The sweeping changes brought about last year through the Patient Protection and Care Act and national health care reform have had a significant impact on a number of health care providers, particularly in terms of financial reporting and compliance. Familiarity with these new regulations is essential to the long-term fiscal health of the organization. Many of them have already taken effect, while others will do so at a later date.

 

TAX-EXEMPT HOSPITALS

For starters, the PPACA includes certain provisions that affect tax-exempt hospitals. It is essential that these hospitals be in compliance with each of these provisions, and that they are comfortable in their level of familiarity with them. Here are several examples:

1. Perform a community needs health assessment (effective after March 23, 2012). This should analyze the health needs of the community by obtaining input from the individuals served by the hospital. It will be required to be updated every three years and must adopt an implementation strategy to meet the needs identified in the assessment. Hospitals will be required to provide updates to this process in their annual 990 filing, and an excise tax of $50,000 will be imposed on those that do not meet these requirements.

2. Establish a financial assistance policy. This policy requires hospitals to develop a written financial assistance policy that includes the following:

Eligibility criteria for financial assistance, and whether such assistance includes free or discounted care;

The basis for calculating amounts charged to patients;

The method for applying financial assistance;

An explanation of collection actions, including the use of collection agencies; and,

The method of publicizing the policy to the community.

Additionally, hospitals now need to have written policies requiring the organization to provide, without discrimination, care for emergency medical conditions, regardless of the individual's eligibility under the financial assistance policy.

3. Limitation on charges. This requires hospitals to limit amounts charged for emergency or other medically necessary care provided to individuals eligible for assistance under the organization's financial assistance policy. The PPACA states that these patients cannot be billed any more than the amounts generally billed to individuals who have insurance covering such care.

4. Billing and collections. Before taking extraordinary collection measures against patients who owe them money - such as lawsuits, liens, attachments or arrests - hospitals must now first make a reasonable effort to determine if the individual is eligible for financial assistance under the hospital's financial assistance policy.

While many hospitals may already have policies in place to deal with financial assistance and billing and collections, now would be a good time to review those policies to determine if they need updating to meet the requirements of the PPACA.

 

OVERPAYMENTS

Another area greatly affected by health care reform laws involves overpayments, which occur when health care providers receive too much funding from government programs. How these overpayments are managed and reported could mean the difference between the business running smoothly or facing potentially large fines and penalties.

What causes an overpayment situation is not always clear. Sometimes it is nothing but a misapplication of the payment to a different account. However, there are other times where it is a true overpayment, and in those instances the funding must be returned. Historically, these overpayments are often squared away over time through audits, which were undertaken by the programs or by repayments by the organizations to the appropriate reimbursement agency.

The Federal False Claims Act historically considered these situations to be a false claim, and the results can be very costly. Any person who has possession, custody or control of property or money used or to be used by the government who knowingly delivers or causes to be delivered less that 100 percent of that money or property can be held liable for damages, even if no false claim was ever filed with the government agency. This act carries with it a civil penalty of not less than $5,000 and not more than $10,000, plus three times the damages that the government sustains.

What's more, the Fraud Enforcement Recovery Act of 2009 expanded the False Claims Act. It now includes instances of knowingly concealing or knowingly avoiding an obligation to pay or transmit money or property to the government, whether the person uses a false record or statement to do so or not.

The False Claims Act and the Fraud Recovery Act of 2009 have strengthened the Health Care Reform Act, requiring that overpayments be repaid within 60 days. The clock starts ticking on either the date when the overpayment is identified or the date the cost report is due, whichever is later. The consequences for not complying with overpayment regulations can be severe. The Department of Human Services has the right to recoup these overpayments from the provider, and state Medicaid programs are instructed to exclude providers that maintain these overpayments from participation in the Medicaid Program.

In order to avoid potentially costly ramifications, all health care organizations should review any potential overpayments on a timely basis, and those identified as true overpayments from government payors should be repaid in accordance with the guidelines in the act. A compliance audit should also be considered in this area to make sure that the organization does not unwittingly run afoul of this revised regulation.

 

George W. Thomas, CPA, is a director at BlumShapiro, specializing in hospitals and long-term care.

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