AHA asks IRS for more clarity on charity care rules

The American Hospital Association wants the Internal Revenue Service to clarify the types of mistakes and omissions involving specific charitable care financial assistance policies for patients that will lead to a hospital violation, AHA News Now reported.

The AHA provided input to the IRS' proposed final rules for Section 501(r), which regulates financial assistance and charges to low and moderate income patients for emergency services. The regulation calls for hospitals to have written financial assistance policies in place; limit the amounts it can charge patients; and make reasonable efforts to determine whether patients are eligible for assistance before making any "extraordinary" efforts to collect on their bills. Hospitals also have to keep their financial assistance policies posted in public areas.

The IRS first proposed the rules several years ago after mounting criticism that hospitals did not provide enough charity care, but continues to hammer out the final regulations.

Non-profit hospitals in violation of 501(r) regulations could lose their tax exemption, but the AHA wants more discretion when hospitals must assess and fix any violations.

Under the proposed regulations, the IRS will withdraw tax exemption for egregious and willful violations, but seek disclosure and correction for lesser violations.

"It would be helpful for the final guidance to offer examples of minor and inadvertent mistakes. For example, a glitch in the hospital's website may result in a previously posted community health needs assessment report or financial assistance policy being temporarily unavailable; or signage in the emergency department or admitting area that had fallen down or is out of place for a short duration," wrote Melinda Hatton, AHA general counsel, in the letter.

And, when a hospital must correct a violation, the AHA wants a "safe harbor" provision regarding what actions it takes. "While a hospital must satisfy the principles of correction in the guidance, it is placed in the position of being second-guessed by the IRS about the sufficiency of its response. This may occur years after the mistake occurred or was identified and corrected," Hatton wrote.

To learn more:
- read the AHA News Now article
- check out the letter (.pdf)

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