Patient Discounts Policy

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PURPOSE: 

To document discounts provided by Vanderbilt University Medical Center (VUMC) to uninsured and insured patients.

SCOPE:

This policy adheres to eligible patients receiving VUMC services.

POLICY:

VUMC is committed to providing a discount in accordance with applicable laws and regulations to individuals who are uninsured, or, in some cases, insured but without insurance coverage for services offered by VUMC, but who may not be eligible for Financial Assistance set forth in the VUMC Financial Assistance Policy.

Discount requests are determined based upon the specific scenario and category, as described below. Consideration will be given to factors including but not limited to, patient insurance status, cost of health care services requested, payer relationships with VUMC, patient liability amount, and/or the time in which the Payer or individual can adjudicate and/or pay claims.

Discounts for Services Provided to Uninsured Individuals

All Uninsured Patients will be provided an Uninsured Discount prior to the first billing statement. This Uninsured Discount is given without consideration of patient financial status. This Uninsured Discount may be ultimately classified as a Financial Assistance Discount if the patient meets the additional income-based screening criteria described in the VUMC Financial Assistance Policy. In accordance with the Tennessee regulations, uninsured patients are not to pay for services in an amount that exceeds one hundred seventy-five percent (175%) of the cost for the services provided (calculated using the cost to charge ratio in the most recent joint annual report). VUMC has chosen to use the discount calculated from the IRS 501(r) regulatory guidance pertaining to AGB as the discount to be applied to uninsured and underinsured patients who have received eligible healthcare services.

In accordance with Internal Revenue Code Section 501(r) requirements, VUMC calculates two AGB percentages: one AGB percentage for services provided at VUMC, except Vanderbilt Wilson County Hospital (VWCH); and a separate AGB percentage for services provided at VWCH.  For both AGB percentages, VUMC utilizes the “Look Back Method” to determine the AGB percentage based on claims from the prior 12-month period. The AGB percentages are determined by using the calculated expected reimbursement from all claims allowed by Medicare fee-for-service and all private health insurers and dividing that total reimbursement by total charges for the same claims.  The resulting percentages represent the AGB for Medicare and private insurers. VUMC includes hospital and VUMC-owned physician claims which occur in both the hospital and hospital-based clinic settings in the AGB calculation. VUMC removes from the calculation all claims which are 100% denied by the applicable insurer and claims which are in credit balance status.  The AGB percentages are then updated annually based on the analysis described above. 

Therefore, patients who are eligible for an Uninsured Discount are not expected to pay more than the AGB.  Click here for current AGB percentages.  Transplant Services are excluded from the Uninsured or Underinsured Discount provisions of this policy.

Discounts for Non-Covered Services

A discount from billed charges may be offered to patients, when requested by the patient, with Contracted Payer coverage for all services which are adjudicated by the payer in a fashion that does not allow the patient to benefit from a contractual adjustment based on the contract with the payer. Specifically, this includes services denied for maximum benefits, medically necessary non-covered or non-reimbursed services, and non-authorized services that can be billed to the patient.  This discount does not apply to Transplant Services. See a list of non-covered services here.

Discounts for Services Provided to Non-Contracted Payers

Discounts provided to Non-Contracted Payers will be negotiated by the Associate Vice President for VUMC Managed Care or their designee on a case-by-case basis prior to services being rendered to the patient. The office of the Associate Vice President for VUMC Managed Care will coordinate any necessary LOA. The Discount amount will only be offered to Non-Contracted Payers who will honor the patient’s in-network level of benefits. It is expected that the Non-Contracted Payers Discounts will be documented with LOAs prior to medical services being provided.

Discounts for Services Provided to International Individuals

International Individuals enrolled in non-U.S. Insurance Plans (regardless of whether or not they are accessing a Contracted Payer or Non-Contracted Payers network) and/or have no insurance are expected to pay 100% of gross estimated charges for services provided by VUMC prior to services being scheduled or rendered.A patient may owe more if actual charges exceed the estimate. Any agreed upon discount will be negotiated on a case by case basis by the Associate Vice President of VUMC Managed Care or their designee, including Patient Financial Services up to the discount amount reflected in this policy, and documented with a LOA for estimated balances in excess of $5,000 and will be applied within 90 days from date of service or date of discharge.

International Individuals enrolled in U.S. Insurance Plans which are Contracted Payers of VUMC will be required to follow the terms and conditions for those agreements including any discount amount.

International Individuals enrolled in U.S. Insurance Plans which are Non-Contracted Payers of VUMC will be negotiated on a case-by-case basis by the Associate Vice President for VUMC Managed Care or their designee, including Patient Financial Services up to the discount amount reflected in this policy prior to services being rendered to the patient. Discounts will only be offered to Non-Contracted Payers which honor the patient's in-network level of benefits. The Non-Contracted Payers Discount will be documented with a LOA.

International Individuals who are embassy sponsored patients will be negotiated on a case-by-case basis by the Associate Vice President for VUMC Managed Care or their designee prior to services being rendered. The Discount will be documented with a LOA and applied within 90 days from the date of service or date of discharge. The Managed Care Office will coordinate with the embassy to obtain appropriate signatures on the LOA and to receive a letter of guarantee from the embassy. An embassy will NOT be required to make a deposit for an embassy sponsored patient UNLESS the embassy has previously failed to comply with a LOA. Such embassies will be required to pay any balances from previous embassy sponsored International Individuals AND pay 100% of gross estimated charges in advance for any future embassy sponsored International Individuals prior to the first patient visit.

Any exceptions to this policy require the approval of the Deputy Chief Executive Officer, VUMC and VUMC Chief Financial Officer.

Discounts for Services Provided to Out-of-state Medicaid Individuals

Discounts provided to out-of-state Medicaid Individuals will only be negotiated prior to the rendering of authorized Eligible Health Care Services. For Transplant Services, discounts can be explicitly negotiated for out-of-state Medicaid Individuals only by the Associate Vice President for VUMC Managed Care or their designee. The office of the Associate Vice President for VUMC Managed Care will coordinate any necessary enrollment with the Vice President of Revenue Cycle or designee. Out-of-state Medicaid Individuals’ negotiated discounts for Eligible Health Care Services or Transplant Services will be documented with a LOA.

All Out-of-state Medicaid services planned or unplanned, for Covered Eligible Health Care Services, should have a Single Case Agreement (SCA) or LOA, negotiated by the Managed Care Office.

All Out-of-state planned services for Non-covered Services, including cosmetic, experimental or services deemed not medically necessary according to the Out-of-State Medicaid plan, require formal approved of discounts by the appropriate representatives and a documented LOA prepared by the Vice President of Revenue Cycle or Associate Vice President of Revenue Cycle or their designee.

In some instances, out-of-state Medicaid regulatory statutes dictate what the respective state will pay to out of network providers. If VUMC agrees to the specific state’s statute on reimbursement, a LOA will be drafted by the Associate Vice President for VUMC Managed Care or their designee, citing the applicable statute(s) and including the VUMC payment stipulation for all Covered Services, including transplant and non-transplant services. The office of the Associate Vice President for VUMC Managed Care will coordinate any necessary LOA with the Vice President of Revenue Cycle or their designee.  For planned non-transplant, experimental, cosmetic services, or other non-transplant services not covered by Out-of-state Medicaid, a LOA will be prepared by the Vice President of Revenue Cycle, Associate Vice President of Revenue Cycle, or their designee, and formal approval of the appropriate representative will be obtained. If VUMC does not agree to the respective state’s statute, VUMC will not proceed with rendering the requested service.

Small Balance Discounts

No formal approval is needed for small balance discounts for accounts with outstanding patient balances up to $24.99 for technical hospital services and $15 for physicians’ services.

Letter of Agreement (LOA) Stipulations

The following language shall be incorporated into the LOA:

  • List of Vanderbilt entities included
  • Limitation of the payer’s ability to audit
  • The payment timeframe and denial of discount if payment is not made within stated timeframe
  • Payer’s claims address, claims contact person, and claims contact person’s phone number
  • VUMC payment address
  • Stipulation that the discounts proposed by VUMC do not represent any future financial commitment with the Payer
  • Condition that the patient must be eligible for benefits, plan coverage must be in force, and the Payer must be the primary Payer for the duration of the LOA
  • Confidentiality language
  • Arrangements for embassy sponsored patients to be interim billed every thirty (30) days and payment received within 15 days of the Payer’s receipt of the interim bill or the Discount is forfeited (any agreed upon discount reverts to full (100%) billed charges).

Summary of Discount Approval Levels

See Summary of Discount Approval Levels for an explanation of the approval levels required for discounts.

Contact Information

Questions regarding the interpretation of this policy should be directed to:

Email:  financepolicy@vumc.org