Non-Profit Hospital Tax Exemptions Being Questioned

Photograph of a patient struggling with his hospital bills

National Public Radio recently reported the suspected abuses of nonprofit hospitals that sue and garnish the wages of low income, uninsured or underinsured patients.  As a result of these reports, Senator Charles Grassley, R-Iowa and Chairman of the Senate Judiciary Committee says hospitals could be breaking the law.

Last month, Senator Grassley sent a letter of inquiry to a facility in Missouri that was found to have one of the most aggressive payment collection efforts. In his letter, he questions their billing practices and asks for a great deal of information about how many poor people the hospital had sued in an attempt to recover the cost of their care.

This letter is a shot across the bow for this organization and others like it. They risk losing their tax exempt status for not following the letter of the law. It signifies that the Senate Judiciary Committee expects non-profit hospitals to comply, eagerly or not.

Speaking on this, Grassley says, “Well, I think some hospitals, you hit them over the head with a two-by-four and they still don’t get the message.”

Grassley continues by saying he’s “astounded” by the collection practices described in the reports. For more than a decade, he’s worked at making nonprofit hospitals more accountable for the tax breaks they receive.  To justify their tax-exempt status, Grassley says nonprofit hospitals have to “earn” it by “taking care of people who couldn’t provide for their own healthcare.”

Non-profit hospitals receive tax breaks for providing care to patients that are uninsured or underinsured. Most of these are considered charitable organizations because they are to act as a safety net for the nation’s poor.  Recently, the IRS released clarified rules that go into effect January 1, 2016 and will require hospitals to take extra steps to inform patients that they might qualify for financial assistance.

Let’s examine the new guidelines in the context of current ones:

  1. Currently, hospitals are required to offer services to lower income patients at a reduced cost and have a financial assistance policy that states who qualifies for aid (charity care). This requirement came into effect in 2010.
  2. Under the new rules, all non-profit hospitals will be required to post their financial assistance policies on their websites by January 1, 2016.
  3. Under the new rules, hospitals must aggressively identify patients who would qualify under the facility’s financial aid policy rather than relying on patients to self-identify and request assistance. This too must be implemented by January 1, 2016.

Grassley reiterates this point: the Patient Protection and Affordable Care Act requires hospitals to take the initiative and determine whether patients qualify for financial aid. The hospital is not supposed to shift onto patients the burden of proving need. But in the Missouri hospital’s case, Grassley said, “It seems to me they have not taken the initiative and they have not abided by the law.”

According to Senator Grassley, the healthcare law may need to be strengthened in order to force nonprofit hospitals to offer financial assistance to poor patients. “If they don’t get the message now, we’ll have to work towards getting the ideal language in the legislation.”

As healthcare marketers responsible for your organizations website, it will be important for you to be involved in seeing that your organization’s financial assistance policies are available on your website. And doing this may mean you need to touch content, adjust your site information architecture (IA) or make other changes to ensure you’re meeting the letter of the law and that your financial assistance policies are available, accessible and discoverable on your website.

The cost of non-compliance?  It’s looking increasingly likely that it will mean the loss of your tax exempt status.

If you’re not sure of the best way to meet these demands with your website, contact us. We’re here to help.

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This entry was posted in Admin Feed, Geo.com Homepage Panel, Health Reform, Industry Trends by Tedd Kipper. Bookmark the permalink.

About Tedd Kipper

To call Tedd experienced in the healthcare industry is an understatement. With former roles that include COO at a community hospital and director of business services for a physician group, he brings unique insight to his role as client strategist. He understands the unique challenges and opportunities that face healthcare marketers today and uses his insider knowledge to help Geonetric’s clients tie organizational goals to digital tactics in meaningful ways. Tedd holds a bachelor’s degree in business administration from Loras College. When he’s not helping clients prove the value of their Web investments, Tedd’s an active community leader and is involved in numerous civic organizations

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