Heyl Royster

Not-For-Profit Hospitals Must Meet New Burdens in Financial Assistance and Debt Collection

may 18, 2015

The Internal Revenue Service has adopted new final rules and regulations placing additional regulatory burdens on not-for-profit hospitals with regard to financial assistance and debt collection. The final rules and regulations clarify the broad provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA) which added section 501(r) to the Internal Revenue Code. Although the final rules and regulations discuss much more in terms of specifics, generally, the following four additional requirements are placed on not-for-profit hospitals to maintain tax exempt status:

  1. A community health needs assessment (CHNA Assessment) must be conducted at least once every three years and an implementation strategy to meet those community health needs must be adopted or the institution will be subject to a $50,000 tax penalty.
  2. A written financial assistance policy must be established which provides eligibility criteria for assistance, including how outpatients must apply for assistance and how they are to be charged for care under the policy. A written emergency medical care policy requiring emergency care to individuals regardless of their eligibility for financial assistance must also be established.
  3. Gross charges and the amounts charged to those patients who qualify for financial assistance for emergency or other medically necessary care must be limited to not more than the amounts generally billed (AGB) to individuals who have insurance covering such cases.
  4. Reasonable efforts must be made to determine whether an individual is eligible for assistance under the financial assistance policy before engaging in extraordinary collection actions (EC Actions).

As a result of the new final rules and regulations, charitable hospitals may legally bill for and collect funds they are owed for patient care, however, hospital personnel and their legal counsel should closely review all related policies, procedures and facility practices to ensure all billing and collection policies and practices comply with the law.

As noted above, a number of specific requirements are discussed in the new regulations beyond those mentioned above. The full text of the new regulations can be found here.

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