Tag: hospitals

Nonprofit Hospitals Face Additional Regulatory Burdens in Financial Assistance and Debt Collection

Poyner Spruill LLP Attorneys at Law, a North Carolina Law Firm

Roughly 60 percent of hospitals nationwide either have received or are seeking tax-exempt status under the United States Treasury Department (Treasury) and Internal Revenue Service (IRS) rules and regulations. With new final rules and regulations adopted by the Treasury and the IRS effective December 29, 2014, nonprofit hospitals (referred to in the Federal Register as “charitable hospitals”) now face a number of additional requirements when attempting to collect debts owed for care provided to patients and face additional mandates related to financial assistance policies and qualification of certain low-income patients for financial assistance.

The final rules and regulations clarify the broad provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA), which added Section 501(r) to the Internal Revenue Code (Code) imposing the following four additional requirements on charitable hospitals to maintain tax-exempt status:

  1. Conduct a community health needs assessment (CHN Assessment) at least once every three years and adopt an implementation strategy to meet those community health
    needs, or be subject to a $50,000 tax penalty.

  2. Establish a written financial assistance policy which prescribes the eligibility criteria for assistance, how patients apply for assistance, and how they are charged for care under the
    policy, and a written emergency medical care policy requiring emergency care to individuals regardless of their eligibility for financial assistance.

  3. Limit the use of gross charges and the amounts charged to those patients who qualify for financial assistance for emergency or other medically necessary care to not more than the amounts generally billed to individuals who have insurance covering such cases.

  4. Make reasonable efforts to determine whether an individual is eligible for assistance under the financial assistance policy before engaging in extraordinary collection actions (EC Actions).

Additionally, the PPACA insists that a charitable hospital organization meet each of the above requirements separately with respect to each facility it operates.

Below are some requirements from the new rules and regulations that may be potential areas of focus for regulators in their review and enforcement actions against charitable hospitals.

    • The CHN Assessment process requires careful documentation of each of the multiple levels of need assessment, community input and collaboration, and a hospital’s plan for addressing the need with an adopted strategy for implementation.

    • A hospital’s financial assistance policy must contain all eligibility criteria, all financial assistance and discounts available under the policy, and methods to apply for financial assistance, as well as any actions that may be taken in the event of nonpayment under certain circumstances.

    • Hospitals must continue to take certain measures to make the financial assistance policy, the policy’s application form and a plain language summary of the policy available upon request, available in certain areas of the hospital for visitors and patients (e.g. emergency department and hospital intake areas), available on a website, and available to members of the community served.

    • Certain additional written notices with financial assistance policy information, summaries and hospital contact information for policy-related documents must be provided to patients against whom a hospital actually intends to engage in EC Action.

    • Hospitals must limit the costs for any care for which financial assistance policy-eligible individuals will be personally responsible to not more than amounts generally billed (AGB), and the criteria and method for calculating the AGB must be clearly defined by a hospital in its financial assistance policy.

    • Reasonable efforts, as defined in the new regulations, must be followed and carefully documented by hospitals during each step of an EC Action assessment application, including notification and further billing and collection communication(s) with financial assistance policy-eligible individuals. The regulations define EC Action as including, among other things, reporting adverse information about the individual to credit bureaus; requiring or deferring medically necessary care because of nonpayment of bills for previously provided care; and instituting legal process such as liens, foreclosure, attachment of property, or garnishing wages.

The full Treasury and IRS rules and regulations related to the additional requirements on charitable hospitals contain specific regulatory changes and other nuances not touched on in the “big picture” points mentioned above. The full text of the new regulations can be found at:  http://www.gpo.gov/fdsys/pkg/FR-2014-12-31/pdf/2014-30525.pdf.

Charitable hospitals may lawfully bill for and collect funds they are owed for patient care. However, the new rules and regulations in this area mean hospital leadership and experienced legal counsel should closely review all related policies, procedures, and facility practices to ensure all billing and  collection policies and practices fully comply with the law.

ARTICLE BY

David R. Broyles
Poyner Spruill LLP

The Unhappy Intersection of Hospital Mergers and Antitrust Laws

McBrayer, McGinnis, Leslie and Kirkland, PLLC

The rapidly-evolving field of health care has been moving lately towards a single-minded goal – coordination of patient care in the name of efficiency and efficacy. Hospital systems are more and more often merging with other medical practices to better achieve the standards and goals of the Patient Protection and Affordable Care Act (“ACA”). TheNinth Circuit Court of Appeals, however, recently provided a stark reminder that the ACA isn’t the only law hospitals need to consider compliance with in these mergers.

Saltzer Medical Group in Nampa, Idaho, had been seeking to make a change from fee-for-service to risk-based reimbursement and approached St. Luke’s Health System in Boise in 2012about a formal partnership. They entered into a five-year professional service agreement that contained language about wanting to move away from fee-for-service reimbursement but without any clear language on making that change. Saltzer received a $9 million payment on the deal. Other hospital systems in the area, the FTC, and the Idaho Attorney General all filed suit to enjoin the merger.

The Ninth Circuit affirmed the district court’s holding that St. Luke’s violated state and federal antitrust laws when acquiring Saltzer. St. Luke’s argued that acquisition of the other provider would improve patient outcomes and care in the community of Nampa, Idaho, where Saltzer operates, but both courts agreed that the anticompetitive concerns surrounding the merger outweighed the benefits to quality care.

This case and other similar cases brought by the FTC provide a bleak outlook for health care providers looking to merge with other entities to provide care and efficiency under the aims of the ACA. While the court ultimately found that St. Luke’s aims were beneficial and not anticompetitive in and of themselves, antitrust laws only truly take the effect on competition into account, and courts are not ready to place quality of care under the ACA on equal footing.

ARTICLE BY

Molly Nicol Lewis
McBrayer, McGinnis, Leslie and Kirkland, PLLC

Mergers and Acquisitions and the Affordable Care Act

Giordano Halleran Ciesla Logo

As most employers already know, the Affordable Care Act (a/k/a ObamaCare or the ACA) now imposes health care insurance coverage requirements upon certain employers which have a certain number of full time and full time equivalent employees (“FTEs”).  Therefore, it is imperative that consideration be given to whether parties involved in any merger or other acquisition transaction are currently subject to the requirements of the ACA (and if so, whether they are in compliance with such requirements), or will otherwise be subject to the requirements of the ACA following the consummation of the transaction.

If the buyer or seller company is a “small business,” meaning the company has less than 50 FTEs, it should not be subject to the ACA.   However, a determination has to be made as to whether or not individuals who are treated as independent contractors are, for the purposes of the ACA, truly independent contractors, or rather are deemed to be employees.  While the ACA makes reference to certain federal statutes with respect to this determination, it is clear that the Obama administration has uniquely and aggressively interpreted the ACA to accomplish its objectives.  In those circumstances where the seller or buyer company is below 100 FTEs for the year 2015, the company will be exempt from the requirements of the ACA for the year 2015, but subject to the ACA thereafter.  Even in those circumstances where companies clearly are subject to the ACA, the question then becomes whether or not all of the individuals who provide services to that company are classified appropriately (employees v. independent contractors), and whether the requirements of the ACA have been complied with regarding those individuals.

A new level of complexity has been added in this area by a relatively recent interpretation of the National Labor Relations Board (NLRB) in a franchise case dealing with the classification issue, in which the NLRB found that the various employees of the franchisees were also employees of the franchisor.  This could automatically create, for any national franchise, a situation where the local franchisee meets the large employer threshold of the ACA, and therefore would be liable to comply with the requirements of the ACA.  Obviously, the position taken by the NLRB will be contested and is a long way off from being established as binding law upon all employers.  Notably, this very issue has already been addressed in various state courts.  For instance, in contrast to the NLRB decision, the California State Supreme Court recently determined in a 4 to 3 decision that the employees of a franchisee are also not employees of the franchisor.

While the ACA references certain federal statutes for determining whether or not an individual is an employee, in the recent case of Sam Hargrove, et al. v. Sleepy’s, LLC , the New Jersey Supreme Court has advised the Third Circuit that for the purposes of the wage and hour laws, the interpretation should follow New Jersey case law, which provides a much stricter definition for independent contractors than the federal law.  Only time and litigation will tell what interpretation will be made under the ACA for the purposes of determining whether an individual is an employee or an independent contractor with respect to the determination as to whether the employer is a small business subject to the ACA and whether or not an individual is entitled to health care coverage.

In summary, careful consideration must be made in any merger or acquisition transaction as to whether the seller company in an asset purchase or equity purchase is, or the combined company in any merger, consolidation or similar combination will be, subject to the onerous requirements of the ACA based on the number of FTEs of the company.   In order to make such a determination, further consideration will need to be made into applicable case law as to whether or not individuals who are designated as independent contractors of the company are truly independent contractors, or rather should be deemed to be employees of the company for purposes of the ACA.  However, because the law in this area is not entirely settled and continues to evolve, companies involved in merger or acquisition transactions and companies contemplating merger or acquisition transactions will need to stay informed on these issues.

ARTICLE BY

Ari G. Burd
Patrick S. Convery
OF
Giordano, Halleran & Ciesla, P.C.

Privacy, Behavioral Health and Hospital Regulations: Recent Developments in Wisconsin Law [VIDEO]

vonBriesen

In recent months, the Wisconsin legislature has passed several bills relating to health information privacy, treatment of behavioral health patients, and regulation of hospitals. Please view this webcast that will provide a summary of the legislative action and tips for complying with the new law.

http://player.vimeo.com/video/90057974

Health Law Check-Up Webcast: Recent Developments in Wisconsin Law

Article By:

Meghan C. O’Connor
Ralph V. Topinka
Of:
von Briesen & Roper, S.C.