Policy RC-114: Patient Financial Assistance Screening and Limits on Collection Actions
Student Name
American College of Education
HLTH5603: Legal and Ethical Decision Making in Healthcare Administration
Module 6 Assignment
Instructor Name
February 14, 2028
Purpose and Scope
Purpose. This policy establishes how the hospital determines whether a patient with an unpaid balance is eligible for financial assistance before any collection action, and it limits the collection actions the hospital and its agents may take. It carries out the hospital's mission to serve all members of its community and its obligations as a tax-exempt organization under the federal tax rules for nonprofit hospitals, which require a financial assistance policy and reasonable efforts to determine eligibility before extraordinary collection actions (Internal Revenue Service [IRS], 2024).
Scope. The policy applies to all patient accounts for services provided at the hospital and its owned clinics, to all hospital employees involved in billing, financial counseling and collections, and to every outside collection agency and law firm acting for the hospital. The hospital, its departments and the roles named here are composites written for this assignment.
Definitions
Presumptive eligibility screening means an assessment of a patient's likely eligibility for financial assistance using information available to the hospital, including enrollment in public benefit programs, income data from a third-party verification service and prior financial assistance determinations, without requiring the patient to complete an application. Extraordinary collection action has the meaning given in federal regulations and includes filing a lawsuit, placing a lien on a residence, garnishing wages, reporting the debt to a consumer credit agency and selling the debt to another party. Qualifying payment plan means an interest-free plan with monthly payments no greater than 5 percent of the patient's documented monthly household income.
Policy Statements
One: Before any account is referred for extraordinary collection action, the hospital will complete presumptive eligibility screening. Patients who screen eligible will receive financial assistance automatically, and their qualifying balances will be adjusted without an application.
Two: Every patient who does not screen eligible will be offered a qualifying payment plan in writing and by telephone at least twice before any extraordinary collection action.
Three: The hospital will not garnish wages or place liens on a patient's primary residence under any circumstances.
Four: The hospital may file a lawsuit only if documented household income is above four times the federal poverty guideline, the patient has declined or defaulted on a qualifying payment plan and the chief financial officer has approved the filing in writing.
Five: The hospital will not sell patient debt, and collection agencies acting for the hospital may not report balances under $500 to consumer credit agencies. Each statement is written so that a new employee, reading it alone, could tell whether a proposed action is allowed.
Ownership and Accountability
The Vice President of Revenue Cycle is the policy owner, responsible for implementing the procedures, training staff and ensuring that outside agencies comply. The Director of Community Benefit is the co-owner for monitoring, responsible for reviewing screening results and reporting to the board. The chief financial officer approves any lawsuit under statement four and keeps a log of approvals. The board's community benefit committee reviews compliance twice a year. Naming two owners from different functions is deliberate: one is accountable for doing the work and the other for checking it.
Monitoring and Consequences
The Director of Community Benefit will report to the community benefit committee every six months the number of accounts screened, the number found presumptively eligible and adjusted, the number of payment plans offered and accepted, the number of lawsuits filed with their approval dates and any instance in which a step was skipped. Medical debt falls unevenly by income, with far higher balances in poorer ZIP codes than in wealthier ones (Kluender et al., 2021), so the report will also show the distribution of collection actions by patient ZIP code income decile.
Consequences for noncompliance are specified. An employee who refers an account for extraordinary collection action without completed screening, or who initiates a prohibited action, will be subject to the hospital's progressive discipline policy, beginning with documented retraining for a first occurrence. Any collection agency or law firm that takes a prohibited action on the hospital's behalf will be notified in writing, required to reverse the action at its own cost and, after a second occurrence, have its contract terminated. Any lawsuit filed without written approval will be withdrawn.
Rationale and Review
The hospital adopted this policy after declining a proposal to sue 212 patients whose accounts, on review, included many who were likely eligible for financial assistance. Federal rules permitted the lawsuits; neither the hospital's mission nor the community benefit expected of a tax-exempt hospital supported them. Hospitals elsewhere that sued patients in large numbers found the practice drew public criticism once it was documented (Bruhn et al., 2019), a risk the board weighed alongside the ethical case. The policy makes the screening step automatic rather than dependent on patients completing an application, because the review showed that notices alone did not reach many eligible patients. The policy will be reviewed annually by its owners and the community benefit committee, and any change to statements three through five requires board approval.
References
Bruhn, W. E., Rutkow, L., Wang, P., Tinker, S. E., Fahim, C., Overton, H. N., & Makary, M. A. (2019). Prevalence and characteristics of Virginia hospitals suing patients and garnishing wages for unpaid medical bills. JAMA, 322(7), 691-692. https://doi.org/10.1001/jama.2019.9144
Internal Revenue Service. (2024). Requirements for 501(c)(3) hospitals under the Affordable Care Act: Section 501(r). U.S. Department of the Treasury.
Kluender, R., Mahoney, N., Wong, F., & Yin, W. (2021). Medical debt in the US, 2009-2020. JAMA, 326(3), 250-256. https://doi.org/10.1001/jama.2021.8694
How this HLTH 5603 Module 6 example is structured
HLTH 5603 Module 6 usually turns the course's reasoning into policy with an owner and a consequence; your classroom's instructions decide the policy format. This example follows the structure of a hospital policy document: purpose and scope, definitions, policy statements, procedure, ownership and accountability, monitoring and consequences. A short rationale section at the end connects the policy back to the legal and ethical analysis, because a policy without its reasons is easy to repeal and hard to apply to cases it did not anticipate.
HLTH5603 Module 6 questions, answered
What does HLTH5603 Module 6 usually ask for?
HLTH5603 Module 6 usually asks students to convert their legal and ethical analysis into an organizational policy with a named owner and consequences for noncompliance. Many sections expect a policy format with purpose, scope, definitions, procedures and review provisions. Your classroom's instructions decide the policy template and length.
Why does a policy need a named owner?
A policy without an owner has no one responsible for implementing it, training staff or noticing when it is not followed. Naming a role, not a person, keeps ownership stable through staff changes. Naming a second role to monitor compliance separates doing the work from checking it.
What should the consequences section of a policy include?
State what happens when the policy is not followed, for employees and for any outside agents, and make the consequences proportionate and graded, for example retraining for a first occurrence and escalating steps after that. Consequences should also include correcting the harm, such as reversing a prohibited action.
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