How Does AB 1020 Impact Agencies?

Healthcare-focused RCM services groups — especially those in California — are having a heck of a year. 

Not only did Reg F go into effect, but AB 1020 has also come down the regulatory line, and collection agencies and revenue servicers have had to do everything they can to adjust. 

They’re also planning for future, similar regulations, by creating foundations that allow them to stay adaptable in an ever-changing regulatory environment. Balancing these reactive and proactive tasks would keep anyone on their toes. 

Fortunately there’s a technological solution that can help (as is true with the majority of tasks and rules that plague an organization, these days!). 

Just as the right AI can support full Reg F implementation and adherence, so too can it support AB 1020 adherence, a critical aspect of mitigating risk in healthcare agencies. 

Before we jump into the details of the impact of AB 1020, let’s talk more about AB 1020 itself.

What is AB 1020?

In addition to redefining high medical costs and updating eligibility thresholds, impacting how hospitals manage self-pay, notification and more, AB 1020:

  • prohibits a hospital from selling patient debt to a debt buyer until specific conditions are met
  • requires hospitals to send a patient notice with specific information before assigning the bill to collections or selling that debt to a debt buyer
  • prohibits collection before 180 days after initial billing, regardless of financial status
  • prohibits credit reporting or civil actions for 180 days after initial billing, adding 30 days to the previous 150 limit. 

As you can see, these shifts mean that the cycle of buying or receiving and working medical debt is significantly altered. 

How Does AB 1020 Change How Agencies Work?

The main impact of AB 1020 on California agencies is on cycle timing, meaning process adjustments are required. 

As Tomekia Mitchell of Rash Curtis & Associates shared, not only must skilled, seasoned and new collectors be trained on how to avoid violating Regulation F laws (such as talking about credit reporting and how to adjust call openings during the validation period), but IT also must get involved to set new thresholds to ensure compliance on how often collectors are allowed to contact a consumer.

Regardless of how buyers and agencies respond to AB 1020, there’s potential to lose money when a new regulation enters the picture. “Any way you look at it, you lose production,” says Mitchell.

Many of the AB 1020 regulations strictly apply to a collector or assignee’s clients (the hospitals). Consequently, agencies have had to undergo a rewrite of the entire first-notice-to-collection process, with the integration of the “Goodbye letter” from the acute hospital (which must occur before sending the consumer to collections).

Of course, the fact that compliance and timing issues may arise during the medical billing process has always been inevitable, given how many parties and steps are involved. AB 1020 just has the potential to make these error types especially frequent while hospitals gain a foothold and agencies support the rewrite of the aforementioned processes.

As an example, if the patient was initially billed only 100 days before the agency received the debt, and the agency waited 80 days to contact the patient, but learned later the specific information required had never been provided to the patient in a letter, the agency would still have to answer for that error. 

The bill would still be stuck in collections. 

The cycle of repayment would extend. 

Not to mention: compliance violations are a massive risk. 

A rewrite of the process, now incorporating the Goodbye Letter, would support the shift, but unquestionably adds work for the agency. 

Additionally, a billing and collections regulation that relies on client (hospital) implementation will naturally limit an agency’s client pool: 

  • How will the agency guarantee the debt they’re receiving has been through all of the steps AB 1020 requires? 
  • Will the agency reject any client who can’t prove it? 
  • Will they need to require certain technology in order to form a partnership? 
  • Is it up to the agency to fully monitor their clients’ compliance with the bill? 

The questions are endless, and the impact on revenue can be extreme if clients struggle to implement the new processes to the level the agency requires — or if the agency struggles to do the same. 

How Can AI Support AB 1020 Adherence?

Technology is a must to keep agencies on track with their revenue recapture goals despite the many changes they’ve encountered in recent years (and months). The right analytics solutions would include both productivity and QA tools to ensure that:

1) operating margins don’t tank in these shifting conditions and 

2) compliance risks are mitigated as much as possible.

When an analytics platform and model presents opportunities like custom tags and tag management, agencies can ensure total call coverage with much less manual involvement. 

Smart, automated reporting can also help compliance and operations teams discover important opportunities they’d previously missed, and productivity tools like real-time assistance can support better collector responses to those opportunities. 

So, the questions are endless, but so are the possibilities. 

If you’re interested in learning more about AB 1020 adherence or about how Prodigal can support agencies both inside of California and elsewhere to meet their compliance needs, start exploring below. 

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