Most U.S. hospitals will face new rules for how hospitals collect money from patients under health reform, prompting some hospital governing boards to reconsider how their facilities identify and help those who cannot afford to pay.
The Patient Protection and Affordable Care Act laid out new billing, collection and financial aid requirements for private, not-for-profit hospitals, which account for six of every 10 hospitals across the country. The new rules—which are in effect but have yet to be finalized—would require governing boards to approve mandatory financial aid and debt collection policies and set new limits on collection efforts. Collection practices at some hospitals have provoked public outrage and regulatory scrutiny, such as liens or other legal actions.
Under the ACA, hospitals must make reasonable efforts to identify low-income patients eligible for financial aid before using legal action to collect debt. The same restrictions apply for reporting debt to consumer credit bureaus or selling unpaid bills to debt-collection companies.
The stakes are high for hospitals that fail to comply. Under proposed rules, the Internal Revenue Service may strip tax breaks from not-for-profit hospitals if violations are willful and egregious.
“You've got to be even more sure that someone doesn't qualify for charity before they end up in bad debt or the collection process,” says Keith Hearle, president of Verite Healthcare Consulting in Alexandria, Va.
The new rules underscore the heightened expectation from policymakers and the public that not-for-profit hospitals do more to identify and address community needs in exchange for their tax breaks. That pressure follows several inquiries in recent years by Congress, regulators and state attorneys general into how hospitals bill and collect, particularly from vulnerable patients and those least able to pay.
The scrutiny has not stopped scandals. Last year, an inquiry into efforts to collect from emergency room patients prompted Minnesota's attorney general to temporarily ban one collection company from the state.
Most low-income patients will significantly benefit from the ACA rules, says Jessica Curtis, director of the hospital accountability project for Community Catalyst, a consumer advocacy group. The onus previously fell on patients to be aware of financial aid and negotiate bills they could afford. The health reform law shifts the responsibility to hospitals to promote financial aid and help patients to enroll, she said.