The IRS Proposes Additional Requirements for Charitable Hospitals
Section 501(r) of the IRC requires that for a hospital organization to be recognized as a 501(c)(3) organization it must meet certain new requirements with respect to each hospital facility it operates, including:
- Conducting a community health needs assessment (CHNA) at least once every three years and to adopt a strategy to meet the needs identified through the CHNA;
- Establishing a written financial assistance policy (FAP);
- Establishing a written policy regarding emergency medical care under which the hospital agrees to provide, without discrimination, care for emergency medical conditions to individuals regardless of their eligibility under the hospital’s FAP;
- Limiting amounts charged for emergency or other medically necessary care provided to individuals eligible for assistance under the hospital’s FAP to not more than the amounts generally billed to individuals who have insurance covering such care, and refraining from using gross charges; and
- Making reasonable efforts to determine whether an individual is eligible under the hospital’s FAP before engaging in extraordinary collection efforts against the individual.
This NPRM addresses all but the first requirement, which was addressed through a Notice published by the IRS on July 8, 2011 and will be the subject of subsequent guidance. Specifically, the NPRM describes: (1) the information that a hospital must include in its FAP and its policy regarding the provision of care for emergency conditions; (2) the methods the hospital must use to widely publicize its FAP; (3) how a hospital may determine the maximum amounts it can charge FAP-eligible individuals for emergency care and other medically necessary care; and (4) the actions that are considered “extraordinary collection actions” and the “reasonable efforts” a hospital must make to determine FAP-eligibility before engaging in such actions. The NPRM also provides guidance as to which entities must meet each of these requirements by defining the terms “hospital organization” and “hospital facility.”
In issuing the NPRM, the IRS aimed to both ensure that patients have access to information about a hospital’s FAP and to preserve hospitals’ flexibility to meet the health needs of the particular communities they serve. The IRS plans to address the consequences of failing to meet the NPRM requirements in future guidance.
Comments and requests for a public hearing regarding the NPRM are due by September 24, 2012. Notably, the requirements described in the NPRM apply to taxable years beginning after March 23, 2010, while the requirements regarding the CHNA addressed in separate guidance apply to taxable years beginning after March 23, 2012.
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