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Is Your Hospital’s Billing and Collection Process Ready for 501(r)?

Posted by Admin on December 1, 2015

With the New Year fast approaching, your hospital is undoubtedly preparing for the Internal Revenue Service’s new 501(r) statute. The statute affects nonprofit hospitals that are covered by 501(c)(3) and includes community needs assessments, limitations on charges and written policies and procedures. Organizations that fail to meet the requirements outlined by the IRS may have their tax-exempt status revoked. This post will focus on the impact on your billing and collection process and is for general reference purposes only.

When collecting debt on hospital accounts it is crucial to know the new requirements and steps needed to be taken before and after the collection process. At a minimum, your organization should have:
• A written financial assistance policy (FAP) that applies to all emergency and other medically necessary care
• A procedure for notifying patients about your FAP when admitted or discharged
• Billing statements (3) that include instructions on how a patient can obtain information about your FAP (telephone number and/or website) as well as a plain language summary of the FAP
• FAP, plain language summary and financial assistance application readily available to your patient population – website, hard copies, inbound call messages, etc.
• A final notice 30 days before referring any account for further collection activity by an outside agency that includes information on the collection activities you intend to engage in (i.e. interest, credit bureau reporting)

Patients have up to 120 days to complete the financial assistance application before you can refer that patient for further collection activity. In addition, financial assistance applications must be accepted for 240 days after the date of the first statement. It will be crucial to know the date of the first bill sent.

Over the next few months we will start to see the impact of 501(r) on billing and collections. If your organization has questions related to the billing and collection changes there are many resources available, including your revenue cycle partners who should be well versed on these requirements.

Topics: Compliance