Section 501r – Final Regulations and the
Medical Debt Advisory Task Force
Tina Hanson
Executive Vice President, State Collection Service, Inc.
Wisconsin AAHAM Spring Conference
May 7, 2015
Today’s Speaker
•
Two decades of experience in the receivables
management industry
•
Served on the HFMA/ACA International Medical
Debt Collection Task Force
•
Served as the Chair of ACA International’s
Education Council, Ethics Committee, R&D
Committee
•
ACA International Instructor of the Year (2011)
Tina Hanson
Executive Vice President
State Collection Service, Inc.
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Agenda
• How did we get here?
• How have the industry and Washington
responded?
• Overview of the HFMA Medical Debt Best
Practices Flow Chart
• 501r and how it fits into the Diagram
• What is next?
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How Did We Get Here?
• Problems with very
complex billing
processes with
numerous variables
• New legislation and
regulations
• Increased demand for
better financial
assistance policies and
more transparent
policies
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How Did We Get Here?
• Consumer complaints
specifically around credit
reporting discrepancies
• Media attention
• Consumer Financial
Protection Bureau, or
CFPB
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Consumer Financial Protection Bureau
• Created under Dodd-Frank Act of 2010
• Treated as an independent federal agency
• Mission to make markets for consumer financial
products and services work for Americans
• Has rulemaking, supervisory and enforcement
authority
• Tasked with monitoring and responding to
consumer complaints regarding consumer
financial products or services
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CFPB – What is Happening Now?
Recent federal actions related to medical collections
December 11, 2014
Consumer Financial Protection Bureau issues report with findings
that 43 million Americans have medical collections on their credit
reports. Director Richard Cordray states, “The CFPB is taking action
to improve credit report accuracy. Getting medical care should not
make your credit report sick.”
December 29, 2014
Final Regulations issued by Department of Treasury and IRS.
Transition period – final regulations apply to tax years beginning after
December 29, 2015. For earlier years (meaning now), hospitals may
rely on a reasonable, good faith interpretation of the statute.
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What is Happening Now?
• The message in DC
– Congressman Blaine Luetkemeyer (R-MO)
 Member of the House Financial Services Committee
 Member of the House Small Business Committee
 Operation Choke Hold
• FCC
– Request for TCPA clarification
• CFPB
– Congressman Neugebauer (R-TX)
 Chairman, Subcommittee on Financial Institutions
and Consumer Credit
 Legislation to over see the CFPB
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A Convergence of Issues…
Consumer Trends:
• Increased Use of HDHPs
• Tighter Lending Standards
Environment
Ripe for
Legislative/
Regulatory
Action
Provider Challenges:
• Non-Standardized Account
Resolution Processes
• Opaque Pricing
• Challenges Accessing
Financial Assistance
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The Medical Account Resolution Process
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The Medical Account Resolution Process
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
• Extraordinary Collection Actions (ECA)
– Any action taken by hospital to obtain payment for care
covered under FAP that requires legal or judicial
process, or
– Involves selling an individual’s debt to another party, or
– Involves reporting adverse information to consumer
credit reporting agencies or credit bureaus.
– Deferring or denying or requiring payment before
providing medically necessary care because of an
individuals nonpayment of one or more bills for
previously provided care
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
• Extraordinary Collection Actions (ECA)
– Actions that require a legal or judicial process include,
but are not limited to
 Placing a lien on property
 Foreclosing on real property
 Attaching or seizing a bank account or other personal
property
 Commencing a civil action
 Causing arrest or body attachment
 Garnishing wages
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
• Extraordinary Collection Actions
(ECA) do NOT include
– Certain debt sales
– Liens on certain judgments,
settlements, or compromises (e.g.
hospital liens)
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
• Certain debt sales are not ECAs if the hospital enters into a
legally-binding written agreement with the purchaser of the debt
pursuant to which:
– The purchaser is prohibited from engaging in any ECAs to obtain
payment for care
– The purchaser is prohibited from charging interest on the debt in
excess of the rate at the time the debt is sold
– The debt is returnable to the hospital upon a determination by the
hospital facility or the purchaser that the individual is FAP eligible
– If the debt is not returned, there must be procedures in place to
insure the patient does not pay more than he or she is responsible
for paying as a FAP eligible individual
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
Hospital facilities may initiate ECAs
against an individual as early as 120
days after the first post-discharge bill
without failing to meet the
requirements of section 501(r)(6),
provided the required notifications
have been given prior to the initiation
of the ECAs.
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
Hospital facilities need only incur the additional costs that
may be associated with the provision of a plain language
summary one time and only with respect to the smaller pool
of patients against whom the hospital facility actually intends
to engage in ECAs, not with respect to all patients against
whom it might one day want to engage in ECAs. As a result,
the final regulations significantly reduce the burden on
hospital facilities in notifying individuals about their FAPs.
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
The final regulations state that hospital facilities may not
engage in ECAs against an individual before making
reasonable efforts to determine whether the individual is
FAP-eligible. It should be noted that individual here includes
account guarantors and hospital facilities include any
purchaser of an individual's debt, any debt collection agency,
or any party to which the hospital has referred the debt.
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
• FAP notification requirements – plain language summary
– Written statement notifying individual that hospital offers financial
assistance under a FAP and includes all the following (in clear, concise,
easy to understand language):






Brief description of eligibility requirements and assistance offered
Direct website address and physical locations where copies of FAP and
application form can be obtained
Instructions on how to obtain free copies of FAP and application by mail
Contact information of hospital staff who can provide information about the
FAP and the application process as well as nonprofit organizations or
government agencies capable of providing assistance with FAP applications
Statement of the availability of translations of the FAP, application, and plain
language summary in other languages
Statement that no FAP eligible individual will be charged more than AGB for
emergency or other medically necessary care
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
(reasonable notification efforts continued)
The final regulations clarify that, in the case of any written
notice or communication that is mailed, the communication
will be considered ‘‘provided’’ on the date of mailing. A
communication may also be considered provided on the date
it is sent electronically or delivered by hand.
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
(reasonable notification efforts continued)
• May print notices on billing statements, as long as they are
conspicuously placed and of sufficient size to be clearly
readable.
• Obtaining a signed waiver from an individual will not constitute
the determination that an individual is not FAP-eligible and will
not satisfy the requirements to make reasonable efforts before
beginning ECAs.
• If you sell or refer the debt during the 240-day application
period, you must have a legally binding agreement with the
party that no ECAs will be taken, until reasonable notification
has occurred, and all applications submitted during the
application period will be processed.
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Overall Considerations
Billing and Collections Regulations-501(r)(6)
(reasonable notification efforts continued)
• Hospital can provide notification simultaneously for multiple
episodes of care. However, cannot begin ECA until 120 days
after the most recent episode of care.
• Notification before deferring or denying care due to nonpayment
of prior care:
– Must provide written notice and FAP application
– Include deadline, after which hospital will no longer process the
FAP application for previously provided care. Deadline may be no
earlier than the later of 30 days after the notice, or 240 days after
the date of the first post-discharge statement.
– If individual submits application on or before deadline, must
process it.
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Overall Considerations
Incomplete Applications
• Suspend any ECAs
• Provide written notice that describes what additional
information or documentation is required and includes a
contact number for additional assistance
• If the individual completes the application within the
application period (or, if later, within a reasonable
timeframe to respond to additional requests), the hospital
must process the application.
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What’s Next?
• Credit reporting
• CFPB regulation
• Complaint management and oversight
• Get close to your collection vendors and other
third party vendor service providers as they are an
extension of you
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Questions?
Your feedback is appreciated!
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Thank you!
Tina Hanson – Executive Vice President
State Collection Service, Inc.
2509 South Stoughton Road, Madison, WI 53716
Phone: (800) 477-7474 x314
Email: tinah@stcol.com