Tuesday, June 1, 2010

IRS Requests Comments on Nonprofit Hospital Provisions in Health Care Reform Act

In Notice 2010-39, the IRS is requesting comments on new section 501(r), added to the Internal Revenue Code (Code) by section 9007(a) of the Patient Protection and Affordable Care Act (otherwise known as the health care reform legislation).  We previously blogged about the new provisions of the Act here and here.

The notice is interesting because it quotes the Joint Committee on Taxation's Technical Explanation of the law's provisions.  For example, with respect to the community health needs assessment requirement, the Technical Explanation states that the CHNA “may be based on current information collected by a public health agency or non-profit organizations and may be conducted together with one or more organizations, including related organizations.”  On the financial assistance policy requirement, the Technical Explanation finds that “[t]he policy must prevent discrimination in the provision of emergency medical treatment, including denial of service, against those eligible for financial assistance under the facility’s financial assistance policy or those eligible for government assistance.” 

Perhaps most interesting are the Technical Explanation's comments about the provisions relating to limitations on charges and billing/collection.  With respect to the former, the Explanation notes that “[i]t is intended that amounts billed to those who qualify for financial assistance may be based on either the best, or an average of the three best, negotiated commercial rates, or Medicare rates.”  On the latter, the Explanation states that “extraordinary collections include lawsuits, liens on residences, arrests, body attachments, or other similar collection processes.”  The Explanation also finds that “[i]t is intended that for this purpose, ‘reasonable efforts’ [e.g., the part of the bill that prohibits extraordinary collection efforts before "reasonable efforts" have been taken to determine whether the individual is eligible for assistance under the hospital organization’s financial assistance policy] includes notification by the hospital of its financial assistance policy upon admission and in written and oral communications with the patient regarding the patient’s bill, including invoices and telephone calls, before collection action or reporting to credit agencies is initiated.”

I expect the American Hospital Association will have its members commenting in force; it will be interesting to see what other comments the IRS gets on these provisions.  Comments should refer to Notice 2010-39 and be submitted by July 22, 2010, to:

Internal Revenue Service CC:PA:LPD:PR (Notice 2010-39) 
Room 5203 
P.O. Box 7604 
Ben Franklin Station 
Washington, DC 20044

JDC

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