AHA releases guidelines on fair billing and collection

Government asked to clarify Medicare regulations

On Dec. 17, the American Hospital Association (AHA) announced it would provide guidelines for hospitals on billing and collection practices to ensure that poor patients and patients who lack health insurance are treated in a "fair-and-balanced" manner.

"Providing the patients and communities we serve with quality health care is our top priority," AHA president Dick Davidson said in a statement accompanying the release of the guidance. "Hospitals see every day the stark reality that not all patients have insurance to help cover the cost of their care. In the absence of health care coverage for all, we are working on a number of ways to assist these patients and to ensure that hospitals are there when their communities need them."

The new AHA guidelines stipulate that hospitals should:

  • help patients with payment for their hospital care by helping them qualify for existing coverage options, and communicating more effectively about available payment programs;
  • ensure that hospital policies are applied accurately and consistently;
  • make care more affordable for patients with limited means;
  • implement fair and balanced billing and collection practices.

As part of this effort at improving hospital billing practices, however, the AHA also is urging the federal government to clarify Medicare regulations that many hospitals perceive as a barrier to providing discounted services to indigent patients.

Medicare regulations require hospitals and other providers to maintain a uniform list of established charges for each product and service provided. Medicare bases its payments to hospitals on these rates, but it and other third-party payers typically negotiate discounts for goods and services provided to their members.

However, Medicare regulations and most third-party payer contracts stipulate that charging different rates for the same services is fraudulent. So, while covered patients pay for goods and services at a discount of the established charge — many providers have interpreted the regulations to mean that uninsured patients must be charged the full amount.

In a Dec. 16 letter to Health and Human Services (HHS) Secretary Tommy Thompson, Davidson urged that Medicare regulations be re-examined.

"Hospitals believe that patients of limited means should not have to pay full charges simply because they have no coverage," he wrote. "But federal Medicare regulations, as written today, constitute a string of barriers that discourage hospitals from reducing charges or forgiving debt for these patients without potentially running afoul of the law."

In the letter, the AHA asked HHS to:

  • work through the Centers for Medicare & Medicaid Services and the Office of the Inspector General (OIG) to develop safe-harbor protection for discounting or waiving charges for collections for patients of limited means who are unable to pay their hospital bills. Hospital programs that fall within the safe harbor would be protected from challenges to their payments and from OIG enforcement actions.
  • institute an advisory opinion process that would allow hospitals to seek and receive binding regulatory guidance on a timely basis;
  • create a panel of hospitals and others involved in this issue to explore solutions to the existing regulatory barriers and prevent new ones from developing. The panel could also develop new tools, processes, and resources that would enable hospitals to create new and innovative programs to meet the news of patients with limited means.

Copies of the letter and the new AHA guidelines for hospitals are available on the AHA web site at www.aha.org.