Ready for prime time? Make your financial assistance policy a class act: hospitals should feel free to offer uninsured patients discounts or financial assistance to pay for healthcare services; but they also should make sure their financial assistance policies are ready for the bright light of regulatory scrutiny

Healthcare Financial Management, March, 2005 by Dennis Barry, Christopher L. Keough

Honing the Financial Assistance Policy

To effectively address all the foregoing concerns, a hospital's financial assistance policy for uninsured or low-income patients should reflect the following considerations.

Written policy. The policy should be in writing, and--most important--it should be applied consistently.

Eligibility criteria. The eligibility criteria for discounts should be spelled out in the written policy. These criteria should:

* Provide for individualized determinations of financial need

* Address whether assistance will be provided for uninsured nongovernmental patients, indigent government program patients, and/or other low income, underinsured patients

* Define qualifying income levels-typically, a multiple (e.g., one to three times) of the federal poverty income level, but possibly taking into account local considerations that reasonably allow for some leeway

* Address whether expenses (such as child sup port) are considered

* Address whether the patients" assets are considered, and if so, what types of assets are considered available for payment of hospital bills and what other expenses are considered

* Address whether the hospital will consider cases of medical need in catastrophic cases where income or assets would otherwise be considered to be too high to qualify for assistance

Notice. Waivers of coinsurance or deductibles for patients in governmental programs should not be advertised, but hospitals may post notices that financial assistance is available for qualifying individuals.

Documentation. The hospital's written policy should address what documentation will be required to verify a patient's eligibility for assistance. Self-attestations may not be sufficient to establish indigence for Medicare bad debts.

Time limits for financial assistance applications. The policy should specify whether there is a presumptive time limit for applications for assistance. For example, will applications for assistance be considered if submitted after the accounts have been sent to a collection agency, and will any money be refunded to patients who have been determined to be eligible for assistance after some amount has been collected?

Beneficiaries of assistance. The policy should make clear that the assistance is intended solely for the benefit of the patient and his or her family and does not relieve third parties of liability for payment.

Payments plans. The policy should outline the types of payment plans the hospital will accept and whether it will charge interest.

Collection activities. The policy should state whether unpaid accounts will be sent to outside collection agencies and, if so, what level of review or approval are required for initiation of legal proceedings.

In Sum ...

Hospitals have a long established tradition of providing care to the uninsured and indigent. Hospital senior financial executives can help their organizations sustain that tradition by insisting that their organizations develop clear policies for discounting charges to uninsured or indigent patients in a way that is mindful of pertinent payment and compliance concerns.