When a large health system in south Florida was recently hit with a complaint for failing to comply with government-mandated charity care obligations, it should have been a big wake-up call for other tax-exempt hospital organizations that have not yet changed their processes to comply with the new requirements. The complaint was filed with the Internal Revenue Service by Florida Legal Services and the National Health Law Program – groups that represent low-income residents on issues including access to health care.
The complaint alleges the system neglected its obligations under section 501(r) of the tax code, which, in general, requires tax-exempt hospitals to assess the needs of their communities and establish policies and practices to help the poor and uninsured obtain access to the health care services they need. Section 501(r) was enacted in the Patient Protection and Affordable Care Act of 2010.
This was the first complaint of its type to be filed with the IRS against a large health system for failure to comply with Section 501(r). The system is currently challenging the complaint.
While for-profit hospitals do not have to comply with the 501(r), many are adopting the various requirements anyway, viewing the requirements as best practices in communicating financial policies to patients. The 501(r) requires tax-exempt hospitals to:
Conduct a community health needs assessment at least once every three years and adopt an implementation strategy to meet the identified needs;
Establish a written financial assistance policy and a written emergency medical care policy;
Limit amounts charged for emergency or other medically necessary care to individuals eligible for assistance under the hospital’s financial assistance policy; and
Make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy before engaging in extraordinary collection actions against the individual.
For organizations failing to comply, the consequences can be significant, including loss of status as a 501(c)(3) tax-exempt organization. The IRS is responsible for ensuring that all tax-exempt hospital organizations comply with the new requirements, and for taking appropriate action against those organizations that do not. In addition to the forfeiture of tax-exempt status, hospitals also face the potential for additional fines and penalties.
We’re happy to offer a product that helps support 501(r) requirements. Availity Patient Access not only stores an organization’s business rules and financial assistance policies, it helps ensure those policies are followed. Through automated workflow and customized scripting, our Patient Access solution helps ensure these policies are consistently, correctly and automatically applied to every patient encounter, thus greatly reducing the risk of an organization finding itself out of compliance with 501(r).