The Patient Protection and Affordable Care Act (ACA), enacted March 23, 2010, added new requirements codified under IRS Section 501(r) for tax-exempt organizations that operate one or more hospital. Specifically, the ACA imposes four new requirements that hospitals must meet to qualify as a tax-exempt facility, they are as follows:
- Conducting a community health needs assessment with an accompanying implementation strategy;
- Establishing a written financial assistance policy for medically necessary and emergency care;
- Complying with specified limitations on hospital charges for those eligible for financial assistance; and
- Complying with specified billing and collections requirements.
Meeting the requirements under 501(r)(4) can be a formidable challenge for hospital executives. It requires the hospital to “establish a widely publicized financial assistance policy (FAP) that identifies eligibility criteria for financial assistance and a policy for providing emergency treatment, regardless of an individual’s eligibility for financial assistance.”2 It is not enough to merely develop a comprehensive written FAP. Administration, promotion, publication, ease-of-access, awareness across all channels of the organization and consistent application are at the core of any successful financial assistance program.
The ACA requires the IRS to review, at least once every three years, the community benefits activities of the approximate 3,000 charitable hospitals nationwide. According to the IRS, of 2,482 compliance reviews of tax-exempt hospitals completed between 2014 and 2016, the IRS cited 163 (nearly 7%) as potentially non-compliant and are under further examination. And, results of the IRS’s latest review concluded in February 2019, total of 129 hospitals were referred for compliance checks, of which 125 resulted in referrals for indications of “Healthcare-Financial Assistance Policy issues.
Clearly, the IRS is serious about 501(r) enforcement. Don’t wait for an audit to discover that some patients did not receive the financial assistance they needed. Schedule a demonstration of Caritas360 online Charity Care Administration solution today!