Billing Project)

14. MEDICAL DEBT COLLECTION TASK FORCE • SUMMARY OF BEST PRACTICES (CONTINUED) - ESTABLISH POLICIES FOR ACCOUNT RESOLUTION AND ENSURE THAT THEY ARE FOLLOWED. Make sure that key account resolution activities are governed by your organization’s board-approved policies.

15. MEDICAL DEBT COLLECTION TASK FORCE SUMMARY OF BEST PRACTICES (CONTINUED) - REPORT BACK TO CREDIT BUREAUS WHEN AN ACCOUNT IS RESOLVED. If a past due account is reported to a credit bureau, the reporting entity should report back to the bureau when the account is satisfied.

16. MEDICAL DEBT COLLECTION TASK FORCE SUMMARY OF BEST PRACTICES (CONTINUED) - TRACK ALL CONSUMER COMPLAINTS This information should be shared between the business affiliate and the provider to improve customer service, hasten account resolution and avoid recurring grievances.

17. MEDICAL DEBT COLLECTION TASK FORCE SUMMARY OF BEST PRACTICES (CONTINUED) - USE ESTABLISHED HFMA AND ACA BEST PRACTICES, PRINCIPLES, AND GUIDELINES TO INFORM YOUR ORGANIZATION’S APPROACJ TO MEDICAL ACCOUNT RESOLUTION. This includes HFMA’s Best Practices for Patient Communications, HFMA’s Patient Friendly Billing Project; ACA’s Health Care Servicing Guidelines and ACA’s Code of Ethics.

20. MEDICAL DEBT COLLECTION TASK FORCE MORE DETAILED INFORMATION ABOUT THE TASK FORCE AND THEIR REPORT IS AVAILABLE AT WWW.HFMA.ORG/MEDICALDEBT.

21. IRS REGULATION PROPOSED RULE – IRS 501r US Dept of the Treasury and IRS Proposal Seeks revisions for charitable hospitals and their exemption status. As of January 16, 2014, with the final rules NOT yet released, the IRS advised charitable hospitals to refer to the proposed rules issued in June 2012 and April 2013 regarding 501(r).

22. IRS REQUIREMENT THE IRS ISSUED 2 NOTICES DURING THE WEEK OF JANUARY 16, 2014 INSTRUCTING HOSPITALS TO FOLLOW PROPOSED RULES THAT IMPLEMENT AFFORDABLE CARE ACT REQUIREMENTS.

23. IRS REGULATION The Treasury stated in a blog post about the guidance. “We want to remind charitable hospitals that they must take steps to protect patients – including protecting them for hidden and high prices and unreasonable collection actions.”

24. IRS REGULATION FIRST NOTICE Includes a procedure for hospitals to correct and disclose failures to satisfy the requirements under section 501(r) of the IRS Code. Following this process would assure hospitals that they would not lose their tax-exempt status.

25. IRS REGULATION SECOND NOTICE Specifies charitable hospitals responsibilities under section 501(r). Specifically, the proposed rules require tax-exempt hospitals to “clearly define the financial assistance available, how to apply for it and publicize their policies so that community members are aware aid is available.”

26. OTHER POSSIBLE LEGISLATION Medical Debt Responsibility Act of 2013 – S.160 (introduced by Senator Merkley) 7 Co-sponsors. In August 2012, Senator Merkely and others sent a letter to the CFPB asking them to address the impact of medical debt and consumer credit. House Companion bill (HR 1767) introduced by Ranking Financial Services Member V. Waters. 18 co-sponsors

27. OTHER POSSIBLE LEGISLATION Accuracy In Reporting Medical Debt Act of 2013 HR 2211 Introduced by G. Miller (R-Ca) along with C. McCarthy (D-NY) on 5/24/2013. Amends the FDCPA to prevent credit reporting of a disputed debt for 120 days. But can still report after 30 days if no dispute.

28. OTHER LEGISLATION Some states are also trying to enact their own bills to address medical debt collection. Indiana – Senate Bill 290. Prohibit the collection of prejudgment interest in medical collection cases. Shorten the Statute of Limitations on medical debt from 6 years to 2 years. Permit defendants to consolidate cases into one.

29. OTHER LEGISLATION Will other states attempt to pass bills that affect medical debt collection? ACA International and the state units are constantly monitoring these types of legislation.

30. AFFECT ON YOUR BAD DEBT VENDORS Possible effects: Increase costs to do business. more regulations/requirements Bad debt medical accounts may be more difficult to collect. Less accounts being transferred to true bad-debt. Possible more to early-out or precollection programs.

31. CONTACT INFORMATION Jill Epstein Unit President/Council Delegate, Associated Collection Agencies of WV, Inc. Sales Manager, HealthCare Financial Services jillian.epstein@camc.org 304-388-6807 – Telephone (Direct)