Tuesday, February 26, 2019
From Senator Grassley's press office:
Grassley Renews Probe of Non-Profit, Tax-Exempt Hospitals
WASHINGTON – Senate Finance Committee Chairman Chuck Grassley continued his years-long effort to ensure tax-exempt hospitals are fulfilling the standards for serving communities and low-income patients as required by law. In a letter to IRS Commissioner Charles Rettig, Grassley pressed for data on how many hospitals are in compliance with the requirements for tax exempt status and the status of IRS examinations of those not in compliance. “Making sure that tax-exempt hospitals abide by their community benefit standards is a very important issue for me. As chairman of the Senate Judiciary Committee, I oversaw an investigation into the billing practices of the Mosaic Life Care hospital. That investigation resulted in debt relief of almost $17 million for thousands of low-income patients. This issue is still just as important to me now that I am chairman of the Senate Finance Committee,” Grassley wrote. Specifically, Grassley is seeking information about whether tax-exempt hospitals are meeting the statutory requirements laid out in section 501 of the Internal Revenue Code. In February 2018, Grassley and then-Chairman Orrin Hatch of Utah pressed the IRS for information on enforcement practices and compliance data on non-profit hospitals. Grassley has continually urged greater compliance among non-profit hospitals. He has even helped ensure debt relief for thousands of patients through an oversight inquiry into Mosaic Life Care. That inquiry examined the billing and debt collection practices of the care center after news reports indicated it had sued low-income patients that should have qualified for charity care.
Here is a snippet from the letter:
Unfortunately, according to reports, it appears that at least some of these tax-exempt hospitals have cut charity care, despite increased revenue, calling into question their compliance with the standards set by Coongress. So, on February 15, 2018, I sent a letter to the IRS to inquire about how the agency reviews non-profit hospital compliance with 501(r) of the Internal Revenue Code. Acting Commissioner Kautter responded that the IRS annually reviews one third of approximately 3,000 tax-exempt hospitals by reviewing Forms 990, hospital websites, and other information in order to identify the hospitals withthe highest likelihood of noncompliance. The IRSS then assigns either a compliance check or examinaton to those hospitals that appear to be most at risk of noncompliance.
The letter goes on for another page and half asking some 30 or so questions. Funny thing is, Grassley is citing to an Obama care provision for which he has voted repeal too many times to count! Here is a brief outline 501(r):
Background on Section 501(r)
The Affordable Care Act (ACA) added IRC Section 501(r), imposing significant new requirements on nonprofit hospitals. Grassley was a driving force behind Section 501(r)'s inclusion in the ACA. At a summary level, this section requires charitable hospitals to:conduct a Community Health Needs Assessment (CHNA) every three years and adopt an implementation strategy to meet the needs identified establish a written Financial Assistance Policy (FAP) and a policy relating to emergency medical care limit the amounts that it can charge individuals eligible for financial assistance under the FAP limit the way that it collects outstanding charges prior to making a reasonable effort to determine whether an individual is eligible for financial assistance under the FAPSection 501(r) provides that a hospital will not be treated as a tax-exempt organization as described in Section 501(c)(3) if it fails to meet these new requirements. In addition, a nonprofit hospital that fails to meet requirements around conducting a CHNA must pay an excise tax of $50,000.
Anyway, full text of the letter can be found here.
Darryll K. Jones and Easter Floyd-Clarke