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IRS Holds Public Hearing on Additional Requirements for Charitable Hospitals

December 7, 2012—The Internal Revenue Service (IRS) Dec. 5 held a public hearing on the “Additional Requirements for Charitable Hospitals” imposed by proposed regulations required under the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) [see Washington Highlights, June 29].

Under the regulations, tax-exempt hospitals must implement a financial assistance policy (FAP) and an emergency medical care policy; limit amounts charged for those who qualify for financial assistance; and  refrain from extreme collection activities (ECA) until numerous requirements are met.  Commentators representing hospitals, including two state hospital associations, expressed concern that the requirements were too prescriptive about how hospitals can determine financial assistance eligibility and collect payment; that in some states with existing, similar requirements, the new regulations will cause a duplication of process and greatly increase the administrative burden; and that the IRS has not yet indicated how it will enforce these requirements. 

Several commentators asked the IRS to clarify how the two 120-day periods—a notice period and an application period – will work.  A further clarification about requirements for multi-hospital systems and the extent to which each hospital can use the same financial assistance policy also was requested.  Speakers representing patients generally expressed their support for the regulations, though they asked that some provisions be strengthened.

The ACA states that failure to comply with the additional requirements would result in a hospital losing its tax exempt designation and a $50,000 penalty. Speakers also mentioned that the IRS also has not issued proposed regulations regarding another ACA requirement, conducting and implementing a community health needs assessment, and asked that the IRS remedy this situation soon.

IRS panelists included Tax Exempt and Government Entities (TE/GE) Deputy Division Counsel and Deputy Associate Chief Counsel Janine Cook; Preston Quesenberry, senior technical reviewer in TE/GE's Exempt Organizations branch; and Judith Kindell, senior technical adviser in Exempt Organizations. From Treasury, the panel included Ruth Marcus, an attorney-adviser in the Office of Tax Policy.


Peters Willson
Sr. Specialist, Policy and Constituency Issues
Telephone: 202-862-6029

Ivy Baer, J.D., M.P.H.
Senior Director and Regulatory Counsel
Telephone: 202-828-0499



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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806