Medical Debt

IRS releases new Form 990 instructions; PwC struggles to help Grady rebuild cash flow;

Anne Zieger — Wed, 27 Aug 2008 05:03:14 -0400

> The IRS has officially released new instructions for Form 990, including tools that make it easier to answer questions, line by line. Article

> While consultants with PriceWaterhouseCoopers are doing their best to make over cash flow Atlanta's Grady Memorial Hospital, it's proving to be a very difficult job, thanks to, among other problems, resistance from staff, bad technology and worker shortages. Article

> Nearly 80 million U.S. adults have medical bill problems, or are working to pay off medical debt, according to a new Commonwealth Fund report. Article

> Des Moines, IA-based Broadlawns Medical Center has announced that patients will no longer receive free medication unless their income is below the federal poverty level. The public hospital had previously given free medications to patients with no insurance and those on state insurance for low-income patients. Article

And Finally... If you think even a dog could see the flaws in King County, WA's voter registration system, you might be right. Article

Updates on regulatory risks

Anne Zieger — Thu, 19 Jun 2008 10:23:28 -0400

Because everyone uses healthcare, regulators take a shot at the system from time to time to prove that they're paying attention. Still, things are particularly intense this year, with tax issues and financing questions looming larger than they have before. With tax exemptions for non-profit hospitals under scrutiny, the use of tax-exempt bonds being examined, endowment use being questioned, and the ongoing carnival of changes that is Medicare reimbursement, you'll see a fair amount of discussion at the show around agency rule-making.

Among hospital types, expect to see some furrowed brows over the impending Form 990, Schedule H, in which not-for-profit hospitals will report on their charitable activities to the IRS. Given that some Congressional hospital critics, like Sen. Chuck Grassley (R-IA), have questioned whether some hospitals deserve not-for-profit status at all, filling out the Schedule H will be a high-stakes exercise. (As we've mentioned elsewhere, the June 25th educational session on how to cope with the new Form 990 is likely to be a standing-room-only affair.) Of course, the trade show exhibit floor will feature quality time with consultants like Grant Thornton, who are offering to help with the problem, too.

While you're at the show you may also wish to check out the buzz on what's happening in patient collections in your colleagues' home states--as it seems that state legislatures are pretty interested in how hospitals deal with uninsured and self-pay patients. In Illinois , for example, the legislature is considering a bill that would set limits on what hospitals would be allowed to charge and collect from some uninsured patients. And the Minnesota legislature recently passed a bill (later vetoed by the governor) that would have banned providers from collecting, using or sharing medical debt information to qualify patients prior to providing elective services. It seems likely that other states are going to get involved in these issues in coming months, too.

Hospitals auctioning off patient debt online

Wed, 04 Jun 2008 06:59:57 -0400

Struggling to cut their bad debt ratios--some of which are lowering the stock prices of publicly-held chains--hospitals are beginning to use a new channel to collect on patient bills. Rather than simply hiring collections agencies, some are beginning to put patient debts up for auction online. Bidders on the debt may include the same agencies that serve the hospitals, some of which provide guaranteed payments to hospitals in exchange for giving them access to the debt. Meanwhile, the auctions are also attracting other companies that buy the debt outright.

Many of these auctions are run through ARxChange.com, a TriCap Technology Group site, while others use medipent.com's Medipent LLC. The companies say that they vet collectors to see that they will use the right tactics before participating in auctions, and also, try to make sure that collectors comply with the hospitals' standards for collections (such as whether they record phone calls). Also, hospitals have the final say over who bids on their accounts, and at least on ARxChange.com, don't necessarily choose the highest bidder.

Despite these safeguards, some critics argue that auctions change the dynamics of hospital collections unfavorably. Usually, collectors are paid a percentage of what they collect, sometimes more when they collect more. But in many of these cases, however, winning bidders get to keep all of the money they collect. This gives them a greater incentive to be aggressive in their tactics, some observers say.

To learn more about this trend:
- read this Wall Street Journal article (sub. req.)

Related Articles:
Bad debt savages HCA, LifePoint profits
In 2007, bad debt rising for hospitals
MN governor vetoes medical debt history bill
FL hospital sued over sale of $1.9B in bad debt

MN governor vetoes medical debt history bill

Wed, 14 May 2008 06:59:55 -0400

Minnesota Gov. Tim Pawlenty (R) has vetoed a bill that would have banned healthcare providers from collecting, using or sharing medical debt information to qualify patients prior to providing elective services. The bill, which had passed both of the state's legislative chamber's by a broad margin, permitted providers to determine patient income levels and assets, but only to qualify them for charity programs or state and federal reimbursement programs. Pawlenty, however, called the bill "extremely broad," and said that it could force providers to make big changes in how they offer routine medical services. Supporters of the bill say they'll probably rework the text to try and meet the governor's objections.

To learn more about the bill:
- read this Modern Healthcare article (reg. req.)

Related Articles:
MN bill blocks hospitals from using debt info pre-care
Trend: Hospitals requiring upfront payments before treatment
HMA adopts tougher collections strategy
Hospitals collecting patient bills up front