Healthcare News & Insights

Collection practices: Feds propose new rules for charitable hospitals


Nonprofit hospitals need to tread carefully when attempting to collect their debts.

Reason: The U.S. Department of Treasury recently released proposed regulations to ensure patients of charitable hospitals access to financial assistance and protect them from aggressive collection practices.

These proposed regulations come on the heels of an investigation by Minnesota’s attorney general that questioned the billing and collection practices of Fairview Health Services’ former consulting firm, Accretive Health. According to the attorney general’s report, there were concerns that financial counselors may have delayed a child’s treatment in the ER due to financial issues.

Understanding that hospitals need manageable rules to govern their operations and financial affairs, the proposed regulations clarify hospitals’ responsibilities under the new statutory provision.

The key elements of the proposed regs include:

  • Each tax-exempt hospital must establish a financial assistance policy that clearly describes the eligibility criteria for receiving financial assistance and how to apply for it. However, they don’t provide concrete requirements for a financial assistance policy regarding eligibility or amount of assistance, giving hospitals flexibility to determine the most effective way to serve their particular communities.
  • Hospitals must publicize their financial assistance policy to ensure community members are aware of the aid available.
  • Tax-exempt hospitals are prohibited from engaging in certain collection methods, such as reporting a debt to a credit agency or garnishing wages, until they make reasonable efforts to determine whether an individual is eligible for  financial assistance.
  • Hospitals must provide patients with a plain language summary of the financial assistance policy before discharge and with the first three bills.
  • They must give patients 240 days to submit an application for financial assistance.
  • Hospitals can’t charge individuals eligible for financial assistance more for medically necessary care than the amounts generally billed to insured individuals. If a person hasn’t applied for financial assistance, the hospital may bill the person its usual charges, provided they’re reaching out to determine whether the person is eligible for financial assistance. If the person is eligible for aid, the hospital must refund any excess payments already made.
  • Hospitals must have a written policy requiring they provide emergency medical care without discriminating against patients who may need financial assistance. A policy consistent with the requirements of the Emergency Medical Treatment and Active Labor Act (EMTALA) is sufficient.
  • Debt collection activities in emergency departments or other areas where collection activities could interfere with treatment are prohibited.

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