Last summer, the General Assembly passed the North Carolina Health Care Cost Reduction and Transparency Act (S.L. 2013-382/S.L. 2013-393) (the "Transparency Act"). The Transparency Act is designed to shed light on hospital charges and to protect North Carolinians from inappropriate debt collection practices. The North Carolina Attorney General's office has taken a particular interest in the Transparency Act, given its consumer protection implications, and will likely be attuned to any patient complaints that indicate lack of adherence to the Act's requirements. While the various provisions of the Transparency Act had differing effective dates, the bulk of the provisions took effect October 1, 2013, December 1, 2013, or January 1, 2014. This means compliance is required now and hospitals failure to comply could lead to penalties and licensure violations.
The Medical Care Commission proposed temporary amendments to the hospital licensure (10A N.C.A.C. 13B.1906 and .3110) and ambulatory surgical facility licensure (10A N.C.A.C. 13C.0202, .0205, and .0301) regulations that took effect May 1.
The regulations address requirements in the following areas:
- Policies and procedures related to patient billing and collections activities;
- Provision of charity care and financial assistance policies;
- Processes for patients to obtain itemized statements and to dispute a bill;
- Data reporting; and
- Making certain activity illegal.
These regulations require that the hospital Board ensure that written policies and procedures are in place regarding:
- How a patient may dispute a bill;
- How a patient may appeal a facility decision regarding a bill;
- Issuance of a refund in the event of overpayment of a bill;
- Provision of written notice to the patient prior to submitting a delinquent bill to a collection agency;
- Provision of the charity care and financial assistance policies to patients; and
- The requirement that a collection agency must obtain the written consent of the hospital prior to initiating litigation against the patient. 10A N.C.A.C. 13B.1906.
A hospital must submit a written attestation statement verifying compliance with these requirements with its licensure renewal form. Id. Additionally, 10A N.C.A.C. 13B.3110 was temporarily amended to extend the time period in which a patient can request an itemized statement to 3 years, and to require that itemized statements "detail in layman's terms the specific nature of the charges or expenses incurred by the patient."
Proposed temporary rules were issued July 2 that outline how quarterly data will be submitted and collected from hospitals and ambulatory surgery centers, as required by the Transparency Act. The public comment period on these rules runs from July 1 through September 2. The proposed rules and a description of the public comment process are posted on the DHSR website at http://www.ncdhhs.gov/dhsr/rules/transparency2014.html. While the proposed effective date of the regulations is November 1, 2014, hospitals are obligated to report data from the second quarter (April 1 – June 30). The deadline for submission is October 1, 2014, and data must be submitted to Truven Health Analytics, the entity selected as the statewide data processor. Truven is responsible for publishing the data collection tool and instructions for data submission.
The proposed temporary rule at 10A N.C.A.C. 13B.2102 requires that hospitals submit the following information:
- Data related to the statewide 100 most frequently reported DRGs. (The list of DRGs is published at 10A N.C.A.C. 13B.2103, available at the link provided above). For each DRG, the hospital must report:
- average gross charge for each DRG if all charges are paid in full without any portion paid by a public or private third party;
- the average negotiated settlement on the amount charged for each DRG, calculated using the average amount charged all patients eligible for the hospital's financial assistance policy, including self-pay patients;
- the amount of Medicaid reimbursement received for each DRG;
- the amount of Medicare reimbursement for each DRG; and
- the lowest, average, and highest amount of payments made for each DRG by the hospital's top five largest health insurers (based on the dollar volume of payments received from those insurers).
- Data related to the statewide 20 most common outpatient imaging procedures (published at 10A N.C.A.C. 13B.2104, available at the link provided above). For each procedure, the hospital must report:
- average gross charge for each procedure if all charges are paid in full without any portion paid by a public or private third party;
- the average negotiated settlement on the amount charged for each procedure, calculated using the average amount charged all patients eligible for the hospital's financial assistance policy, including self-pay patients;
- the amount of Medicaid reimbursement received for each procedure;
- the amount of Medicare reimbursement for each procedure; and
- the lowest, average, and highest amount of payments made for each procedure by the hospital's top five largest health insurers (based on the dollar volume of payments received from those insurers).
- Data related to the statewide 20 most common outpatient surgical procedures (published at 10A N.C.A.C. 13B.2105, available at the link provided above). The same data elements as listed above for outpatient imaging procedures must be reported for these outpatient surgical procedures.
Late data submissionswill not be accepted, and a failure to timely report data will constitute a licensure violation.
It is important that hospitals promptly evaluate whether their policies and procedures are in compliance with all applicable Transparency Act requirements and put in place new or revised policies that make it clear the hospital's practices comply with all applicable requirements. Compliance Officers should work with finance department and other personnel to ensure that billing and debt collection practices are compliant.
Our health care team is ready to assist in implementing the Transparency Act requirements. For assistance, please contact Maureen Demarest Murray, Allyson Jones Labban , or Toni Peck.