Northern Inyo Healthcare District (NIHD) no longer offers prompt pay discounts to every patient, drawing sharp community criticism for the District tangled up in financial issues.
Interim Chief Executive Officer Lionel “Chad” Chadwick, Ph.D., says because of the financial challenges, District leaders are assessing every aspect of the District’s operations. “No one wants to see the District close down or face bankruptcy,” Chadwick says. “NIHD is not exempt from the economic environment. Like every family in the country, we must tighten our belts and make prudent decisions regarding our finances.”
Chadwick reminds the community the District’s financial state is not something that came on overnight; rather, it has been building for years under various administrations and, unfortunately, compounded during the pandemic. Government relief monies for COVID-19 temporarily masked some of the issues.
“Providing quality healthcare does not just happen,” Chadwick says. “It requires trust between patient and provider, prudent fiscal management, efficient workflows, and responsible leadership. From our Board of Directors to our physicians and clinicians, and from our directors and managers to our support teams, everyone wants a brighter day for NIHD.”
Chadwick says NIHD’s Executive Team, directors, and managers are reviewing every expense and looking at how to increase revenues. A Turn-Around Group, known in-house as TAG, was assembled to review all options. All employees can submit suggestions digitally or via a centralized drop box.
The District also contracted with RSM LLP to evaluate the people, processes, and technology affecting revenue capture and revenue realization. Chadwick expects RSM will identify gaps and opportunities to improve NIHD’s revenue cycle, yielding the greatest return on investment in the shortest period.
Perhaps the leader most feeling these impacts is veteran healthcare Chief Financial Officer Stephen DelRossi, MSA. DelRossi joined the District last September and began familiarizing himself with the District’s policies and procedures. DelRossi discovered discrepancies in financial statement reporting and issues with billing from NIHD’s Electronic Health Record, Cerner. He suggested the District hire RSM to get the problems worked out. About a week later, our prompt pay discount practices came to his attention, and he began reviewing the topic in detail.
DelRossi knew that various federal and state laws prohibit a prompt pay discount for those covered by health care plans, including Medicare and Medi-Cal. Prompt pay discount must be reserved for self-pay patients, meaning those not covered by healthcare plans and who pay for services out-of-pocket, often at a higher cost than those covered by insurance.
DelRossi realizes this is a frustrating topic for those arguing that NIHD, and other regional healthcare organizations, have offered these popular discounts for years. “NIHD’s policy has always been written for private pay (those without insurance), but it’s not been enforced that way,” DelRossi explains. “What has changed is the realm we operate in and the increased effort we must make to meet our obligations to our commercial and governmental payors.”
DelRossi says the federal laws, which include fraud and abuse laws, the anti-kickback statute, and civil monetary penalty laws, are even more specific. “These three laws combined disallow discounts because they can induce a patient to favor one healthcare organization over another, and it can ultimately become an insurance fraud situation.”
DelRossi notes the use of inducements can lead to a healthcare organization losing all of its governmental funding. NIHD’s patient mix shows the District currently receives more than 70 percent of its revenue from government health plans.
“Needless to say, that would decimate the District,” DelRossi says. “So, from where I stand, there are a whole lot of reasons for the District to discontinue the discount.”
Interim CEO Chadwick sees this issue as a matter of the local community hospital trying to be kind and generous to its local residents. “None of this has been done out of malfeasance by anyone past or present on the NIHD team,” he says. “It’s been done out of generosity and goodwill, and that is what I hope people will take away from this.”
Residents are also calling the District out on its revised Charity Care program. Last month, the NIHD Board of Directors approved an updated version of the Charity Care program policy. The new policy clarifies eligibility and the process required to access the program.
“Charity Care is a self-pay program, so, yes, NIHD can give discounts to those who qualify for that program,” CFO DelRossi says. “If you are seeking Charity Care, our policy gives a 25 percent discount if the bill is paid within 30 days or 30 percent if it is paid on the service date. The reason we allow 30 percent is that is equal to what commercial insurance discounts hospital payment for the patients it covers.”
The State of California requires healthcare organizations to have a charity program for anyone whose income is 400 percent or lower of the Federal Poverty Guideline. DelRossi says he updated NIHD’s previous policy as it had ambiguous language, which could allow overuse by those who did not necessarily qualify for the program.
“Again, we have to remember those who the program is designed for; that is who needs this program and who it is designed to assist,” he says. “NIHD serves those requiring medically necessary service or care. We will continue to use the Federal Poverty Guidelines for eligibility.”
What about those who need help paying their health bills but do not qualify for Charity Care? NIHD offers a payment plan over 60 months. “This is something many rural hospitals are beginning to offer,” DelRossi says. “To clarify, we are still offering presumptive enrollment in Medi-Cal for every person who would qualify for Medi-Cal and who wants to enroll. We have been doing this and will continue to do so as
DelRossi and his team must address other issues, such as collecting co-pays for those with insurance coverage. “Again, co-pays are an obligation we have to our payors, and it is something we have not been consistently doing,” DelRossi says. “We are working to address this so you may be asked to provide your co-pay at NIHD before receiving services, and that’s across the District, not just within the hospital setting.”
Interim CEO Chadwick, who also served as a Chief Financial Officer during his career, says he has been concerned for the NIHD team members who have taken angry calls regarding these programs.
“These staff members come in daily to serve the community and have been thrown into a less than appreciative situation,” he says. “They are doing their best to learn the new policies and convey what they have learned. Stephen (DelRossi) is working very hard to resolve several serious issues in our revenue cycle. None of this is easy. Given a chance and support by the community, NIHD will be able to stabilize its finances, get back on the right track, and serve this community for years to come.”
Anyone with questions about billing, insurance, or payment plans is encouraged to call the NIHD Business Office, Monday through Friday, 8:30 a.m. to 4:30 p.m. at (760) 873-2190.
About Northern Inyo Healthcare District: Founded in 1946, Northern Inyo Healthcare District features a 25-bed critical access hospital, a 24-hour emergency department, a primary care rural health clinic, a diagnostic imaging center, and clinics specializing in women’s health, orthopedics, internal medicine, pediatrics and allergies, general surgery, colorectal surgery, breast cancer surgery, and urology. Continually striving to improve the health outcomes of those who rely on its services, Northern Inyo Healthcare District aims to improve our communities one life at a time. One team, one goal, your health.
(From Northern Inyo Healthcare District)