HFMA, ACA Release Final Medical Debt Resolution Best Practices

Recommended best practices for managing patient debt created by the leading organizations of healthcare financial and accounts receivable professional have been finalized and released today.

The Healthcare Financial Management Association and ACA International spent almost a year developing the guidelines. “Best Practices for Resolution of Medical Accounts” (pdf download) is a concise but detailed list of best practices for managing patient accounts from the moment a statement is sent to a patient to when the account is closed.

Early last year the two organizations formed a task force comprised of representatives from healthcare finance, third-party collections, patient advocate organizations, and others to create the draft guidelines. Last summer that draft was released to members of HFMA and ACA for their comment and criticism.

Most of what had been proposed in the initial draft remains, but some of the proposed guidelines have been softened. For example a proposed best practice to remove resolved medical debt from a patient’s credit report is now optional. According to the report:

“If a provider/business affiliate elects to report an outstanding debt to a credit bureau and the debt is subsequently satisfied (includes accepting a settlement for less than full value as paid in full), the hospital should establish a policy stating the patient’s credit report should be updated to reflect the account’s resolution. It is at the discretion of the hospital as to whether this requires removal of paid accounts from the report or to have them marked as paid but leave them on the report. In either scenario, it is the responsibility of the provider/ agency to report the satisfaction of an account to credit bureaus. Providers/agencies that choose not to report to credit bureaus are exempt from this step.”

Other best practices include :

Allow patients 120 days to pay bill before reporting to a credit agency. The IRS 501(r) regulations for nonprofit hospitals defining “extraordinary collection actions” now require this. The guidelines recommend this for all healthcare providers.

Standardize “collection process clock.” The guidelines recommend that the collection process clock starts at first statement date from provider’s system.

Collection partners adhere to provider’s policies and procedures. All vendors and partners involved in the collections workflow need to adhere to the provider’s policies and procedures. In addition, “policies related to extraordinary collections activity (ECAs) (as defined by the IRS—i.e. liens, credit reporting, lawsuits, wage garnishments, or sale of debt) are board approved, and communicated to and practiced by collection agencies.”

Providers and partners must regularly reconcile accounts. ”Regular reconciliations should occur between the provider system and business affiliates’ system to ensure balances are in sync (i.e., take backs) for accounts in bad debt. Providers should also ensure through the reconciliation process that only one entity (business affiliate(s) or the provider) is working on an account to avoid duplication of patient contact. The frequency of these reconciliations should be such that it allows for a high degree of confidence that multiple parties are not pursuing the same account.”

Track and report patient complaints. ”All business affiliates involved in account resolution activities are required to report patient complaints.”

HFMA has built a comprehensive web site (click here) where anyone can download a copy of the best practices and learn more about how it was developed.

Here’s the official press release from HFMA and ACA International:

A Medical Debt Collection Task Force led by the Healthcare Financial Management Association, ACA International and a group of diverse stakeholders, including medical providers and consumer advocates, recently announced new best practices to help make paying of medical bills an easier and fairer proposition for consumers.

“Many consumers are struggling with medical bills today,” said ACA International CEO Pat Morris. “These best practices are a balanced step forward for all of the stakeholders involved to better resolve patient medical accounts.”

The Medical Debt Task Force sought to identify common methods for resolving the patient portion of medical bills and provide a framework for educating patients about available financial assistance programs and the account resolution process. These new best practices are intended to be voluntary guidelines and complement existing federal, state and local laws governing the recovery of patient medical debt.

Representing ACA on the Medical Debt Task Force were Director of Federal Government Affairs Lucia Lebens, Board Member Tom Gavinski of I.C. System, Tina Hanson of State Collection Service, Eric Mock of Medical Business Bureau, and Pam Kirchner of BCA Financial Services.

The following are included among a broader list of best practices. More information on these best practices will be available after 10 a.m. CST on Jan. 15, 2014, at http://www.hfma.org/medicaldebt.

• Improve Patient Education and Communication. Take responsibility for educating patients about their payment options and responsibilities. Be proactive about communicating available financial assistance policies and procedures.
• Make bills patient-friendly. All financial communication should be clear, concise, correct, and patient friendly. See HFMA’s Patient Friendly Billing Project.
• Establish policies for account resolution and ensure that they are followed. Make sure that key account resolution activities are governed by your organization’s board-approved policies.
• Report back to credit bureaus when an account is resolved. If a past-due account is reported to a credit bureau, the reporting entity should report back to the bureau when the account is satisfied.
• Track all consumer complaints. This information should be shared between the business affiliate and the provider to improve customer service, hasten account resolution, and avoid reoccurring grievances.
• Use established HFMA and ACA best practices, principles, and guidelines to inform your organization’s approach to medical account resolution. This includes HFMA’s Best Practices for Patient Communications; HFMA’s Patient Friendly Billing Project; ACA’s Health Care Servicing Guidelines; and ACA’s Code of Ethics.