Some Thoughts About Financial Hardship Waivers

Providers have maintained financial hardship policies for decades.  Typically, a provider establishes a process for determining which patients qualify for its charity care program.  What’s new about this?

This process used to be primarily for uninsured patients.  However, in light of the increased enrollment in high deductible health plans and reductions in insurance benefits (i.e., capped and limited services, increased co-payments), more and more underinsured patients are asking for financial hardship waivers.  See earlier posts on HDHP and Underinsurance HERE and HERE.  What had been a process exclusively between patient and provider now can have ramifications with the payor.  Can you grant a patient’s request for a hardship waiver without jeopardizing your payment from the insurer or self insured payor? 

Although there are many “best practices” for when and how to offer a financial hardship waiver (see for example, HFMA’s Patient-Friendly Billing Project “Early, Transparent Financial Communications” - subscription required), as a general rule, a valid financial hardship waiver process requires that –

-          It not be advertised or otherwise used in a manner intended to induce patients to select this provider for services;

-          A decision to grant or deny a financial hardship waiver of some or all patient payment be made based on the provider’s individualized determination of the patient’s financial need; and

-          The provider’s standards for granting a financial hardship waiver are the same for all payors, including the uninsured.

Insurers include member payments in the benefit designs as a way to encourage the member to use services efficiently.  As a result, insurers have a legitimate interest in making sure providers do not undermine these member payments as a way to encourage the member to obtain more services.  On the other hand, insurers are increasingly selling insurance products that contain high deductibles, benefit - specific co payments and out-of-network coinsurance payments – without regard to whether the member has the means to pay for these benefits.  So, where should the line be drawn between the insurer’s interest in protecting its benefit designs and the provider’s interest in responding to legitimate requests from patients for help with their member payments? 

I have been involved in disputes where payors have challenged the provider’s waiver process, sometimes accusing providers of fraud and disallowing or drastically reducing payment.  Sometimes if the provider is not in the insurer’s network the provider is dealing with underinsured patients who have purchased insurance products with an out-of-network benefit. 

If you are considering a hardship waiver for a patient who is covered  by a payor with whom you participate, you might verify with the payor in advance that it will accept your financial hardship determinations and still pay the amount you’re entitled to under the policy.  You might even ask them to review the policy and to give you some written assurances that your financial hardship waiver program will not jeopardize payment from the payor.  Typically, insurers want to know that the policy will not be advertised or used to increase utilization.  If you find a disproportionate number of financial hardship waiver requests from one payor’s patients, consider whether you need to adjust your rates with this payor to account for the fact that it is selling policies that leave its subscribers underinsured … and you unpaid.

But what can you do when you are out-of-network with a payor?  How do you ensure that your decision that you will not or cannot collect from a patient won’t jeopardize insurance payment?   We have not found much established law on this point, but here are some things to consider.  By the way, many of these can also be helpful when dealing with contracted payors.

1)      If you have an assignment of benefits from a patient, be sure the document clearly appoints the provider as the patient’s authorized representative and assigns all the patient’s rights with respect to the claim – not just the right to payment.

2)      Be sure your financial hardship policies, both the substantive (what you consider financial hardship) as well as the procedural (how do you go about administering your program) are documented … and followed so you can prove their legitimacy if you are challenged.

3)      Although you are not required to follow any specific process (such as asking for tax returns or pay stubs going back 3 months) if your policy says you review tax returns, be sure you do so for each financial hardship applicant.

4)      Make sure your financial hardship determination takes into consideration income as well as spending, including health care and non health care related expenses.

5)      Be sure your waiver is for a finite period of time and that you revisit the patient’s financial situation periodically. 

6)      Maintain records of the patient’s written request for a waiver.

7)      If a payor challenges the legitimacy of your financial hardship waiver program, be ready to show its legitimacy by:

a.       Providing the payor with a copy of your established policy;

b.      Documenting the number of hardship requests you have received for a period of time, the number you approved for a full waiver, a partial waiver and the number you did not approve;

c.       Providing the provider with a copy of its members’ requests for waivers.

8)      When you grant a patient a financial hardship waiver, consider asking for some things in return. 

a.       Tell the patient that your resources are limited to helping only those patients with a legitimate need and require him / her to provide complete and accurate information as a condition of qualifying for assistance.

b.      Ask the patient to inform you if his or her financial situation changes during the period of a waiver.

c.       Consider whether you will require the patient to cooperate with your efforts to collect from the payor and describe what this cooperation may require.  When challenging a payor’s denial of payment, having the patient’s obvious participation and willingness to assist can make a world of difference.

d.      Document that the patient has been informed of his / her responsibilities.

 

Thank you to Tom Force of Patriot Healthcare Systems for his thoughts on this issue.

Comments

[Gerry]

I think more people asking for financial hardship waivers is just a sign of the times.

[Tony Thorton]

I agree... a think the hard financial times are really playing into that--- i'm also curious the degree to which provider standards vary (in order to determine need)...