New Rules Target Not-for-Profit Hospitals’ Policies, Practices
Not-for-profit hospitals can no longer use aggressive measures to collect payments from certain low-income patients and must find ways to help them, according to new rules issued last month by the Department of Treasury and IRS, the New York Times reports.
Details of New Rules
The rules, published Dec. 31, 2014, in the Federal Register, clarify certain provisions of the Affordable Care Act. They apply to not-for-profit hospitals that are seeking or currently have tax-exempt status, which accounts for about 60% of U.S. hospitals, according to the Times. To qualify for tax-exempt status, not-for-profit hospitals must demonstrate that they provide "community benefits" and are operated and organized specifically for charitable purposes.
Under the new rules, not-for-profit hospitals must create and make publicly available a written policy about which patients are eligible for financial assistance and how individuals can apply for such assistance.
According to the Times, financial assistance will vary among hospitals and could include:
- Offering no-cost care to patients with incomes below the federal poverty level;
- Offering no-cost care to patients with incomes up to double the federal poverty level; or
- Providing discounted care on a sliding scale for patients with incomes up to three times the federal poverty level.
The new rules also prohibit not-for-profit hospitals from charging patients who are eligible for financial assistance more than "the amounts generally billed" to insured patients. Previously, patients without insurance have been required to pay much higher prices than insured patients for the same medical services, according to the Times. American Hospital Association Senior Vice President Melinda Hatton said, in practice, the new rules would result in such patients not "be[ing] charged much more than the Medicare rate."
In addition, not-for-profit hospitals are now required to assess whether a patient is eligible for financial assistance before:
- Placing a lien on an individual's home;
- Providing a credit agency with negative information about a patient;
- Referring a case to debt collectors; or
- Seeking a court order or filing a lawsuit to seize an individual's earnings.
In general, the rules mandate that not-for-profit hospitals provide patients with at 120 days' notice before taking such "extraordinary collection actions."
Further, not-for-profit hospitals under the rules must evaluate their communities' health needs at least every three years and work to address those needs, with a potential $50,000 tax penalty for noncompliance.
Sen. Chuck Grassley (R-Iowa) said, "[Not-for-profit] hospitals and for-profit hospitals have often been indistinguishable. The rules make clear that tax-exempt hospitals have to earn their tax exemption."
Meanwhile, health care attorneys have said the new rules could influence for-profit hospitals' financial assistance practices and develop an industry standard because they have been endorsed by the Consumer Financial Protection Bureau. The CFPB has "broad authority" to regulate debt collectors and credit reporting companies, according to the Times.
CFPB Director Richard Cordray said "consumers would benefit if for-profit hospitals and all other medical providers adopted the same approach" (Pear, New York Times, 1/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.