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Prompt Payment Policies: What CHC’s Need to Know

October 21, 2013

Community Health Centers promote and expand access to high quality primary health care to an underserved population. To do that, CHCs must constantly break down financial barriers to that care. How do we do that? Our insured population is protected through our contracts with the payers. Our patient population with income less than 200% of the FPL is protected by our HRSA mandated sliding fee schedule. What about the ‘tweeners? The patients that fall between those two groups. They are the uninsured or underinsured who are not eligible for the slide. PMG has consistently recommended a prompt pay policy. This policy allows for a payment at less than the usual charge amount if the patient or entity pays on the date of service.

One argument has been that we can’t do that because we have to charge everyone the same amount for a service. That is true, we must charge the same amount. How do we make that work and still give prompt pay discount? This prompt pay policy would not offer a lowered charge. It would offer an adjustment to the full charge amount…just like we do for our third party payers.

Another argument has been that HRSA does not allow discounts to anyone above 200% of FPL. While I could give you my opinion on this, I thought a legal opinion was a better bet. We asked Adam J. Falcone, an attorney with Feldesman Tucker Leifer Fidell LLP, a well respected D.C. based law firm with decades of FQHC specific experience. Here’s what Adam had to say:

I learned that we don’t have a definitive answer from HRSA.  We have made the argument that this is not a discount issue – rather, it’s a collection policy.  We’ve demonstrated that having cash discount policies increase collections (basically, the minute someone walks out without paying, the chance of collection drops dramatically), so it maximizes reimbursement consistent with regulation.  HRSA has not officially weighed in yet one way or another.

We usually advise centers that have these policies that they do not have to change them until told to do by HRSA, provided that: (1) they can back it up re: increased collections; (2) the policy is approved by the board, on the record; (3) the policy is applied uniformly, and made known and offered equally to all patients; and (4) no one is denied care if they cannot pay upfront.  To that list, I would also add that the health center should be able to cover its costs even with the cash discount (on the assumption that its charges exceed its costs).  Lastly, I think we mean something broader than just cash.  Probably the health center would want to offer a discount for payment made on the same day regardless of whether it is made by cash, credit card, or check.

Consider a prompt pay policy. You may just discover that a collection policy that allows an account to be settled at less than the full charge amount may very well increase collections!

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