WASHINGTON — Officials at two nonprofit hospitals have warned the Internal Revenue Service that new requirements imposed on bond-financed and 501(c)(3) hospitals by this year’s health care insurance overhaul would be burdensome and costly.
Jill Wehner, the vice president of fiscal services for Harbor Beach Community Hospital in Michigan, and Steven Finkel, the senior vice president of finance, chief financial officer, and treasurer at the Reading Hospital and Medical Center in Pennsylvania, each sent letters to the IRS raising concerns about a new federal law’s requirements for nonprofit health care facilities.
The law is the Patient Protection and Affordable Care Act, enacted in March. It requires a nonprofit hospital to conduct a community health needs assessment every three years with broad input from the community and to report the findings on its Form 990, the annual information return that charitable organizations submit to the IRS. Hospitals face a $50,000 excise tax if they fail to meet the requirement.
The law also requires a nonprofit hospital to adopt a written financial assistance policy that is widely publicized. In addition, it prevents the hospital from charging more for emergency or medically necessary care that is provided to an individual eligible for financial assistance than to an individual with insurance. Finally, the law blocks nonprofit hospitals from pursuing “extraordinary collection actions” against individuals before a reasonable effort has been made to determine whether they qualify for financial assistance.
Finkel highlighted the assessment requirement as costly and “particularly burdensome.”
“These types of exercises can cost $100,000 or more if outside consultants are utilized and the results could barely be acted upon … before another assessment would be due,” he wrote.
Instead, he suggested that the assessments only be required every five years, and hospitals in the same area should have the option to perform a single collective assessment. However, given that the three-year requirement is specified in the statute, it is unlikely the IRS would be able to modify it administratively.
In her letter, Wehner asked for clarification on the limitations as to how much hospitals can charge patients eligible for financial assistance. She said hospitals are already required to have a system that is consistently applied to all patients and the law is requiring an additional discount for patients on financial assistance. This requirement “adds unnecessary complexity and administrative burden,” she wrote.
Wehner also requested clarification on a stipulation that the amount a hospital can bill a patient eligible for financial assistance be based on either “the best, or an average of the three best, negotiated commercial rates, or Medicare rates.” She wondered if lawmakers meant the highest discount on charges when they wrote “best.”
The IRS is expected to continue accepting comments on these requirements until July 22.