Department of Treasury proposed rule takes aim at ER collection practices

The U.S. Department of Treasury late last week proposed regulations aimed at helping patients gain access to financial assistance at charitable hospitals while also providing protection from overly aggressive payment collection in the ER.

"In recent months, we have heard concerns about aggressive hospital debt collection activities, including allowing debt collectors to pursue collections in emergency rooms," said Emily McMahon, acting assistant secretary for Tax Policy, in a press release. "These practices jeopardize patient care, and our proposed rules will help ensure they don't happen in charitable hospitals. These rules also require charitable hospitals to establish and publicize financial assistance policies, and give hospitals the flexibility to establish programs that meet the needs of their communities."

Under the proposed rules charitable hospitals wishing to maintain their tax-exempt status must demonstrate they have established billing and collections protections for patients eligible for financial assistance and that they provide patients with the information needed to apply for such assistance. The proposed regulations are based on a provision of the Affordable Care Act.

The action comes as a bright spotlight is now being shone on the some of the billing collections practices employed in emergency rooms, as highlighted in a testimony in a May 30 Senate hearing before the Committee on Health, Education, Labor and Pensions, called by Sen. Al Franken (D-Minn.).

In that testimony, the committee heard from Deb Waldin, a patient of Minnesota's Fairview Health Services who described being approached to make payment by a representative of Chicago-based revenue cycle company Accretive Health, as she lay in pain in a Fairview emergency room awaiting a diagnosis and treatment for kidney stones.

Accretive Health has defended their practices both in relation to an existing lawsuit filed earlier this year against the company by the Minnesota Attorney General and in the hearing called by Sen. Franken.

According to testimony submitted by Greg Kazarian , senior vice president of Accretive Health, this case has created a fundamental misunderstanding of what services the company provides to hospitals for their revenue integrity programs.

"We believe that many of the recent allegations are founded upon a fundamental misunderstanding of who we are and what we do," Kazarian testified. "We hope it is now clear that Accretive Health is not principally a 'debt collector.' Far from it: over 95 percent of the revenue that we help hospitals collect comes from insurance companies and other third-party payors."

Charles Mooty, chair of the Fairview Health Services board of directors was more conciliatory, noting that the health system had terminated its relationship with Accretive in January based on reports of its collection practices in Fairview hospitals while also issuing an apology to any patients who were mistreated.

Sen. Franken noted that he understands many hospitals are under financial stress due to the weak economy and need to ensure that they are paid fairly for the services they provide, but "in this time of economic hardship, we need to make sure that patients aren't the unintended victims of budget shortfalls."

With approximately 60 percent of hospitals in the country operating as non-profit, tax-exempt institutions, the proposed rules are aimed at ensuring they meet the guidelines for maintaining their current status.

The proposed rules published in the Federal Register provide guidelines around a number of other areas including disclosure of a hospital's financial assistance policy, limitations on charges and non-discriminatory emergency medical care, in addition to the collections rules. The proposed rules will be open for comment for 90 days.