AHA: IRS rules thwart health reform

Hospitals are lobbying the Internal Revenue Service to relax eligibility rules for hospitals to participate in for tax-exempt or local bond financing, reported AHA News Now.

The American Hospital Association has asked the IRS to change procedure 97-13, which governs what constitutes public and private businesses at hospitals that enjoy tax-exempt financing. The use of facilities for private business could put hospitals out of compliance for bond eligibility.

However, the AHA argues the restrictions hinder the ability for hospitals to contract in a manner consistent with arrangements advocated as part of the Patient Protection and Affordable Care Act. It has proposed relaxing some parts of the procedure.

"(They) present a barrier to hospital and medical foundation use of particular arrangements that are encouraged by the ACA, such as accountable care organizations, bundled payments and other shared savings programs," states the letter, which was written by Melinda Hatton, the AHA's general counsel.

"Furthermore, hospitals face significant penalties right now under the law's readmission reduction and value-based purchasing programs. Rev. Proc. 97-13 prevents the types of arrangements that can effectively align incentives among physicians, hospitals and other health care service providers to meet the goals of these two policies," she wrote.

The AHA and IRS also are at odds over the the community benefits provided by hospitals to maintain their tax-exempt status, Lexology reported.

For more:
- here's the AHA News Now brief
- read the letter (.pdf)
- check out the Lexology article

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