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Shawn Gretz Earns Fellowship Designation from HFMA


Shawn Gretz, President of Americollect, has become a Fellow of the Healthcare Financial Management (FHFMA).

To be awarded the FHFMA distinction, applicants must be credentialed as a Certified Healthcare Financial Professional (CHFP); be an HFMA member for at least five years; complete a bachelor’s degree or 120 semester hours from an accredited college or university; and volunteer in HFMA or the healthcare industry. More than 1,700 HFMA members nationwide have achieved this accomplishment in the organization’s 68-year history.

Shawn has been an HFMA member since 2003, including Wisconsin Chapter President in 2016-2017 and Region 7 Regional Executive since 2017. He was recently appointed to the HFMA National Advisory Council (NAC) which began June 1, 2020. In April, Shawn also became a Certified Healthcare Financial Professional, allowing him to qualify for this coveted recognition.

“It is a bittersweet moment for me as I earn my Fellowship from HFMA. As much as I have volunteered and given to this great organization, I have received so much back,” said Shawn. “I have created friendships that will last a lifetime. I have watched and learned from great leaders of their respected organizations. And I have received world-class education on the business of healthcare.”

Earning the HFMA Fellowship attests to one’s financial expertise and leadership. HFMA Fellows act as ambassadors to the profession by raising the standard of practice through consistent participation in professional development activities and service to the healthcare finance industry.

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Funding COBRA for your Patients during the COVID-19 Pandemic?

Funding COBRA for your patientsIn early May, the U.S. Department of Labor announced that the April unemployment rate reached 14.7-percent, and a Forbes article claimed that number could grow to 30-percent as a result of the ongoing health crisis. In addition to lost wages, these same people are finding themselves without health insurance during the Coronavirus pandemic, leaving them struggling to find ways to continue paying healthcare premiums through COBRA or other offerings.

This is impacting hospitals that are trying to stretch every dollar to stay solvent while dealing with COVID-19, which is not an easy task. Combine that with patients who are finding themselves newly unemployed with no insurance, the level of care can decline – but it doesn’t have to.

Some patients may be eligible for Medicare or Medicaid, which can provide some coverage, while others could qualify for plans under the Affordable Care Act (ACA). Hospitals may also bill the patient in the hopes that they elect to pay for COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage.

But what if none of these options work or the patient is unable to afford their COBRA payments? Hospitals may consider helping cover these costs through their foundation or other charity entity to ensure a higher payout from the commercial insurance company. Paying a few thousand dollars to receive several times that amount for care can be a way to stay closer to the black. An article by BLR titled, “COBRA Continuation Coverage: Who Pays?” laid out several examples where someone other than the beneficiary pays premiums, including hospitals and Medicaid. In the article, it states that,

“Although COBRA does not require that employers pay for COBRA coverage, COBRA also does not require that a qualified beneficiary actually be the one to pay for coverage–that is, someone else can pay for the qualified beneficiary’s coverage.”

This is not to say you should start paying for every person that walks through the door. To the contrary, you need to review each situation to ensure you are following the correct path. In a Linkedin article, Brent D. Magers, Executive Associate Dean, Texas Tech University HSC School of Medicine, says that,

“any provider that wishes to pay the health coverage premiums for an individual should consider the type of health care coverage, the legal structure of his or her entity that is seeking to provide such payments, applicable state laws and insurance contract terms. Finally, tax-exempt entities should also think of private benefit issues.”

He also gives further advice on having clear policies and procedures to guide the entire process while also securing the approval of legal and compliance professionals before starting this practice, so be sure to work with your legal department to avoid trouble later on.

At Americollect, we understand that a larger segment of your patients may be dealing with COBRA coverage for the first time. We reviewed our already Ridiculously Nice COBRA information and added new training for our staff designed to help first-time COBRA patients better understand their rights and how it works. By taking the time to talk with them, we hope to maximize the use of COBRA during the COVID-19 pandemic, which will positively impact your bottom line.

There are many things to consider when it comes to paying COBRA premiums for your patients, but as COVID-19 continues to impact our world, it may be worth your time to consider this option when working with patients that unexpectedly find themselves without insurance coverage.

 

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Hospitals to receive an additional $75 Billion in the Paycheck Protection Program and Health Care Enhancement Act

Paycheck Protection Program and Health Care Enhancement Act

On Friday, President Trump signed the $484 billion Paycheck Protection Program and Health Care Enhancement Act into law, the fourth economic stimulus package since the start of the COVID-19 pandemic. The new package’s goal is to augment the Paycheck Protection Program and Healthcare funding of the CARES Act that was passed in March and quickly ran out of funds.

This new bill contains $370 billion to replenish the Paycheck Protection Program (PPP), $60 billion of which is set aside for medium, small and community lenders. Healthcare facilities with fewer than 500 employees are able to utilize this program like the first round. Another $75 billion has been set aside specifically to reimburse providers for the cost of treating COVID-19 patients. These funds will be available through the U.S. Department of Health and Human Services (HHS) like the previous round of funding. Finally, $25 billion has been authorized specifically for developing and implementing testing protocols.

Like many other businesses, healthcare providers may have found themselves unable to receive funding from the initial round of PPP, since the initial funds were depleted by April 17. The Small Business Administration resumed accepting applications on Monday, April 27 for the current act. The Department of the Treasury has released a Frequently Asked Questions to help navigate the PPP.

According to the bill itself, “the Public Health and Social Services Emergency Fund will receive $75 billion to remain available until expended, to prevent, prepare for and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible healthcare providers for healthcare related expenses or lost revenues that are attributable to COVID-19.”

The bill lists eligible healthcare providers as public entities, Medicare or Medicaid enrolled suppliers and providers, and for-profit and not-for-profit entities that provide diagnoses, testing or care for individuals with possible or actual cases of COVID-19. Like the CARES Act, funds from the Paycheck Protection Program and Health Care Enhancement Act can be used for temporary structures, leases, medical supplies and equipment, testing supplies, increased workforce needs, emergency operation centers, retrofitting existing facilities and extra surge capacity needs.

The current act may help reduce some of the confusion around what organizations can access the $75 billion in healthcare funding for by providing $25 billion specifically for testing. Previously, states and other groups were able to access the healthcare funding portions for testing, but now they can work directly with HHS for the necessary expenses to research, develop, validate, manufacture, purchase, administer and expand capacity for COVID-19 tests. It also requires states, localities, territories and tribes to outline their own testing plans and plans to ease coronavirus mitigation strategies. The bill also lays out the use of $1 billion from this fund to cover the cost of testing for the uninsured.

While there are still a lot of unknowns as to how the Coronavirus will continue to impact our world, Groups like the American Hospital Association are applauding these and other efforts. In a release from April 21, AHA president and CEO Rick Pollack said, “The initial CARES Act funds are already being used by hospitals and health systems to increase capacity and provide care, and in some cases to keep access to care available by keeping the doors open. This additional funding will help ensure that critical care can continue to be provided by front line providers throughout the country.”

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The CARES Act: $100 Billion in Healthcare Funding and Your Hospital

When the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES) act was announced in late March, the funds promised were to be distributed to many areas, including, arguably the most negatively impacted area, the healthcare field. The CARES Act funding hospitals is not only important for healthcare, but for the nation as a whole.

The Public Health and Social Services Emergency Fund, which usually works with an annual budget of $2.6 billion, received $100 billion to reimburse both non-profit and for-profit hospitals for expenses and lost revenue cause by the COVID-19 pandemic. The U.S. Department of Health and Human Services has been tasked with dispersing these funds as quickly as possible to minimize the impact COVID-19 is having on our healthcare providers.

Originally, hospitals believed they could apply for money to use towards a range of Coronavirus-related expenses ranging from medical supplies like masks, gowns and gloves, to larger equipment and buildings like beds, ventilators and temporary structures to house patients, but during an April 3rd Coronavirus Task Force Press Briefing, Health and Human Services Secretary Alex Azar said that at least a portion the $100 billion fund will be used to reimburse hospitals at Medicare rates for uncompensated COVID-19 care for the uninsured. Additionally, a condition to receiving the reimbursement is that hospitals cannot balance bill uninsured patients for Coronavirus care.

While $100 billion is a lot of money, if it were to be evenly disbursed across the country, it would mean about $108,000 per hospital bed in the United States. But with hospitals not knowing how much will go to covering uninsured patients, and without a lot of additional guidance, an article in Health Leaders suggested hospitals prepare to submit quantifiable information as soon as possible.

Groups like the American Hospital Association have taken notice to the addition of covering uninsured patients and the ramifications this will have on continuity of service. In a Revcycle Intelligence article, AHA president and CEO said:

“Because hospitals and health systems, and our dedicated caregivers are on the front lines of this pandemic, we continue to urge the release of the CARES Act emergency relief funds as soon as possible. This critical funding will help ensure that our health care providers can continue to be there for everyone and have the support and resources that are needed to deliver care to their patients and communities.”

If you have concerns about this shift in funding, contact your associations and have your voice heard. Let them know how this will impact your ability to survive.

As we continue to navigate these unprecedented times, it will be important to stay fluid and find as many options as possible to strengthen your bottom line. Between the CARES Act funding hospitals with $100 billion and the Paycheck Protection Program that can help with payroll needs, hospitals can find a few more tools for the fight against COVID-19.

 

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How the Paycheck Protection Program can help your Hospital

 

When the Coronavirus Aid, Relief and Economic Security (CARES) Act was Paycheck Protection Program helping hospitalssigned into law on March 27, the news focused on the money to be sent to each American to help ease the financial impact of the COVID-19 crisis. But what about the businesses that are feeling the crunch? An important part of the CARES Act is the Paycheck Protection Program, which allocates nearly $350 billion to support emergency loans to qualifying businesses – including some hospitals and physicians, intended to help business keep their staff employed through these uncertain times.

This program, which is administered by the Small Business Administration, makes loans of up to $10 million available for organizations with less than 500 total employees (i.e., both full and part time). The money can be used for salaries and wages, leave and health benefits, rent, and/or retirement obligations, among other uses. For-profit and non-profit hospitals that meet the affiliation rules are eligible for these loans. Even more enticing, these loans may be forgivable if certain guidelines for use are met. The American Hospital Association estimated that 700 hospitals may be eligible to apply for $7 billion under the loan provisions.

According to a handy guide put together by the U.S. Chamber of Commerce, loans can be up to 2.5 times the borrower’s average monthly payroll costs that fall under the $10 million threshold. These costs can include:

♦  salary, wage, commission, or similar compensation
♦  payment of cash tip or equivalent
♦  payment for vacation, parental, family, medical, or sick leave
♦  allowance for dismissal or separation
♦  payment required for the provisions of group health care benefits, including insurance premiums
♦  payment of any retirement benefit
♦  payment of state or local tax assessed on the compensation of the employee

There are a few things this money can’t be used for. Annual salaries of $100,000 or more, payroll and income taxes, employees who live outside of the United States, and qualified sick leave wages that were allowed under the Families First Coronavirus Response Act, sections 7011 and 7033.

One of the most important aspects of the Payroll Protection Act for any business, but especially health care facilities, is the fact that borrowers are eligible for loan forgiveness if they use at least 75% of the money for payroll costs, including retaining or quickly rehiring employees and maintaining salary levels. Loan funds can also be used for other expenses, including mortgage, rent, and/or utilities.

Applications will be accepted between April 3 and June 30. You can find more information about the Paycheck Protection Program requirements and how to apply on the Small Business Administration website. In a recent Modern Healthcare article, SBA Administrator Jovita Carranza said, “Speed is the operative word; applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans.”

The Coronavirus is impacting us all. It is time to utilize the tools offered to ensure the strength of your staff during this difficult time.

 

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Maintaining Collections During a Pandemic

In late January the Coronavirus reached the United States, radically changing the trajectory of 2020 in ways we won’t soon forget. No area has experienced more disruption and uncertainty than healthcare. From shortages of personal protective equipment and ventilators to reductions in elective procedures, from expectations of additional strain on emergency services to unclear revenue outcomes with questions about collections during a pandemic, the concerns for healthcare providers right now seem endless.

Hospitals can expect to feel financial pressure from this pandemic on several fronts. First, according to Rhett Brown, Managing Director, Research Analyst at Lazard Asset Management, in an article in The Bond Buyer, patients will choose to forgo profitable elective procedures this year, and the resulting excess capacity may or may not be replaced with treatments for patients with Coronavirus. And those treatments will end up costing hospitals additional revenue. Health Leaders predicts that nearly all hospitals would lose an average of $2,800 per Covid-19 patient case if reimbursement rates are not increased from the currently proposed rate.

We are hearing these same concerns directly from our clients. One shared that they are already experiencing a 30-percent reduction in their daily census, and if it continues, they predict a 50-percent drop in revenue.

Costs for supplies are also on the rise due to shortages in both the normal supply chain as well as the Strategic National Stockpile. New York Governor Andrew Como shared that masks that normally cost around 85-cents each were now costing $7 when they could be found. He, like others, have called for the government to nationalize the medical supply chain to help hospitals afford much-needed supplies. Hospitals will also see a rise in personnel costs as additional cases of Coronavirus are diagnosed that require a higher level of care.

Price gougers are also appearing in the critical drug and medical supplies markets, trying to cash in on the pandemic. In recent weeks, investment bankers and others have pressed healthcare companies to consider ways that they can profit from the crisis. If allowed, that profit will come in the form of higher costs passed on to hospitals and patients.

Compounding these rising costs are stories of mass unemployment spreading across America faster than the disease. Prior to the passing of the CARES Act, Treasury Secretary Steven T. Mnuchin had claimed that the unemployment rate could reach as high as 20-percent if lawmakers did not take action. While these are eye-opening numbers, the flip side is that if this awful scenario comes to be, 80-percent of the US workforce will remain employed without a major income disruption.

With the challenges the Coronavirus is creating, the last thing healthcare providers have time to worry about is their revenue stream. But in these uncertain times it’s never been more important. With significant reductions in incoming revenue, some hospitals – especially those in rural and smaller community settings – could be forced to close their doors. Alan Morgan of the National Rural Health Association recently told Kaiser Health News that if short-term cash isn’t addressed, we’re going to see hundreds of rural hospitals close before this crisis ends.

Considering the ramifications of these factors, it’s imperative that hospitals continue to collect any and all revenue possible during the Coronavirus pandemic, including self-pay balances, but the key is to do it in the most patient-friendly way possible.

First and foremost, empathy is paramount to collecting success and sensitivity to those affected by Coronavirus is essential. The unknown can cause emotions to run high, and there’s no place for anything less than kind, understanding words and actions. When on a call, and a patient says that they are experiencing financial hardship due to the Coronavirus, it is best to thank them for their time, mention any financial assistance options they may have available, apologize and end the call.

Here are a few additional steps that we recommend your collections partners take to help minimize the impact health issues will have on your patients during the Coronavirus pandemic:

  • Flag Accounts – Add a notation to accounts that are suffering financially due to the Coronavirus in both your system and your collections partner(s) system. An example of this is Epic users adding a Billing Indicator to track the accounts and ensure that collection activities cease until the pandemic has subsided.
  • Credit Reporting – Have your collections partner(s) temporarily stop reporting to the credit bureaus. With so many other issues occurring surrounding this pandemic, it is not the right time to affect an individual’s credit. This will also ensure that Coronavirus-related charges do not accidentally get reported. We do not know what will happen with these charges in the future.
  • Legal Action/Garnishments – Have your collections partner(s) pause all legal action and wage garnishments. As with credit reporting, this is simply not the right time to pursue these types of actions.
  • Insurance Check – Reviewing, identifying and verifying that insurance was correctly applied to your patient’s accounts is another step you and your collections partners can take to help maximize your revenue. Some accounts may be payable but were not correctly covered by the insurance company. Having your collections partners help identify missing insurance and follow up on these accounts could lead to the insurance company paying, which is a major patient satisfier.
  • Explore All Avenues of Additional Reimbursement – Look for opportunities to apply for Cobra with patients who may have recently lost employment. Additionally, backdated Medicaid or disability will become a greater revenue source for hospitals.
  • Financial Assistance – More patients will qualify for financial assistance, so working to qualify these patients as efficiently as possible will be extremely beneficial. This includes Medicare patients who will also qualify for Medicare Bad Debt. 

We have to remember that while there will be some patients who are unable to pay their bills, many will still have the means to pay. These are the patients you will want your collections partners to focus on communicating with during these times. Additionally, it is important to keep your inbound communication options strong, making it easier for patients to reach out to you with any questions or payments.

Though the nation is in turmoil, it is important to ensure that letters and responses required by law are still sent to patients regarding disputes, payment plans or receipts in a timely manner. Stay on top of any changes on a national and state level to remain in compliance, even when dealing with Coronavirus fallout.

Here in Wisconsin, Governor Tony Evers enacted a “Safer at Home” order, which closes any non-essential business. Hospitals from across the state have shared with us why it is important for collection agencies to remain operational during the Coronavirus pandemic. One such letter said,

“With respect to the COVID-19 response, [collections] are a critical function to [our facility] and our patients.  Patients during this trying time will need assistance planning their financial future, and [our facility] needs to continue to utilize [collection] services to maintain adequate cashflow.” 

The truth is, the Coronavirus is going to impact hospitals for the foreseeable future. There are several topics you will want to discuss with your collections partner/agency now to ensure they are prepared to support you during the pandemic.

  • Remote Workforce – Validate that they have made provisions for their staff – especially collectors – to be able to work from home. Stay-at-home directives will quickly shut down call center-based collections, making it harder, if not impossible, for them to continue operations.
  • Technical Infrastructure – If your partner/agency says that they are prepared to have their collectors work from home, ask for information on their technical infrastructure. A remote workforce has drastically different needs than office-based staff, and their system may not be able to handle this change.
  • Essential Business Status – While many jobs can and will be done from home, there are responsibilities (printing, incoming/outgoing mail, payroll, etc.) that will have to be handled from the office. If your collections partner(s)/agency does not have “Essential Business” status, any shelter in place orders will stop them from working on-location.
  • Remote Training – Collections can be a high turnover industry, and with the uncertainty caused by the Coronavirus, there will be a need to add and replace collectors. Make sure your partner/agency has the ability to hire and onboard new employees remotely. If not, you may see a decrease in revenue due to a dwindling workforce.

Nobody knows exactly how the Coronavirus will impact our country in the long or short term, but your survival may depend on ensuring a consistent collections revenue stream. Please take the time to review your current partners and agencies to safeguard your employees and patients during these uncertain times.

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Proposed FPL Changes and the Impact to Financial Assistance

Proposed changes to the Federal Poverty Level (FPL)Joseph Maretti, Ridiculously Nice Sales

The Trump Administration has proposed updating the way in which the Federal Poverty Level (FPL) is measured. The formula that currently determines someone’s poverty level has been around since the Social Security Administration created Medicare in 1965. The way Americans have spent their disposable income, along with inflation, has changed considerably since then. One could argue that it’s time to adjust this formula to be more in line with today’s current inflation measures.


Today, the U.S. Census Bureau looks at the poverty threshold and factors in inflation to provide an update on how many Americans are living in poverty every year. The Department of Health and Human Services (DHHS) issues poverty guidelines based on the number of individuals for each household. For example, the poverty level for a household of four is an annual income of $25,750. To get the poverty level for larger families, simply add $4,420 for each additional person in the household. For smaller families, subtract $4,420 per person. Guidelines for Alaska and Hawaii are higher due to cost of living. DHHS then bases their poverty guidelines around this threshold to determine an individual’s eligibility for certain benefits. Under the current proposal, the Office of Management and Budget would adopt a lower rate of inflation to determine the poverty threshold. This means fewer people would qualify for certain benefits as the poverty threshold would rise more gradually over time.


How could this impact your facility?


Should this proposal go through, it could mean a significant number of individuals who currently qualify for the financial assistance benefit would no longer be eligible. To help paint a clearer picture, the Center on Budget and Policy Priorities (CBPP), a left-leaning think tank, released a report this month examining the 10-year impact of the proposal:

  • More than 250,000 seniors or people with disabilities could either lose their eligibility for Medicare Part D’s low-income subsidy program or receive less assistance from it.
  • More than 150,000 seniors or people with disabilities could lose assistance with their Medicare premiums.
  • More than 300,000 children could lose Medicaid and CHIP coverage.
  • More than 250,000 people could lose the coverage they gained through the Affordable Care Act’s Medicaid expansion.
  • More than 150,000 ACA exchange enrollees could lose some or all of their cost-sharing assistance.
  • Tens of thousands of ACA enrollees could lose their premium subsidies, along with millions who receive smaller subsidies.

According to the Congressional Budget Office (CBO), estimates indicate that the yearly cut across federal health coverage programs would total in the billions of dollars by the tenth year. The impact on program eligibility thresholds would roughly double between the tenth and twentieth year; should the policy go into effect.


In the event the administration is successful, it may be likely that alternative measures will be created to determine the poverty level for social programs at the State level, so as not to rely on the federal poverty line.


Many hospitals rely heavily on the revenue that is generated through these federal programs for their indigent patient population, so it’s important to keep this proposed legislation on your radar. Americollect will continue to monitor this situation as it unfolds and watch for any updates or changes to the proposed regulation.

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Shawn Gretz Appointed to HFMA National Advisory Council Revenue Cycle Committee

Shawn Gretz, President of Americollect, has been appointed to the Healthcare Financial Management Association (HFMA) National Advisory Council (NAC) Revenue Cycle Committee beginning June 1, 2020. In his two-year appointment, Shawn will join the 23 members of the NAC to focus on key issues facing the healthcare industry and HFMA.

Shawn has been an HFMA volunteer since 2006 in various roles and capacities, including president of the Wisconsin chapter and a member of the Regional Executive team for Region 7 (Illinois, Wisconsin and Indiana). During this time, he has had many accomplishments, and his dedication to HFMA has led to his appointment to the NAC Revenue Cycle Committee.

“I’m excited to join the NAC Revenue Cycle Committee to learn about the pain points that are impacting the industry from a revenue cycle standpoint,” said Shawn. “I look forward to bringing my experience from ridiculously nice self-pay and bad debt collections to the committee to help improve the patient experience in healthcare.”

The NAC provides professional perspective on thought leadership topics important to HFMA members. Council appointments are made from individuals who are active in their profession as well as HFMA volunteers who are knowledgeable in their respective areas.

Americollect firmly believes that everyone deserves to be treated Ridiculously Nice, all the time, no matter what. Collecting only for the healthcare industry, we utilize our Ridiculously Nice approach to open communication lines and build trust with the patient, providing the same compassionate approach that they expect from their healthcare organizations. We partner with over 130 hospitals and health systems and over 7,000 physicians to collect more money than our competition while creating an unparalleled patient experience.  

 

 

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Can you wait to be paid?

It would be pretty sweet to be able to buy a new car and not pay for it, right? Or to just walk in and buy groceries without opening your wallet. But how long would the auto manufacturers or grocery stores stay in business if they had to wait years to get paid? Not very long. But that’s exactly what is happening in the healthcare industry.

It seems like every few years someone in congress decides to “help” protect consumers against rising medical costs. Sure, they mean well, but Rep. Rashida Tlaib, a Democrat from Michigan, doesn’t understand the ripple effect a bill like H.R. 5330 would have.

H.R. 5330, also known as the Consumer Protection for Medical Debt Collections Act, is a bill “to amend the Fair Debt Collection Practices Act to provide a timetable for verification of medical debt and to increase the efficiency of credit markets with more perfect information, to prohibit consumer reporting agencies from issuing consumer reports containing information about debts related to medically necessary procedure, about and for other purposes.”

But what does that really mean? It means that consumers would have up to TWO YEARS before it impacts their credit, an extremely long time compared to what is currently allowed. Plus, the legislation would delay the ability to report medical debt to credit reporting agencies for one year, and it would ban the reporting of debt arising out of “medically necessary procedures,” which would be the majority of accounts sent to collections.

And while some believe this would help consumers, it would just kick the can a little further down the road. Consumers have several options when it comes to dealing with their medical expenses – including charity care – and agencies are often the ones to educate them on these choices. If Congress takes away our ability to communicate with consumers in a timely manner, it only pushes that obligation off and adds to an uncertain financial future with a smaller window for resolution, and even less chance of recovery.

Join us in letting our U.S. Representatives know how this would impact the entire healthcare world by calling or emailing your Representative TODAY.

 

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It’s My Birthday and All I Got Was This Surprise Medical Bill

Nick Mclaughlin, Ridiculously Nice Sales

Yes indeed, it was my birthday this week! I didn’t actually receive a surprise medical bill for my birthday (thank goodness!), but there sure is a lot of buzz on the topic in Washington D.C.! With the increase in high-deductible health plans in America, patients are feeling the financial impact of their healthcare services more directly than ever.

What exactly is a “surprise medical bill,” and why is it a problem?
Proposed surprise medical bill legislation specifically addresses the conundrum of in-network and out-of-network healthcare providers. For example, if you visit the Emergency Department of a hospital that is in your insurance plan’s network, yet the physicians group that staffs the ED is out-of-network, the patient would receive a surprise medical bill. Many hospitals use out-of-network consulting services such as radiology and pathology. If a patient utilizes a hospital with outsourced services, they could end up receiving a surprise medical bill, even though the hospital they visited was in-network. Another such situation resulting in a surprise medical bill would be using an out-of-network ambulance, regardless if it is air or ground transportation.Situations such as these, along with the increase in high-deductible health plans, results in a rise in liens on homes, bank accounts and taxes, garnished wages, and crippling medical debt. The Kaiser Family Foundation completed a national poll of partisans, asking whether or not the federal government should protect patients from balance billing for out-of-network services. The results of this poll shows that 90% of Democrats, 77% of Independents and even 61% of Republicans said “Yes.”

A new bipartisan proposal would remove patients from disputes between insurance companies, doctors and hospitals. This act would require that health insurers pay at least the median in-network market rate for the area. For bills that are above $750, either side could seek to have an independent arbitrator resolve the conflict if they disagree with the benchmark rate. This act is the marriage of the first two solutions below.

Possible Solution Number #1 – Regulate Out-Of-Network Payment (“Burn in Hell”)
The first possible solution to reducing surprise medical bills comes out of the Senate. Senators Bill Cassidy (R-LA) and Maggie Hassan (D-NH) offer a two-fold proposal: step one – prohibit balance billing, and step two – regulate out-of-network payment. The plan seems relatively simple at first glance, but big questions remain about how prices would be set. Would the payment standard be a percentage of Medicare reimbursement? Or a percentage of average in-network payments?

This is similar to a plan some health plans are enacting called “reference-based pricing.” It’s a simpler solution compared to others that have been proposed, but it significantly reduces the ability for providers and insurance companies to negotiate contracted rates. A large health system in North Carolina decided not to participate in such a health plan that capped provider payments at 160% of the Medicare rate for inpatient care and 230% of the Medicare rate for outpatient services. An administrator from the system sent an email to the health plan that read, “Burn in hell, you sorry SOBs,” further stating that the plan “would financially destroy every hospital in this state.” Mandating a program like this for out-of-network payment would likely distort some of the market forces left in healthcare.

Possible Solution Number #2 – Baseball-Style Arbitration
The second possible solution to reduce out-of-network pricing comes out of the House. Representatives Frank Pallone (D-NJ) and Greg Walden (R-OR) offer a similar restriction against balance billing, but include baseball-style arbitration for determining what the payment should be. In Major League Baseball, most young players with less than three years of major league “service time” earn the league minimum salary. However, once they reach three years, they become eligible for salary arbitration. The team submits a salary offer, the player submits a salary offer, and a third-party arbiter decides which salary is the fairest; no compromise.

Balance billing patients would still be prohibited, but arbitration would not be between the patient and the provider each time a service is rendered, but instead with the insurance company and provider for a set period. The biggest questions around this solution are who would set the guidelines for arbiters, and what should those guidelines be? It does maintain market forces to an extent, but administratively, a system like this is very burdensome.

Non-Legislative Possible Solution – In-Network Matching Guarantee
Another possibility is for hospitals to voluntarily offer an in-network matching guarantee. This means that any doctor or clinician who treats a patient at an in-network hospital would have to accept the patient’s in-network payment rate. It seems like a nice way for hospitals to differentiate themselves from neighboring hospitals to increase market share, but could discourage physician groups to practice at their hospitals.

Who Wants What?
Once again, the money fight in healthcare is between insurers, hospitals and clinicians. Insurers want federal payment standards to be set, which would likely lower reimbursement benchmarks for setting contracted prices. Providers, for the most part, prefer the arbitration style approach to settling payment disputes, since it would make the process to challenge their out-of-network rates more difficult. Limiting out-of-network payment rates could significantly distort the importance of contracting between insurers and providers. A hospital threatening to leave an insurer’s network gives them leverage to negotiate higher payment rates, and an insurer threatening to leave a provider out of their network gives insurers more leverage to negotiate lower payment rates. How surprise medical bill legislation impacts this dynamic will be interesting to follow in the coming years. We will continue to keep an eye on this issue to see where it goes.

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