Hospitals ask IRS to partially withdraw rules on patient financial assistance

The American Hospital Association (AHA) and the American Association of Medical Colleges (AAMC) have asked the Internal Revenue Service to rethink a portion of its proposed regulations regarding financial assistance policies for patients, AHA News Now reported.

The AHA and AAMC are concerned about a provision in the proposed regulations that would require every provider to list individual doctors and other clinicians delivering medically necessary care and whether they are covered by the institution's overall financial assistance policy (FAP), according to the publicaton. The policy requires that if patients are treated by the specific provider, they could receive charity care, a reduced bill or some other form of financial relief.

The IRS began taking a tough stance on the issue last year, proposing rules that would bar not-for-profit hospitals from aggressive collections tactics on patient bills or risk losing their tax exemptions. The agency took action after published reports of many not-for-profit hospitals taking tough actions against patients for sums owed.

A letter by AHA General Counsel Melinda Hatton and AAMC Chief Healthcare Officer Janis M. Orlowski, M.D., to the IRS commissioners called that proposal "unworkable" and that it would place too much of a burden on the reporting bodies.

"This provision was not included in any proposed regulations nor was it the subject of any requests for comments," the letter read in part. "Had this requirement been proposed, hospitals would have been able to help the (IRS) understand that it is a significant problem for compliance and would have suggested alternatives that would be better matched to the objective."

As an example, the letter noted one hospital with a medical staff of more than 2,200 physicians. Other than listing their names in its financial assistance policy, there would be no realistic way for the institution to comply with the regulation.

"A patient may seek a physician in a group that is covered under the FAP or has a financial assistance policy that is consistent with that of the hospital but such a physician may not be available (on vacation, busy with other patients, at another hospital), and the patient may be treated by another physician not covered by the FAP," the letter observed. "These circumstances occur every day." 

Hatton and Orlowski instead suggested that the IRS withdraw the proposal from the regulations, which go into effect later this year.

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

Suggested Articles

Medicare beneficiaries can be easily tripped up by the difference between a physical and the annual "wellness visit" covered by the program.

CMS has issued a new report that offers a look at how physicians fared in the first year of its Quality Payment Program. 

In an increasingly competitive environment, the healthcare system needs to evolve to better meet the needs of communities.