October 19, 2005
Approximately 45 million Americans currently lack health insurance, and this number is only expected to grow. To help hospitals prepare for the influx of charity care patients that is likely to occur, HFMA, in collaboration with McKesson Corporation and SearchAmerica, has developed a new hfm educational supplement that discusses key strategies to ensure your facility effectively and efficiently handles the provision of charity care. The following are just a few highlights from this supplement:
Review and Update Financial Assistance Policies Annually
All hospitals should have a clear, comprehensive policy regarding charity care and other patient financial assistance that employees can apply appropriately and fairly. This policy should be reviewed at least once per year and updated when necessary.
Many organizations offer discounts using a sliding scale that is based on patients’ income as a percentage of the federal poverty level. According to the PricewaterhouseCoopers Health Research Institute, nearly three-fourths of hospitals offer full charity care to patients that fall in ranges varying between 101 percent and 300 percent of the federal poverty level. One-third offer a partial discount to those above 300 percent of the federal poverty level. An annual review helps ensure that the policy is appropriate for the latest set of federal poverty guidelines as well as any other economic changes. An annual review also can be useful for determining that the policy continues to meet the needs of the patient population as well as the organization’s mission and goals.
Any review of a hospital’s financial assistance policy should include an evaluation of recent charity care cases and the degree to which those accounts were handled in the manner intended. A recent review at Sisters of Mercy in St. Louis, for example, found that although the sliding scale discounts worked for many patients, the system still needed some enhancements.
“One change we made that has really helped patients was determining an out-of-pocket maximum for each discount level,” says Sheri Beekman, vice president, revenue cycle, Sisters of Mercy. “For example, a patient’s income might indicate that he is eligible for a 40 percent discount, which at first sounds great. But if he has a catastrophic illness, the remaining 60 percent can still add up to a huge amount of money. Even with discounts, some patients just can’t pay. By discussing a cap on out-of-pocket expenses, we are more likely to receive at least some payment, and the patient understands up front that his charges will not go over a certain amount.”
Streamline Processes and Procedures
After adopting a new or revised charity care policy, healthcare providers should examine financial assistance processes to assess whether they still work well and if they could be done more efficiently.
“Once we put the new policy in place, we changed all of our workflows based on what we learned while developing the policy,” says Lori O’Malley, regional director, revenue cycle, Providence Health System-Washington in Seattle. “One of the changes was the creation of an electronic worksheet that requires registrars and other staff to enter key pieces of data. It prompts them to ask for any necessary documentation from the patient. Before the worksheet, each patient had a packet of paper that was handed off three to five times,” she says, recounting how the process often resulted in inaccuracies. “With our worksheet, we have an error rate of just 2 percent.”
The worksheet wasn’t the only answer. “Another change we made was moving away from the W-2 as standard documentation,” says O’Malley. “We now use the last three months of pay stubs as proof of income because our policy is based on current financial need, and a W-2 from the past year may not reflect that.”
Focus on Customer Service
Financial need can be a sensitive issue for many patients. Hospitals often have difficulty identifying which patients qualify for charity care, Medicaid, or other assistance simply because patients may not want to make known their need for help. This is why caring, respectful customer service can be one of a hospital’s most valuable tools in managing charity care.
“Of course, all patients should be treated with respect,” says Terry Allison Rappuhn, CPA, project leader for the PATIENT FRIENDLY BILLING® project, a nationwide initiative led by HFMA that supports clear, concise, correct, and patient friendly healthcare financial communications. “But it’s especially important with charity care patients. They’re often embarrassed about their financial situation and don’t want to discuss it, so it’s crucial that staff are trained to provide good customer service.”
SOURCE:
Today’s Charity Care Challenges: What Should You Be Doing?, an educational supplement by HFMA and McKesson Corporation and SearchAmerica.
Additional Resources
The Patient Friendly Billing project web site, which includes the report Hospitals Share Insights to Improve Financial Policies for Uninsured and Underinsured Patients and an accompanying worksheet and resource list.
Comprehensive list of HFMA educational programs, articles, tools, and links relating to uninsured patients.
MEMBER-GET-A-MEMBER SPONSORS NOW RECEIVE CREDIT FOR FORMER MEMBERS
HFMA has big news for members taking part in the Member-Get-A-Member Program: Sponsors now receive credit for former members* who reactivate their memberships between October 1, 2005, and April 30, 2006! That means that every new member or former member* you sponsor adds up to even greater rewards for you. Participation in the Member-Get-A-Member Program allows you to help grow the association and network with your peers while earning rewards. For full program information, visit the Member-Get-A-Member section of HFMA's website.
*Sponsors will receive credit in the Member-Get-A-Member campaign for former members who reinstate (reactivate) their memberships between October 1, 2005, and April 30, 2006. Sponsors will also continue to receive credit in the Member-Get-A-Member campaign for new members who join (or have joined) between June 1, 2005, and April 30, 2006.
If you have questions or comments about HFMA Wants You to Know, contact editor Laura Noble.
HFMA Wants You to Know ISSN: 1540-0697. Volume IV, Issue 20. Copyright 2005, Healthcare Financial Management Association. All rights reserved.