Treasury, IRS Release Details of Hospital Debt Collection Regulations

The Treasury Department last week released the details of its proposed regulations limiting patient debt collections by not-for-profit hospitals to as much as 240 days. Those interested in commenting on the proposed regulations have until September 24.

The proposed regulations clarify IRS regulations regarding how a hospital manages its financial assistance policy (FAP) and emergency medical care policy, and how it collects debts from patients who may qualify for financial assistance or charity care.

The ARM industry reacted last week to the preliminary details.

“The new Treasury rules will be an added revenue cycle burden for all nonprofit hospitals to comply with,” said Tom Gavinski, vice president of I.C. System. “These hospitals will incur additional costs in attempting to determine financial assistance for patients and incur additional costs waiting for the patient to complete their financial assistance application.  Holding self pay patient accounts as accounts receivable for eight months without any collection activity will reduce the overall collectability of those accounts, reducing the net value of that receivable.”

Gavinski also noted that hospitals are already being squeezed with reduced reimbursement and tighter margins.  “These proposed rules will create additional financial constraints on not for profit hospitals that will challenge them financially,” he said.

For more detail on the new regulations and what they will mean for healthcare providers and the medical ARM community, please visit insidePatientFinance.com.

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