irsThe Internal Revenue Service has issued guidance for non-profit hospitals on selected issues that could jeopardize their non-profit status.

As described in a commentary by the U.S. Treasury Department, non-profit hospitals must:

  • Limit charges.  Hospitals may not charge individuals eligible for financial assistance more for emergency or other medically necessary care than the amounts generally billed to patients with insurance (including Medicare, Medicaid, or private commercial insurance).
  •  Establish and disclose financial assistance policies.  Each hospital must establish and widely publicize a financial assistance policy that clearly describes to patients the eligibility criteria for obtaining financial assistance and the method for applying for financial assistance.
  • Abide by reasonable billing and collection requirements.  Charitable hospitals are prohibited from engaging in certain collection methods (for example, reporting a debt to a credit agency or garnishing wages) until they make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy.
  • Perform a community health needs assessment.  Each charitable hospital must conduct and publish a community health needs assessment at least once every three years – and disclose on the tax form it files annually the steps it is taking to address the health needs identified in the assessment.
  • These requirements are in addition to other consumer protections provided by the ACA, including that all hospitals must establish and make public a list of standard charges for items and services.  The Centers for Medicare & Medicaid Services (CMS) issued final rules implementing this provision in August, and encouraged hospitals to make additional efforts to help patients understand how much services may cost and enable them to compare charges for similar services at different hospitals.

The Treasury Department commentary also states that non-profit hospitals are required to:

  • Expand access to translations for patients, by lowering the threshold for having translations of financial assistance policies available from 10 percent of the community served as proposed, to five percent of the community served or population expected to be encountered by the hospital facility, or 1000 persons, whichever is less.
  • Revise the notification requirements to maintain important protections for patients while making it easier for hospitals to comply with them. General notifications regarding a hospital’s financial assistance policy must appear on bills and in the hospital. However, individual written and oral notifications of the hospital’s financial assistance policy are now only required when a hospital plans to use extraordinary collections actions, such as reporting a debt to a credit bureau, selling the debt to a third party or garnishing wages.
  • While charitable hospitals must continue to make a good-faith effort to comply, the rules provide charitable hospitals with adequate time to fully update their policies and programming to implement the changes.

Hospitals that fail to comply with these requirements could have their non-profit status revoked.

Many private safety-net hospitals are non-profit.

To see the Treasury Department’s commentary on the new guidance, go here.  Find the IRS guidance document itself here.