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Beyond Faith: Can Hospitals Collect When Patients Rely on Sharing Ministries?

There is a ubiquitous lack of understanding and regulation surrounding the HCSM coverage which leaves hospitals stuck with the bill and negatively impacts the bottom line.

Enrollment in HealthCare Sharing Ministry (“HCSM”) plans has been on the rise, with one report finding that more than 1.7 million Americans use HCSMs as their primary health coverage. Hospital systems must be aware of how these entities work to secure payment for services rendered to HCSM enrollees, especially if the HCSM does not have an agreement with the provider to govern claim payment and processing, as often is the case.

HCSMs are insurance-like entities that are exempt from compliance with critical state and federal insurance laws. For example, HCSMs are not governed by the Patient Protection and Affordable Care Act (“ACA”) as long as certain requirements are met, for example, enrollees must “share a common set of ethical or religious beliefs and share medical expenses among enrollees in accordance with those beliefs.” HCSMs collect membership fees from enrollees, pool those membership fees, and distribute these fees amongst the members to cover medical expenses. Most states have also exempted bona fide HCSMs from health insurance regulation, resulting in minimal consumer protections, such as coverage for pre-existing conditions and emergency services, and almost zero government oversight. A recent report from the U.S. Government Accountability Office (“GAO”) has similarly found that HCSM plans typically contain a dollar limit and restrictions of essential benefits for enrollees.

Moreover, when an HCSM ceases operations, mismanages their finances, or decides that a certain service should not be “shared,” enrollees are left responsible for unpaid medical bills and providers are left without reimbursement. Court documents from a bankruptcy proceeding revealed that one HCSM likely had over $100 million in unpaid, eligible claims. Hospitals should have systems in place to secure proper payment.

Hospital registration 

When a patient schedules an appointment or presents to the emergency department with a HCSM membership card, it may appear the HCSM will be responsible for the coverage. However, because HCSM membership is not insurance coverage, here are some tips for the front-end hospital staff:

  • Patients should be treated as self-pay unless there is a provider agreement with the HCSM that specifies otherwise.
  • For emergency services, hospitals may balance bill the patient.
  • For elective services, hospitals should either execute a self-pay agreement with the patient; or enter into a single-case agreement with the HCSM to ensure payment. If the agreement is with the patient directly, the patient will, in turn, file a claim with the HCSM for reimbursement. Single case agreements should include interest payment for untimely payment as well as a prevailing party fee provision in the event collection activity by the hospital is required.

Even though the HCSM may, at times, execute a single case agreement for the patient’s elective services, because HCSM enrollees are considered self-pay patients, it is important for hospitals to comply with the No Surprises Act (“NSA”) provisions applicable to self-pay patients, including the requirement to provide a good faith estimate before rendering non-emergency services. Further, hospitals must assess their state’s own requirements for good faith estimates or other requirements pertaining to self-pay patients.

Emergency room

If a patient with HCSM coverage presents to the emergency department, the hospital will need to provide care to the extent required under EMTALA and the applicable state law. Hospitals should be mindful that once the emergency medical condition no longer exists and the patient is in a condition for transfer or discharge, the hospital is not required to provide further services. Hospitals should ideally require a single case agreement from the patient or HCSM for all post-stabilization services. However, this may not be feasible or realistic in certain situations. It is worthwhile for hospitals to identify the HCSMs commonly used in the population they serve to negotiate an ongoing agreement for healthcare services that may be provided.

Billing and collecting 

Some HCSM enrollment cards contain a billing address for the HCSM and direct hospitals to submit their claims to the HCMS. However, hospitals can treat the patient as self-pay and bill the patient directly, instead of going after the HCSM.

If the hospital bills the HCSM directly, the HCSM will submit an “Explanation of Sharing” to the hospital arbitrarily reducing the amount allowed on the claim. Hospitals should not apply a contractual adjustment unless there is an explicit agreement with the HCSM.

Certification 

Some HCSMs may have a process for providers to obtain preapproval or certification that a service will be “shareable.” However, our experience is that HCSMs frequently refuse to make payment even if services are “approved” for numerous reasons including pre-existing conditions or exclusions due to services or conditions violating the “ethical beliefs” of the HCSM (for example, denials due to patient alcoholism or attempted suicide). Hospitals should particularly be wary of the certifications and approvals and be mindful that there is no guarantee for payment.

Applying for Medicaid in-house and retroactively 

Because HCSM plans are marketed as a more affordable option over insurance, many of its enrollees may be eligible for state benefits, especially if they are currently undergoing expensive medical treatment for disease or injury. As such, where the HCSM refuses payment directly, the hospital may want to consider seeking retroactive Medicaid enrollment for the patient, if available in the hospital’s state, as even low Medicaid reimbursement may be more than what is collectible from the patient.

Next steps for HCSMs 

There is a ubiquitous lack of understanding and regulation surrounding the HCSM coverage which leaves hospitals stuck with the bill and negatively impacts the bottom line. Although certain states, such as New Mexico, have taken legal action to address HCSM practices, current federal law falls short of regulating HCSMs. In November 2023, however, the Health Share Transparency Act of 2023 was introduced in the House of Representative to address national issues that patients and providers are enduring due to HCSM practices. If enacted, the law would require HCSMs to disclose certain financial and claims information, such as the percentage of claims denied and out-of-pocket expenses per enrolled individual for “sharable” items and services. Additionally, HCSM enrollees and prospective enrollees will be provided with an explanation of the HCSM benefits compared to traditional insurance. This law would benefit hospitals tremendously by removing ambiguity associated with HCSM plans and ensuring that all parties understand that HCSM beneficiaries will be treated consistently with self-pay patients.

In the meantime, industry leaders ought to be proactive and adopt strategies to help address HCSMs head-on and hold them accountable for proper reimbursement.

Photo: cat-scape, Getty Images

As an associate attorney at Wolfe Pincavage, Rebecca Falk brings a versatile background in medical research, academic analysis, and hands-on experience on the provider side furnishing a unique perspective for the firm’s healthcare clients to solve legal matters. Rebecca has been involved in various cases for the firm while also advising clients and drafting and reviewing contracts. She is admitted to the New York and Florida State Bars and the United States Patent and Trademark Office.

Andrea Greenblatt is an associate attorney at Wolfe Pincavage. She is a vital member of the firm’s healthcare transactional team helping clients to successfully navigate and maneuver complex claims dispute Medicare Advantage appeals, and healthcare-related regulatory and compliance matters. Andrea is particularly interested in the No Surprises Act, and she regularly advises clients on every aspect of the legislation and its independent dispute resolution process.

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