Reimbursement Advisory: (PPACA) Community Benefit Reporting (Includes PPT)

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This material is only applicable to 501(c) hospitals including Critical Access Hospitals (CAHs). Government hospitals are not required to file an IRS Form 990. However, we encourage governmental hospitals to also review the material and consider adopting Community Benefit Reporting standards and now requirements applicable to 501(c) hospitals.

Attached below is a presentation that summarizes 501(c) hospital reporting requirements related to not-for-profit hospitals’ Community Benefits and uncompensated care costs on the IRS 990 Tax Return, Schedule H. In addition, the Patient Protection and Affordable Care Act of 2010 (PPAC) (Health Care Reform Legislation singed into law on Tuesday) has specific new IRS reporting and policies and procedures that 501(c) hospitals must now follow in order to maintain their tax exempt status with the IRS. The new requirements include a $50,000 excise tax IF a hospital does not comply with the new requirements. These changes have also been incorporated into the presentation. It is critical that 501(c) hospitals review current processes and adopt the new requirements as soon as possible.

Major New Requirements under PPAC

1. Hospitals must conduct a Community Needs Assessment once every three years and adopt an implementation plan. The Community Needs Assessment must incorporate input from various community leaders and health professionals in the community. When completed, the Community Needs Assessment must be publicized and made available to the community.
2. Financial Assistance Programs Policies must be widely publicized to the community.
3. Medically Necessary Care must be provided to uninsured patients. It appears that this particular requirement is a back door extension of existing Emergency Medical Treatment and Active Labor Act (EMTALA) requirements.
4. Reasonable efforts must be put forth to enroll uninsured patients into the hospital’s Financial Assistance Program before taking extraordinary collection actions. The IRS will define this in greater detail but would imagine that extraordinary collection practices would encompass placing liens on patients’ homes, civil suit, etc.
5. Limitation on Hospital Charges to uninsured patients: hospitals will only be allowed to collect from uninsured patients the lowest amount collected from insured patients’ carriers. It is unclear in the law whether this means Private Insurers, Medicare, and Medicaid. Additionally, whether collected amounts are before or after application of discounts.

For Example
Uninsured patient bill for an emergency room visit is $100.00 and such patient qualifies for a 60% discount under the hospital’s Financial Assistance Program. Lowest payment received for like services provided to a Blue Cross patient is $50.00. It is unclear whether the 60% discount applies to a billed charge, $100.00, or the $50.00 payment amount.

6. Above are all effective on the enactment date of PPAC, March 23, 2010, with the exception of the Community Needs Assessment. The Community Needs Assessment is effective in two years, which basically means, the Community Needs Assessment must be conducted within the next three years.

As noted, the IRS will be issuing, hopefully very soon, implementing regulations and revisions to the Form 990.