Financial Aid Law (FAL)

May 11, 2009

09-05

Dear Hospital Chief Executive Officer:

In a June 22, 2007 letter, the Department requested specific information regarding each hospital´s implementation of the Financial Aid legislation (Subdivision 9-a of Section 2807-k of the Public Health Law). The Department has reviewed a sample of financial aid summaries and the financial aid policies and procedures submitted by all hospitals. This letter is written to provide feedback to hospitals on the information received and to clarify expectations regarding certain key elements that such policies must include.

The Department´s review identified the following points as most frequently not addressed or not adequately addressed in facility financial aid policies. To assist hospitals with their policy and procedure review, the Department has attached an interpretive guidance document (Attachment A) that outlines requirements and expectations regarding these statutory provisions, a form to inform the Department of a hospital´s intention to use assets in eligibility determinations (Attachment B), the 2009 Federal Poverty Level (FPL) guidelines (Attachment C), and a sample application form (Attachment D).

• Eligibility - For patients whose income is equal to or less than 300% of the FPL, hospitals should assume that patients are eligible for financial assistance through the hospital´s program for emergency services for NYS residents, and for all other services, if they reside within the hospital´s primary service area. As a result, bills and collection notices must be held until the financial aid paperwork is fully processed and a final determination of eligibility is made.
  
  For financial aid eligibility purposes, the hospital may ask for verification of residency within the state with regard to emergency services or residency within the hospital´s primary service area for non-emergent services.
  
  Immigration status is not an eligibility criterion under this statute.
• Financial Aid Summary - Each hospital´s financial aid summary must clearly identify the geographic service area within which the facility´s financial aid policies will apply for non- emergency services. If the hospital chooses to extend its financial aid policies to the entire state or to an extended geographic area, the hospital´s policies and summary should clearly so state. Such summaries must also clearly set forth income limits for determining eligibility for financial aid. In addition, the summary must specifically identify a contact number at each facility where additional information is available. A specific contact person and a contact number may be identified but at a minimum a contact phone number must be listed. Each hospital´s financial aid summary must clearly identify the geographic service area within which the facility´s financial aid policies will apply for non- emergency services. If the hospital chooses to extend its financial aid policies to the entire state or to an extended geographic area, the hospital´s policies and summary should clearly so state. Such summaries must also clearly set forth income limits for determining eligibility for financial aid. In addition, the summary must specifically identify a contact number at each facility where additional information is available. A specific contact person and a contact number may be identified but at a minimum a contact phone number must be listed.
  
  The full text of the hospital´s required summary must be publicly available in hard copy where medical care is provided and at public access points, including the registration and billing offices. In addition, the Department strongly recommends that summaries are posted to a hospital´s website.
• Application - The application must clearly indicate the time frame allowed for patients to submit and complete an application. The minimum time frame allowed for submission of an application under the law is 90 days from the date of service. In addition, patients must be given at least 20 days from the receipt of application materials, for a total of 110 days. Hospitals are free to extend these time frames, but if they do, they should so state in their application forms..
  
  Eligibility for financial aid is based on current income. The application process utilized by the hospital may not require applicants to consent to extraneous inquiries to the Internal Revenue Service (IRS) as a condition of eligibility. In addition, the hospital may not require that an applicant submit copies of tax returns or other past IRS documentation. Information concerning the applicant´s monthly bills is also not relevant to income determinations under the law.
  
  Hospitals should consider self attestations of income levels in appropriate circumstances or simple application forms, such as the sample provided in Attachment D. As another strategy for reducing or eliminating documentation, hospitals may use credit scoring software for purposes of establishing income eligibility and approving financial assistance, but only if the hospital makes clear to patients that social security numbers are helpful but not mandatory, and the scoring does not negatively impact the patient´s FICO. Credit scoring software cannot be used to deny applications for financial aid, and language referring to credit scoring should not appear on financial assistance applications.
  
  Application materials must include a notice to patients that once they submit a completed application and documentation, they may disregard any bills until the hospital has rendered a written decision on the application. Hospitals may not forward accounts to collection while an application is pending.
  
  Applications forms for financial aid should be available at any site where medical care is being provided, e.g. clinics and outpatient areas. Hospitals should consider posting financial aid forms to their hospital´s website to promote accessibility.
• Medicaid or Public Insurance Plan - Hospitals that have a reasonable basis for believing that an applicant may be eligible for Medicaid or other government sponsored health insurance coverage may require the applicant to cooperate in applying for such coverage as a condition of receiving financial aid. However, hospitals may not require applicants to apply for and be denied benefits from Medicaid or any other public insurance plan prior to accepting and processing an application for financial aid from the hospital. To minimize delays in making financial aid available, financial aid applications submitted to the hospital should be processed concurrent with any application for public funds.
• Assets - Under the terms of the statute, hospitals have the option, with the Department´s prior approval, of taking assets into account, but only in accord with the following:
  1. The use of an asset test must be set forth and described in writing in the hospital´s financial assistance policies and procedures and in the summary information given to potential financial aid applicants.
  2. The use of an assets test requires the prior approval of the Department. Currently only those hospitals which indicated an intention to use assets tests in response to the written survey issued by the Department in December of 2006 have the requisite Department approval and authorization to use an assets test. However, hospitals may contact the Bureau of HCRA Operations and Financial Analysis at 518-474-1673 to gain approval to use assets or to refile/recertify the intent to use assets in financial aid determinations.
  3. Asset tests cannot be used to deny financial assistance, but only to "upgrade" a patient´s level of payment obligation, up to the legal maximum permitted under the financial assistance law (i.e. the Maximum Payment Amount (MPA)).
  4. Under the terms of the statute, assets can only be used to "upgrade" the payment obligations of patients with income levels described in subparagraph (i) and (ii) of paragraph (b), that is, patients with incomes up to 150% of the Federal Poverty Level (FPL). Assets may not be used with regard to patients with income levels described in subparagraph (iii) (151% - 250% of FPL) and patients with incomes between 250% and 300% of FPL may already be charged the MPA.
  5. Various categories of assets may not be included in an assets test. These are: an applicant´s primary residence, assets held in a tax-deferred or comparable retirement savings account, college savings accounts or cars used regularly by a patient or immediate family members.
• Financial Aid Information Included on Bills and Statements - Information that explains how qualified patients can access financial assistance through the hospital, must be included on bills and statements to patients.
• Collection Policies - Information about collection practices must be included in a hospital´s financial aid policies and procedures. This information was routinely omitted from the reviewed policies. In addition, hospitals should consider the following with respect to collection policies:
  • Hospitals must require any contracted collections agencies to comply with the hospital´s financial assistance policy;
  • Contracted collection agencies must provide information to patients on how to apply for financial assistance;
  • Hospitals may not force the sale or foreclosure of patient´s primary residence to collect on an outstanding bill;
  • Hospitals may not send an account to collection if the patient has submitted a completed application for financial assistance and the hospital´s eligibility determination is pending;
  • A patient bill with a notification that the account will be referred to collections must be sent to the patient at least 30 days prior to referral to a collection agency ;
  • Contracted collections agencies must obtain the hospital´s written consent before commencing a legal action; and
  • Collections are prohibited against any patient who was eligible for Medicaid at the time services were rendered.
• Payment Deposits - While hospitals are permitted to require deposits from financial aid eligible patients, such requirements must be clearly described in the hospital´s policies and in the financial aid information provided to patients. Any such deposit provisions must consider the applicant´s ability to pay and must not be an undue obstacle to a financial aid eligible applicant´s access to services.
• Installment Payment Plans - Hospital financial aid policies must include installment payment plans with regard to the patient´s remaining payment obligations. Any interest imposed must not exceed what is permitted under the financial aid law and monthly payments may not exceed 10 % of the eligible individual´s gross monthly income.
• Denial Appeals - When a patient is denied financial aid, a hospital is required to issue the denial in writing with information on how to appeal the denial. The hospital´s financial aid policies and procedures must outline the appeals process under which it will evaluate the denial of an application.
• Training - Hospital staff that interacts with patients, especially those in billing and collections, must receive training about the hospital´s financial aid policies and procedures.
• Signs - For hospitals with 24-hour emergency departments, conspicuous posting of language appropriate information is required in public care as such as waiting rooms, outpatient clinics, billing and Medicaid offices. For specialty hospitals, posting of language appropriate information is strongly encouraged. The Department has developed a poster in multiple languages that may be used to satisfy this requirement.
• Denial Appeals - When a patient is denied financial aid, a hospital is required to issue the denial in writing with information on how to appeal the denial. The hospital´s financial aid policies and procedures must outline the appeals process under which it will evaluate the denial of an application.
• Training - Hospital staff that interacts with patients, especially those in billing and collections, must receive training about the hospital´s financial aid policies and procedures.

Enforcement

Complaints about a hospital´s financial aid program are received by the Department´s Centralized Complaint hotline at 800-804-5447 and reviewed by staff within the Division of Certification and Surveillance. Staff will work with both the hospital and complainant to address and to remedy identified concerns.

An amendment to the financial aid statute was enacted as part of the SFY 2008-09 State budget. This amendment, which is contained in a new paragraph (k) added to the statute, provides that if the Department determines that it will be unable to secure needed federal approvals for conditioning hospital indigent care pool payments on compliance with the provisions of the financial aid law, then the Department may deem that part of the statute null and void and, in its place, impose civil penalties of up to $10,000 for each failure to comply with the provisions of the financial aid law. The Department has determined that it is necessary to invoke this statutory option, effective January 1, 2009, and accordingly on and after that date violations of the FA statute will make facilities subject to such civil penalties.

It is expected that each facility will review/amend, as appropriate, its financial aid policies to conform to the elements outlined above. Policies found to be inconsistent with the information detailed in this letter are non-compliant with State law. Should you have any questions regarding the information provided in this letter or specific to the obligations of each hospital, please contact Ruth Leslie at 518 402-1003 or RWL01@health.state.ny.us.

Sincerely,

James W. Clyne, Jr.
Deputy Commissioner
Office of Health Systems Management

Attachments: (A) (B) (C) (D)