IRS: Hospitals Should Follow Proposed Charity Rules
Dec. 31—The Internal Revenue Service issued a notice this week telling hospitals to follow proposed charity care regulations issued in 2012 and 2013, in lieu of final rules.
The guidance issued Dec. 30 directed hospitals to adhere to proposed rules issued in June 2012 and April 2013 implementing new requirements of the Affordable Care Act (ACA) surrounding the tax exemption they receive in return for the community benefits they provide. Whenever final rules are issued they will supersede the proposed rules.
“As we reach the end of the year, we want to remind charitable hospitals that they must also take important steps to protect patients—including protecting them from hidden and high prices, and unreasonable collection actions,” Betsy Bourassa, a Treasury Department spokeswoman, wrote in a post on the new guidance.
The first guidance outlined a procedure for charitable hospitals to report failings in their efforts to satisfy IRS tax exempt reporting requirements before any federal investigation is launched. If hospitals follow the procedures proposed under the previously published rules, they will not lose their tax-exempt status unless the reporting mistakes are “willful or egregious.”
The IRS guidance also detailed new requirements for charitable hospitals to maintain their tax-exempt status, including the creation of a financial assistance policy, an emergency medical care policy, and limitations on charges and collection activities involving patients eligible for financial assistance. The proposed rules require tax-exempt hospitals to clearly define the financial assistance available and how to apply for it, and to publicize their policies so that community members are aware the aid is available. The proposed regulations also bar charging people eligible for financial assistance more than insured patients for medically necessary care, explicitly prohibit collections activities in emergency rooms, and require hospitals to reissue discounted bills if a patient is later found eligible for financial assistance.
The rules also require charitable hospitals to conduct community health needs assessments and implement strategies to address identified community health needs.
The regulations also address the consequences for failing to meet any of the new requirements.
Publication Date: Tuesday, December 31, 2013