IRS Finalizes Regulations Pertaining to Tax-Exempt Hospitals
The IRS recently released final regulations clarifying requirements added by Affordable Care Act to the Internal Revenue Code, which charitable hospitals must meet in order to maintain their tax-exempt status. Those statutory requirements provide that charitable hospitals must:
• Establish and widely publicize a written financial assistance policy clearly describing to patients the eligibility criteria for obtaining financial assistance and the method of applying for such assistance;
• Limit the amounts charged for emergency or other medically necessary care to individuals eligible for assistance under the hospital’s financial assistance policy;
• Make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy before engaging in extraordinary collection actions against the individual; and
• Perform a community health needs assessment at least once every three years.
The final regulations expand access to translations for patients, by lowering the threshold for having translations of financial assistance policies available from 10 percent of the community served to the lesser of 5 percent of the community served or population expected to be encountered by the facility, or 1,000 persons.
Additionally, the final regulations revise the notification requirements. Charitable hospitals must still issue general notifications regarding their financial assistance policy on bills and in the hospital. Now, however, individual written and oral notifications are only required when the hospital plans to use extraordinary collections actions, such as reporting a debt to a credit bureau, selling the debt to a third party, or garnishing wages.
The first three requirements listed above took effect shortly after the ACA passed 2010; the last took effect in 2012. Charitable hospitals have been required to make a good-faith effort to comply with them since their effective dates and must continue to do so. The regulations finalize the requirements and provide time for hospitals to fully phase into them.