When Section 501(r) was added to the Internal Revenue Code in 2010, focus on the Affordable Care Act (ACA) regulatory changes shifted to non-profit hospitals, namely imposing requirements to maintain tax-exempt status. The amended ACA affects organizations with one or more hospitals, which are reviewed on a facility-by-facility basis.

1. HealthcareCompliance:
Affordable Care Act 501(r) and IRS Final Rule
When Section 501(r) was added to the
Internal Revenue Code in 2010, focus on the
Affordable Care Act (ACA) regulatory changes
shifted to non-profit hospitals, namely
imposing requirements to maintain
tax-exempt status. The amended ACA affects
organizations with one or more hospitals,
which are reviewed on a facility-by-facility
basis.
Final IRS ACA 501(r) regulations apply to
taxable years beginning after December 29,
2015. These regulations will affect patient
transactions from financial assistance to
collections. Hospitals must:
• Establish and widely publicize a Financial
Assistance Plan (FAP) and emergency
care policies.
• Limit amounts charged for emergency
or other medically necessary care to
patients eligible under a FAP.
• Make reasonable efforts to determine
whether an individual qualifies for a FAP
before engaging in extraordinary
collection actions.
• Conduct and publish the results of a
community health needs assessment at
least once every three years.
One of the biggest issues under 501(r) is how
your collection partner will contact patients
regarding outstanding bills. Hospitals need
policies that describe how and when they—
and their third-party collection partners—
contact patients. To that end, the content in
this document provides an overview of ACA
Financial Assistance Plan and
Extraordinary Collection Activities
501(r) and highlights specific
requirements in each section that pertain to
medical billing and collections. It also maps
how JCC can help you plan for compliance
with this complex regulation. We partner
with clients to create and monitor collection
procedures that meet tax-exempt
requirements and strengthen your position
as a provider of compassionate, quality care.
The final 501(r) regulations require hospitals
to offer a plain language summary of the
organization’s established FAP during the
intake or discharge of patients. In addition,
billing statements must include a
conspicuous written notice that informs
patients of your established FAP and its
availability. Beginning on the date of their
first post-discharge billing statement,
patients are granted a notification period of
up to 120 days to determine whether they
would like to apply for financial assistance
and start the application process. The patient
then receives an additional 120-day
application period to submit the
application forms. An important aspect of
FAP is that absolutely no extraordinary
collection activities (ECAs) may occur
during the combined 240-day
notification and application periods,
unless reasonable efforts have been
satisfied by the healthcare facility.
Moreover, hospitals are required to process
applications submitted within this window
of time.
What Constitutes an ECA?
The regulations define ECAs to include the
following:
• Employing legal or judicial process to
obtain payment for a bill covered under
FAP
• Selling debt to a third party
• Reporting adverse information to credit
agencies
• Deferring or denying medical care based
on non-payment for previously
FAP-covered care
• Requiring payment before providing
medically necessary care

2. Securing Your ACA 501(r)
Compliance
Financial
assistance policy
(FAP) and
emergency
medical care
policy
A plain language
summary of the
FAP
A FAP
application form
and instructions
hfma National Institute
ECA Protocol and Reasonable Efforts
ECAs may only commence when the
hospital, its third-party collection vendor,
or its legal partner has made a reasonable
effort to determine a patient’s FAP eligibility,
and that patient is deemed ineligible. Should
a hospital intend to proceed with an ECA, it
must make a reasonable effort to
determine whether the patient is eligible for
FAP assistance. While the finer requirements
of “reasonable effort” remain unclear under
the ACA 501(r), it appears, at a minimum the
following steps are necessary to complete
this requirement:
• Include plain language summary with all
(and at least 3) billing statements and
written communications about the bill
during the notification
• Inform patients about FAP in all oral
communications about their bill during
the notification process of FAP
assistance
• Provide the patient with at least a 30
day notification of the intent to perform
ECA’s and listing out the specific ECA’s
that may be completed
The most critical aspect of this regulation is
that all ECA’s are suspended between the
completed FAP application submission and a
In addition to implementing
processes and procedures
that reflect the language of
ACA 501(r), hospitals can
turn to a third-party to
collect patient debt. Your
tax-exempt status is critical
and has implications that
extend beyond business
practicalities. It is one factor that allows
you to provide the utmost service to your
patients and community. The complexities of
new regulations and what is at stake make it
ever more critical to select a vendor that is
100% compliance-ready.
JCC views ACA 501(r) as an opportunity to
protect your tax-exempt status while
solidifying your positive standing with the
patients and communities you serve. Your
patients likely reside in your area and should
feel comfortable to turn to you again for
future needs. Our experience has shown that
account resolution, when handled
appropriately, improves the overall patient-
provider relationship. Through innovation,
education, and support, we can assist your
patients in resolving their accounts in a
manner that protects you and your patients.
Compliance-Ready Resources and Training
Important Decisions:
• What ECA’s will your facility allow JCC to
perform?
• How will your facility ensure that
reasonable efforts have been completed
for each date of service?
• What dates are you able to supply to JCC
to identify the notification and
application period?
• How should JCC direct your patients to
apply for FAP?
• How will your facility communicate any
formal determination of eligibility.
** Note - that if your facility never intends to pursue any
ECA’s you do not need to prove reasonable efforts.

3. new and ongoing FAP applications to
JCC?
A partnership with JCC means that patients
expressing financial hardship will receive
professional assistance that reflects your
values. When you provide us with your
toll-free number and/or website address, our
collection agents are able to act seamlessly
on your behalf, helping patients resolve their
debt.
JCC collection agent, supervisor, and
management training and continuing
education programs are essential to total
compliance. All new Collection Agents are
required to attend our comprehensive,
in-house training. We track progress and
conduct annual tests to evaluate program
completion and effectiveness. Curriculum
topics include:
• What is 501(r)?
• How does 501(r) affect non-profit
hospitals?
• How does 501(r) affect JCC?
• Client-Specific Handling
• FAP Handling
• Extraordinary Collection Activities
• 501(r) Timelines
JCC managers regularly complete the same
training tests as their team members to stay
current on industry changes and be optimally
prepared to field employee questions. Our
Collection Agents assigned to your accounts
will be prepared to use your provided,
plain-language FAP summary. Our initial
written communication with a patient will
include this language:
The Healthcare Services Provider(s) listed
above may provide financial assistance for
eligible persons who cannot afford to pay for
medical care. Financial assistance eligibility is
based upon documented family
circumstances and family size. If you need
assistance in contacting the Healthcare
Services Provider regarding their financial
assistance policy, please contact us at
<<phone #>> and we will provide contact
information for the appropriate Healthcare
Provider(s).
Collection agents will also be equipped with
carefully written and approved scripts. Any
changes or special alerts appear instantly on
the agent’s screen.

4. Make JCC Your Partner in ACA 501(r)
When we assist you with 501(r) compliance,
our people, processes, and technologies
minimize your administrative and resource
burdens. Let us partner with you so that you
are free to focus on what you do best.
About J.C. Christensen & Associates
J.C. Christensen & Associates, Inc. (JCC)
provides highly effective and professional
Compliance-Ready Inventory Management
with Artiva
JCC leverages the Artiva collection system
from Ontario Systems to design and
automate workflows for optimal
compliance within a changing regulatory
landscape. The technology allows us to
record and monitor calls and substantiate
the delivery of alerts and/or scripts.
The results of monitored calls are
maintained in a Complaint and Dispute
Management Application (CDMA), which
provides 360-degree complaint and dispute
resolution.
Account numbers can be individually loaded
such that reporting is delivered to you based
on individual episodes of care. Importantly,
data fields can be designated fCC leverages
J.C.Christensen
& Associates,Inc.
Accounts Receivable Management
JCC
AN ARRAY SERVICES GROUP COMPANY200 14th Ave E, Sartell MN 56377
1.800.692.7374
info@jcccollect.com
Copyright © 2015, all rights reserved
NEW
the Artiva collection system from Ontario
Systems to design and automate workflows
for optimal compliance within a changing
regulatory landscape. The technology allows
us to record and monitor calls and substanti-
ate the delivery of alerts and/or scripts.
third-party debt collection services. Since
its onset in 1977, JCC has excelled in the
healthcare market. Our sensitivity to patient
satisfaction and dedication to sound business
practices are evident in the results we deliver
to our loyal clients. We want to partner with
your healthcare organization so that you can
focus on what you do best. Your success is
our mission.