§ 7.2 – Limitations on Providers under the ACA
The ACA does, however, provide important patient protections by way of changes governing the favorable tax treatment given to hospitals registered as “nonprofit § 501(c)(3) organizations.” See 26 U.S.C. § 501(c). This is important because most hospitals elect to claim “nonprofit status” by filing “Schedule H, Form 990” with the Internal Revenue Service (“IRS”). These filings can be freely found on many websites.
In particular, the ACA added 26 U.S.C. § 501(r) imposing “additional requirements” for hospitals claiming § 501(c)(3) status. On December 31, 2014, the IRS’s Department of Treasury promulgated final regulations relating to
§ 501(r). 26 C.F.R. §§ 1.501(r)-1 to 1.501(r)-7.
In relevant part, to maintain nonprofit § 501(c)(3) status a hospital is required to (1) establish a financial assistance policy, (2) limit amounts charged for emergency or other care to individuals eligible for assistance under the financial assistance policy, and (3) make reasonable efforts to determine whether an individual is eligible for assistance under the financial assistance before engaging in “extraordinary collection actions” against the individual.
a. Financial Assistance Policy (“FAP”)
Every § 501(c)(3) hospital must develop a FAP that is “widely publicized” and, among other things, available on the hospital’s website. 26 C.F.R.
§ 1.501 (r)-4(b)(5). In addition, hospitals must provide a “plain language summary” of the FAP notifying patients the hospital offers financial assistance. The plain language summary must provide in “clear, concise, and easy to understand” language: (1) a brief description of the eligibility requirements and assistance offered under the FAP; (2) a brief summary of how to apply for assistance under the FAP; (3) the direct website address and physical locations where the patient can obtain copies of the FAP and any application form; (4) instructions on how the individual can obtain a free copy of the FAP and any application form by mail; and (5) contact information, including telephone number and physical location, of the hospital facility office or department that can provide information about the FAP and obtaining assistance with the application. 26 C.F.R. § 1.501(r)-1(b)(4).
b. Limits on Amounts Charged
Every § 501(c)(3) hospital must not bill FAP-eligible patients more than the “amounts generally billed” (“AGB”) other individuals. The AGB is determined with respect to the amounts billed to private health insurance, Medicare, and Medicaid. See 26 C.F.R. § 1.501 (r)-5.
c. Extraordinary Collection Actions (“ECAs”)
The Department of Treasury’s regulations...
