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Is Your Charitable Hospital In Compliance With Irc §501(r)?

Even though there have been several attempts this year to repeal the Patient Protection and Affordable Care Act (the “ACA”), the efforts have not been successful. Additionally, the attempted repeal and replace approaches this year have left most of the ACA intact; meaning even if the bills were passed, those requirements initially enacted in Section 9007 of the ACA, also known as IRC §501(r), would continue to be mandatory requirements for charitable hospitals.

The final regulations for IRC §501(r) were issued in December 2014 and are effective for tax years beginning after December 2015. Hospitals with year-ends beginning in January 2016 are subject to all the mandatory requirements including the rules on community health needs assessments, financial assistance, limitation on charges, and billing and collection activities.

How do you make sure your charitable hospital is in compliance? Here is a quick checklist of items required under IRC §501(r) to complete a mini-compliance assessment.

Community Health Needs Assessment

  • Conducted an assessment every three years
  • Approved assessment by Governing Body
  • Posted current and subsequent assessment to the Hospital’s website
  • Created and approved an implementation strategy
  • Attached the implementation strategy to the Hospital’s Form 990

Financial Assistance Policy

  • Approved Financial Assistance Policy (FAP) by Governing Body
  • Approved Emergency Medical Care policy by Governing Body
  • Posted Policy, Application, and Plain Language Summary (PLS) to the Hospital’s website
  • Translated the policy, Application, and PLS, if required
  • Offered PLS at intake or discharge
  • Made visitors to the hospital aware of the Hospital’s Financial Assistance Policy
  • Policy includes explanation of eligibility criteria
  • Policy includes explanation of calculating amounts charged to patients
  • Policy includes how to apply for financial assistance
  • Policy includes explanation for failure to pay (or has a separate billing and collection policy)
  • Policy has or references a list of providers covered and not covered under the Hospital’s FAP

Limitation on Charges

  • Used one of the two approved calculation methods (Look-back or Prospective)
  • Hospital is charging FAP-eligible individuals less than gross charges

Billing and Collection Procedures

  • Approved billing and collection policy by Governing Body
  • Have legally binding written agreement with third party collection agency?
  • Use presumptive FAP-eligibility determination or reasonable efforts to determine FAP-eligibility?

 

Blue & Co. provides assistance with IRC §501(r) compliance reviews. If you have questions or need assistance with any of the items listed above, please contact us.

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