HFMA Unveils Peek into Proposed Medical Debt Collection Guidelines

UPDATED Aug. 27, 2013

Regulators and legislators are bearing down on those who collect medical debt, and in anticipation of new laws and regulations covering those practices, organizations representing healthcare providers and collection agencies have joined forces to create best practice guidelines.

The Healthcare Financial Management Association (HFMA), in conjunction with the Association of Credit and Collection Professionals (ACA International), assembled a task force of stakeholders that has met since March to “identify and document the current state of best practices.” The Medical Debt Task Force comprises representatives from both organizations, as well as from providers, credit agencies, credit bureaus, and patient advocate organizations.

The task force gave a peek into those proposed guidelines Wednesday at HFMA’s Annual National Institute in Orlando. While the full draft guidelines were not unveiled, members of the task force discussed several of the ones that will have a large impact on the industry.

Welcome to “where the sidewalk ends,” announced Chad Mulvany, technical director for reimbursement and regulatory issues at HFMA, who introduced the task force.

The task force walked HFMA members through scenarios that demonstrated how some of the proposed guidelines would be applied, and based on those examples, it appears the task force is hewing closely to proposed legislation in Congress and regulations under consideration by the Treasury Department’s Internal Revenue Service.

Among the task force’s proposed best practice guidelines:

Allow patients 120 days to pay bill before reporting to a credit agency. The proposed IRS 501(r) regulations for nonprofit hospitals defining “extraordinary collection actions” will require this, should they be enacted. Furthermore, if the patient has been unresponsive to billing and collection efforts, the proposed guidelines recommend that the provider conduct an additional charity screening at the end of that 120 days before reporting the debt.

The guideline also mirrors proposed changes to the Fair Debt Collection Practices Act (FDCPA) in a bill introduced in the U.S. House in late May.

Full file reporting (UPDATED Aug. 27, 2013). The task force will recommend is exploring the recommendation to have providers supply their collection agency partners with “full files” on patients, rather than provide limited imitation and allow the credit agency to access other systems for supplemental information that would be helpful in clearing or collecting the debt. In addition to reporting delinquent medical debt, the task force is exploring if all transactions — payments, partial payments, or no payments — should be reported to credit bureaus. Reporting positive transactions will help increase a patients credit score, said Daniel Johnson, president, Experian Healthcare. (In an e-mail, HFMA’s Mulvany writes, “At this point, we’re only committing to exploring the possibility of full file reporting as there are multiple technical and regulatory issues that must be resolved.”)

Removing paid medical debt from credit reports within 45 days. This is a cornerstone of the proposed Medical Debt Responsibility Act currently working its way through Congress. The task force is recommending that this be considered a best practice, and that to make it logistically possible providers, their credit agency partners, and credit bureaus conduct regular reconciliations of patient accounts.

According to Mulvany, the Medical Debt Task Force will release its draft guidelines to stakeholder organizations such as HFMA, ACA International, and others in the coming weeks. After those organizations comment, the guidelines will be updated and the distributed to members of those organizations for additional comment, similar to how HFMA is handling the proposed Patient Interaction Guidelines released earlier in the week.

Member of the task force present, in addition to Mulvany and Johnson, included David Franklin, chief development officer, Connance Inc.; Tina Hanson, executive vice president and chief strategy officer , State Collection Service, Inc.; Lucia Lebens, director, federal government affairs, ACA International; and Mark Rukavina, principal, Community Health Advisors, LLC.