In This Issue

Nonprofit Hospitals Face Additional Regulatory Burdens in Financial Assistance and Debt Collection: Roughly 60 percent of hospitals nationwide either have received or are seeking tax-exempt status under the United States Treasury Department (Treasury) and Internal Revenue Service (IRS) rules and regulations. With new final rules and regulations adopted by the Treasury and the IRS effective December 29, 2014, nonprofit hospitals (referred to in the Federal Register as “charitable hospitals”) now face a number of additional requirements when attempting to collect debts owed for care provided to patients and face additional mandates related to financial assistance policies and qualification of certain low-income patients for financial assistance.

Placing Medicare Beneficiaries Into “Observation Status” – Recent Second Circuit Decision Casts Doubt on Lawfulness of CMS Procedures: The trend toward placing more Medicare beneficiaries into observation status in the hospital has come under increasing attack by patient advocates. Such patients are considered outpatients reimbursed by Medicare Part B rather than inpatients covered by Medicare Part A, even though they may receive care in the hospital for many days and nights. Classification as observation status can have significant negative financial consequences for the beneficiary, as is discussed more fully below, particularly because Part B unlike Part A provides no post-acute benefit for skilled nursing facility care.

Hospitals – Medicare RAC Program Improvements Delayed Until 2016: The CMS had planned to award new contracts to companies that act as Medicare’s recovery audit contractors (now referred to as “recovery auditors” or RAs) for operation of the Medicare recovery audit program in the hospital sector by the end of 2014, which would have concluded the procurement process for new contracts that began in May 2013. However, in familiar fashion, CMS announced recently that due to continued delays in awarding the new contracts, the existing contracts for the four private companies that currently act as Medicare’s RAs (namely, CGI Federal, Connolly, HealthDataInsights, and Performant Recovery) would be extended through calendar year 2015.

Toss or Keep Document Retention in a Hospital Setting: Deciding how long to hold on to specific records in your hospital can be a challenging task, especially when the facility deals with so many different types of records. You may be tempted to hold on to everything indefinitely – an option we know can be space- and cost-prohibitive, especially within the hospital environment. Our reluctance to dispose of records is also driven by several critical questions: What if I need this record to defend our hospital in a lawsuit? What if a state or government agency audits or investigates our hospital for issues contained within this record?

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