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IRS Regulations for Charitable 501 (c)(3) Hospitals/Section 501(r)

Section 501(r) was added to the Patient Protection and Affordable Care Act (PPACA) enacted March 23, 2010. Hospitals have been awaiting the release of the final regulations. The IRS and Treasury issued two notices in 2014:– Notice 2014-2 confirmed that tax-exempt hospital organizations may

rely on proposed regulations under 501(r) before the final regulations are published.

– Notice 2014-3 provided correction and disclosure procedures for certain failures to meet the requirements under 501(r).

Section 501(r) imposes four new requirements for nonprofit hospital organizations that operate one or more hospital facilities to be afforded their 501(c)(3) tax-exempt status:

• 501(r)(3) Community Health Needs Assessment—CHNA

• 501(r)(4) Financial Assistance Policy• 501(r)(5) Limitation on Charges• 501(r)(6) Billing and Collections

Issue:If hospitals have effectively communicated their Financial Assistance Policy (FAP), the proposed 120-day notification period allows sufficient time for completion of a FAP application. Adding a second 120-day period that precludes collection actions requiring a legal or judicial process will inhibit collections from patients with resources available to pay rightly owed balances.

Issue:Emergency Care Policy (EMCP) requirements both duplicate and conflict with federal Emergency Medical Treatment and Labor Act (EMTALA) requirements.

Issue:Requirements to demonstrate “reasonable efforts” are unnecessarily burdensome and will increase costs without increasing access to care or benefiting the patient.

Issue:The regulations appear to require that financial assistance for the insured may be provided only if the Amounts Generally Billed (AGB) is applied. Requiring that assistance for the insured is provided at the same level as the uninsured would create confusion and misapplication of the standard.

AAHAM’s Recommendation:

WAIT………

For more information about the new requirements for tax-exempt hospitals and other provisions of the Affordable Care Act see:

• Current Forms 990, Schedules and Instructions• Affordable Care Act Tax Provisions• Affordable Care Act of 2010: News Releases, Multimedia and Legal G

uidance

The IRS welcomes additional input. Input should be submitted to the following address:Internal Revenue ServiceAttn: Stephen Clarke (Notice 2012-4)SE:T:EO1111 Constitution Avenue, NWWashington, DC 2022

Questions????

Thank you so much!!!!

Until next time……lmsickelbaugh@aol.com