On Sept. 24 of this year, the IRS closed the final comment period on the Proposed Rule for Section 501(r)—an outgrowth of the Affordable Care Act (ACA) that details new compliance criteria for tax-exempt hospitals and health systems.
These proposed regulations are far reaching to be sure, and include requirements pertaining to hospital Financial Assistance Policies (FAP), billing processes for patients qualifying for financial assistance, and patient debt collection practices. In particular, one of the most potentially disruptive (and ambiguously written) regulations would impose stringent limitations on collection practices in the emergency department (ED).
Major changes ahead for ED collections?
As hospitals contend with slower reimbursement increases and continuing cost growth, it is critical that they tightly manage bad debt write-offs. One opportunity to reduce bad debt is collecting from patients that present for care with unpaid balances from prior visits. To address this issue, some hospitals have begun to include outstanding balances in their point-of-service (POS) collection efforts.
According to a 2010 Financial Leadership Council Point-of-Service Collection survey, 34% of hospitals were collecting prior balances, while 47% were not collecting prior balances, but planned to in the next 12 months. Hospitals engaging in this practice have found it can reduce accounts headed for bad debt while also improving POS collections.
Reduce bad debt by collecting prior balances