The Patient Protection and Affordable Care Act (“ACA”) added requirements that a nonprofit hospital must meet in order to maintain its § 501(c)(3) tax-exempt status under the Internal Revenue Code. Under these provisions, a nonprofit hospital must:
- conduct a community health needs assessment at least once every three taxable years and adopt an implementation strategy to meet the needs identified in the assessment;
- establish a financial assistance policy (FAP) and emergency care policy;
- bill patients eligible for the FAP at no more than the amount generally billed to patients with insurance, and not use gross charges; and
- make reasonable efforts to determine whether the patient is eligible for the FAP before undertaking extraordinary collection actions, such as making a negative report to a credit bureau.
On December 29, 2014, the IRS issued final regulations regarding these provisions. Most of the final regulations apply to a hospital’s taxable years beginning after December 29, 2015; some provisions take effect before then.
For a summary of the statutory requirements and an overview of significant features of the final regulations, see the full report.