Page 1 of 4

TEXAS CHILDREN’S HOSPITAL POLICY & PROCEDURE

MANUAL: Texas Children’s Hospital POLICY NO: GA 306-01SECTION: General & Administrative PROC. NO: GA 306-01TITLE: PATIENT/FAMILY COLLECTIONS ORIG. DATE: 07/26/10RESP: Financial Services - Patient

AccountingEFF. DATE: 07/26/10

REV. BY: DISTRIBUTION: All Departments

POLICY STATEMENT

It is the policy of Texas Children’s Hospital (“TCH” or “Hospital”) to establish guidelines for a consistentprocess for the management and collection of patient account receivables. Customer service is a keyconsideration during collection activities and TCH will make reasonable efforts to be flexible andresponsive to individual circumstances. This policy includes actions that TCH may take in the event ofnon-payment for services rendered.

TCH takes a number of steps to ensure that the availability of its financial assistance programs andresources, including the availability of charity care and discounted care, is widely publicized. Guarantorsare expected to meet their financial obligations to TCH and to cooperate with TCH’s accountmanagement and collection procedures. Guarantors are expected to communicate with TCH PatientFinancial Services regarding any inability to meet such obligations. Guarantors of accounts which havequalified for financial assistance or charity care and/or which receive discounted care will be responsiblefor payment of any applicable hospital charges at a reduced rate.

This policy only applies to collections on patient accounts for services provided by the Hospital.Professional services provided by physicians (including specialists and sub-specialists) are not coveredunder this policy.

In implementing this policy, TCH will comply with all applicable federal, state and local laws, rules andregulations, including but not limited to the Emergency Treatment and Active Labor Act of 1986 and itsassociated rules and regulations (“EMTALA”), which requires the Hospital in certain circumstances toprovide an appropriate medical screening examination within the capability of TCH’s emergencydepartment to determine whether an emergency medical condition exists, regardless of patient’s insurancecoverage or ability to pay.

DEFINITIONS

1. Bad Debt: Charges owed to TCH that a patient is unwilling to pay or refuses to pay.

2. Collection Efforts: Actions taken by TCH or its designee that are in addition to routine issuanceof billing statements on non-Outstanding Accounts or accounts with payment plans, and whichare taken to collect amounts due on Outstanding Accounts. Collection Efforts include but are notlimited to: telephone calls, email correspondence, and written correspondence.

3. Guarantor: The person financially responsible for payment on a TCH account.

Page 2 of 4

4. Outstanding Account: An account where: a) the self-pay balance is greater than $10.00, and b)25 days have passed since the Statement was sent to the Guarantor for payment.

5. Self-Pay Account: A patient account with all or part of the balance due from the Guarantor. Anoutstanding balance on a Self-Pay Account may represent total or discounted charges to anuninsured patient (or to an insured patient for non-covered services) or the balance of a bill thatwas partially paid by a third party payor or other source.

6. Statement: Written documentation of the amount due on a patient account, sent to the Guarantorwith a demand for payment.

7. Uncollectible Account: Outstanding Accounts that remain unpaid after a minimum of five (5)statements and three (3) phone call attempts may be considered Uncollectible Accounts, as wellas accounts aged greater than 180 days. Uncollectible Accounts may include Bad Debt.

PROCEDURE

1.00 TIMELY PAYMENT OF ACCOUNTS

1.01 Timely Payment. TCH will send a Statement to the Guarantor for amounts due on apatient account. The statement amount is due in full upon Guarantor’s receipt of theStatement unless otherwise stated in writing.

1.02 Outstanding Accounts. Accounts that are not paid in a timely fashion becomeOutstanding Accounts and are subject to Collection Efforts as described in this policy.

2.00 OBTAINING FINANCIAL ASSISTANCE

2.01 General Information. TCH will widely publicize the availability of its financialassistance programs and resources. This includes posting notices regarding theavailability of such programs at patient access points. Patient Financial Services and itsauthorized representatives will provide patients and their parents and/or guardians withinformation regarding financial assistance programs and resources upon request and uponreceiving information that the patient or Guarantor may qualify for financial assistance.

2.02 Policies. The following policies at Texas Children’s provide information about financialassistance programs and resources: Financial Assistance/Charity Care (GA 303-01) andDiscounts – Self Pay Patients (GA 304).

2.03 Self-Pay Accounts. Self-Pay Accounts may be reviewed for potential eligibility forMedicaid or other government-sponsored coverage.

2.04 Customer Service. Customer service inquiries should be directed to Patient FinancialServices at (832) 824-2300 or (800) 722-2570.

3.00 EVALUATION AND COLLECTION ON ACCOUNTS

3.01 Patient Financial Services is responsible for management and collection of all PatientAccounts, including Outstanding Accounts.

3.02 Patient Financial Services representatives will evaluate Outstanding Accounts and will

Page 3 of 4

contact Guarantors to arrange payments.

3.02 Patient Financial Services representatives will engage in Collection Efforts and willdocument such efforts.

4.00 PAYMENT PLANS

4.01 Payment plans may be set up by Patient Financial Services to allow for schedulingpayments on an account balance, including Outstanding Accounts and UncollectibleAccounts.

4.02 Payment plans should include all outstanding balances on Self-Pay Accounts listed for aGuarantor.

4.03 Payment plans should not exceed six (6) months without approval from Patient FinancialServices management. Payment plans exceeding 6 months should include monthlypayments of at least $150.00 per month.

4.04 Payment plans exceeding one (1) year or otherwise outside of these guidelines should beapproved by the Director or Executive of Patient Financial Services.

4.05 A Guarantor who does not fulfill his or her obligations to make payments according to aPayment Plan is subject to Collection Efforts under this policy.

5.00 ADDITIONAL COLLECTION EFFORTS

5.01 Collection Efforts. TCH will engage in Collection Efforts, as appropriate, to collect onOutstanding Accounts, including but not limited to repeat follow up with the Guarantorfor payment.

5.02 Third Party. TCH engages a third party on a contracted basis to assist with CollectionEfforts. Such third party is authorized to perform Collection Efforts on OutstandingAccounts on behalf of TCH. Such third party’s assistance will be in accordance with theterms of the contract, applicable TCH policies, the Fair Debt Collection Practices Act,and other applicable state or federal requirements.

5.03 Extraordinary and Unlawful Actions. TCH does not engage in extraordinary or unlawfulactions to force collections on patient accounts. Extraordinary actions would includeissuance of liens or foreclosures. Unlawful actions would include actions prohibitedunder the Fair Debt Collection Practices Act.

5.04 Legal Action. Nothing in this policy should be construed as limiting TCH’s rights to takeappropriate legal action, other than the extraordinary actions described above, regardingthe resolution and collection of Outstanding Accounts and Uncollectible Accounts.

6.00 PENDING APPLICATIONS AND APPEALS

6.01 Appeals. Upon receiving verification of a pending application or pending appeal forfinancial assistance or third-party coverage relating on behalf of a patient, includingMedicaid or SCHIP, TCH will suspend Collection Efforts on Outstanding Accounts. TheGuarantor is expected to communicate with TCH regarding the status of pending

Page 4 of 4

applications or appeals. If Guarantor fails to communicate with TCH regarding suchstatus, or if TCH makes a reasonable determination that the Guarantor is not properlyusing the appeals process, TCH may resume Collection Efforts.

6.02 Good Faith Disputes. Collection Efforts on Outstanding Accounts may be suspended ifthe Guarantor has communicated a valid dispute regarding specific charges on theStatement.

7.00 RETROACTIVE REVIEW

Uncollectible Accounts may be subject to retroactive review by Patient Services Specialists, andsuch review may take into consideration whether the Patient would have been eligible forfinancial assistance/charity care.

8.00 PUBLICATION

TCH will post notices as required by law regarding the availability of financial assistance andcharity care. Further information on applying for financial assistance and charity care will beposted in key public areas throughout the Hospital where patients present for services. This policywill be available in both English and Spanish, and will be available through TCH’s website.

ASSOCIATED POLICIESGA 303-01 Financial Assistance/Charity CareGA 304 Discounts - Self Pay Patients

ASSOCIATED LAWS AND REGULATIONSTexas Debt Collection ActFederal Fair Debt Collection Practices ActPatient Protection and Affordable Care Act (PPACA)

Mark A. WallacePresidentChief Executive OfficerTexas Children’s Hospital

Review Dates: Revision/Approval Dates:APPOC 07/26/10 Senior Vice President, Finance 07/26/10