If you talk to any hospital revenue cycle executive, they will tell you the extreme importance of having a strong relationship with an ethical and compliant collection vendor. After all, it is the money collected that keeps the hospital in business. However, medical collections have always been a little bit different than other debt collections. Most people do not plan to go to the hospital, they find themselves there unexpectedly. After the illness or injury that landed them there, they enter an extremely confusing world of EOBs, deductibles, co-pays, per diems, capitated rates, and many other terms they do not understand. It has always been important for hospitals to choose vendors who understand these dynamics. However, in the face of non-profit healthcare collection reform under 501(r), it is even more important for hospitals to make sure their collection vendors are set up to comply with the new regulations.
Nonprofit hospitals in particular are feeling the strain of new regulations on top of increasing patient balances and stricter collection requirements. Deductibles are up nearly 40% from the average for an individually purchased plan before the health care reform, yet the Affordable Care Act requires nonprofit hospitals to follow “reasonable billing and collection requirements,” and to cease “extraordinary” debt collection. But what is considered “reasonable” or “extraordinary”?