On September 22, 2014, HRSA issued the much anticipated final policy on “Sliding Fee Discount and Related Billing and Collection Program Requirements” (Policy Information Notice #2014-02). The new policy, which applies to grantees and FQHC Look-Alike entities, clarifies various aspects of the Sliding Fee Discount Program (SFDP), as described below in detail, and was effective upon publication. In addition to the new PIN, HRSA also issued a document in which it responds to the comments submitted on the draft PIN. With this issuance, the PIN is now the primary policy resource for health centers for the development and application of the SFDP. Thus, it supersedes all prior guidance issued with respect to this specific matter.

In general, the PIN clarifies that the main focus of the SFDP is to minimize financial barriers to care; thus, neither the fee & discount schedules nor the operational procedures (including eligibility verification and billing & collection) should create barriers. As an element of the Board of Director’s responsibility to ensure access to care, the full board must approve the policies upon which all components of the health center’s SFDP are based and must periodically review the entire program (not just the sliding fee discount schedule). This includes:

• Required (“must’) components of the SFDP (e.g., eligibility and verification requirements; the structure of the sliding fee discount schedule; billing and collection policies; policies to waive/reduce fees to ensure access); and
• Discretionary (“may”) components (e.g., alternative mechanisms for determining eligibility such as self-declaration; nominal charges rather than full discount; multiple discount schedules; application of discounts to treatment-related supplies & equipment; “alternative” collection policies such as cash & prompt payment discounts and payment plans; discharge for refusal to pay).

Policy clarifications addressed in the new PIN include (but are not limited to) the following:

Sliding Fee Discount Schedule (SFDS)

• Each health center must establish a sliding fee discount schedule(s) that applies to all services furnished within the center’s federally-approved scope of project for which a charge has been established, whether the services are required or additional and regardless of the type of service or mode of delivery.
• Income and family size are the sole factors to be considered when determining eligibility for the SFDS. While the board has discretion in defining “family” and “income,” additional factors such as population type and insurance status, cannot be considered. In particular, health centers cannot require patients to apply and be turned down for insurance prior to accessing the SFDS, nor can health centers provide a “blanket” waiver of fees for all individuals who belong to a special population such as homeless individuals and families. Rather, the applicable SFDS must be applied uniformly to all patients who qualify based on income and family size.
• The structure of the SFDS must include at least three graduated “pay classes” between 101% – 200% of the then current Federal Poverty Guidelines (FPG). Health centers have discretion to determine whether the charge for each discount pay class will be based on a percentage of the fee schedule or a flat fee.
• While individuals and families whose annual incomes exceed 200% of FPG are not eligible for SFDS, health centers receiving or having access to other non-330 funding sources that include discounts for patients above 200% (such as Ryan White funds) may reduce such patients’ payments accordingly by allocating all or some of the charge to such other source.
• Health centers may charge a nominal fee (rather than offer a full discount) to individuals and families whose annual incomes are at or below 100% of FPG. Nominal fee is defined as a fixed flat rate fee that should not reflect the value of the service provided and should be considered nominal from the patient’s perspective. The PIN explicitly states that the nominal fee is not a threshold for receiving care and thus, is not a minimum fee or co-payment.
• If a patient is informed about the availability of the SFDS and chooses not to provide the required eligibility verification information, health centers may choose to deem the patient ineligible and charge them full fee (provided this policy is applied uniformly).

Referral Arrangements, Cost Sharing and Supplies &Equipment

• Services provided by formal written referral arrangements that are considered “in-scope” (i.e., are included on Form 5A under Column III) must include discount schedules that conform to the structural requirements outlined in the PIN and nominal charges that meet the definition in the PIN.
• If a patient’s cost-sharing amount (for individuals whose insurance does not fully cover the fees for certain services) is more than the amount he/she would have been charged as an uninsured patient on the SFDS, at a minimum, the health center must reduce the cost-sharing amount for such patient to the applicable SFDS level (subject to any contractual limitations). Health centers may provide further discounts in their discretion.
• Health centers that provide treatment-related supplies and equipment that are charged separate from the actual service (such as dentures, crowns, eyeglasses, prescription drugs, etc.) should discount such items but may do so based on a structure that is different from the SFDS. In particular, health centers can set prices to recoup their costs, even if greater than the “regular” discount rate, provided that patient access is supported and the center has provisions in place to waive or reduce fess as necessary to ensure such access.

Billing & Collection Policies

• Health centers must establish policies and procedures that identify circumstances under which fees will be reduced or waived to ensure access.
• Health centers may offer prompt payment or cash payment discounts as payment incentives, provided that these discounts are available to all patients regardless of income level or SFDS pay class, and are applied uniformly.
• Health centers may establish policies to discharge patients for refusal to pay amounts owed, provided that discharge is the “last resort” after reasonable collection efforts are made. At a minimum, the policy should define “refusal to pay” and identify how determinations will be made and what collection actions will be taken prior to discharge.

Several sections of the new PIN still require additional clarification. For example, it is unclear whether a referral provider’s discount policy has to comply with the graduated pay class requirement or simply meet the regulatory eligibility requirements (as indicated in the current Scope of Project Policy – PIN #2008-01). Further, the section on treatment-related supplies and equipment requires additional clarification regarding the depth of required discounts. The requirement to apply prompt or cash payment incentives to all patients also requires further discussion regarding its application to individuals with low co-payment amounts (such as traditional Medicaid co-payments).

Also unclear is the extent to which health centers currently noncompliant with some of the new interpretations will receive grant conditions, given the immediate effectiveness of the PIN. Accordingly, all health centers are strongly urged to review the PIN and proceed with revisions necessary to come into compliance as soon as possible.

HRSA has indicated that it plans to address concerns and additional clarifications through the publication of “rolling” Frequently Asked Questions (FAQs). Health centers are encouraged to submit their concerns and questions to HRSA, either individually or through their respective Primary Care Association (PCA) or through NACHC. NACHC will be submitting requests for clarification within the upcoming weeks. Please do not hesitate to contact either your PCA or NACHC should you have any questions on this or any other issues.