Influence Nonprofit Hospital IRS Regulations in the Health Reform Law
The IRS wants your feedback on the new sections of the
Patient Protection and Affordable Care Act (PPACA), which created four “additional requirements for charitable hospitals.” Comments are due by July 22, 2010.
Notice 2010-39, published on May 27, 2010, explains guidance on how the IRS plans to implement the rules around 1) conducting a community health needs assessment (CHNA), 2) putting public financial assistance policies in place, 3) limiting charges for care that is provided to individuals eligible under the financial assistance policy, and 4) not engaging in “extraordinary collection actions.”
“Feedback from leaders of charitable hospitals is essential in making sure the new rules are reasonable,” states Cory Rutledge, health care manager with LarsonAllen.
He continues, “This is one more move toward transparency and could have serious implications on tax-exempt hospitals.” For example, conducting the community health needs assessment could become a cumbersome and costly process, depending on its specific requirements, Rutledge warns.
Community health needs assessment
This section of the internal revenue code (IRC) states that tax-exempt hospitals must:
- Conduct a CHNA every three years
- Implement a strategy to meet the community health needs identified in the assessment
The CHNA will be applicable to taxable years beginning after March 23, 2012. A $50,000 excise tax will be imposed on organizations that fail to take these steps.
Financial assistance policy
Hospitals must publicly establish written policies on:
- Financial assistance (e.g., patient charge calculations, methods to apply for aid, criteria for free or discounted care, etc.)
- Emergency medical care without discriminating (regardless of a person’s eligibility under the financial assistance policy)
These policies apply to taxable years beginning after March 23, 2010.
Charge limitation to those eligible for assistance under the policy
Amounts billed to individuals eligible for assistance (under the financial assistance policy) must be similar to the rates charged to people covered under health insurance.
This limitation requires the charges be based on one of the following:
- The best commercial rates
- An average of the top three best commercial rates
- Medicare rates
The limitation on charges is also applicable to taxable years beginning after March 23, 2010.
Foregoing “extraordinary collection actions”
The billing and collection guidelines say nonprofit hospitals cannot take atypical measures to collect billings from patients before they’ve made reasonable attempts to determine eligibility under the financial assistance plan.
These rules are applicable to taxable years beginning after March 23, 2010.
Comments due July 22
The public comment and question period is open until July 22, 2010. Nonprofit hospital taxpayers can submit their feedback in the following ways. All communications should refer to notice 2010-39.
Email
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Mail
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Courier
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Electronically submit your comments to notice.comments@irscounsel.treas.gov.
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Internal Revenue Service
CC:PA:LPD:PR (Notice 2010-39)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
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Hand deliveries will be accepted at the address below between Monday and Friday from 8 a.m.
Courier’s Desk
Internal Revenue Service
1111 Constitution Ave., N.W.
Washington, DC 20224
Attention: CC:PA:LPD:PR (Notice 2010-39)
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Cory Rutledge, Health Care Manager
crutledge@larsonallen.com or 612-376-4524
View our health care and tax principals.