Late last week, the IRS issued Notice 2015-46, clarifying the requirement in Regs. Sec. 1.501(r)-4(b)(1)(iii)(F) that a charitable hospital organization include a provider list in its financial assistance policy (FAP).
Sec. 501(r)(4), imposes on charitable hospital organizations the duty to develop a financial assistance policy (FAP) and provide that FAP to patients. Final regulations issued in 2014 (T.D. 9708) require a separate FAP for each hospital facility in the organization to include a list of providers, other than the hospital facility itself, delivering emergency or other medically necessary care in the hospital facility and specify which providers are covered by the hospital facility’s FAP and which are not (“provider list”) (Regs. Sec. 1.501(r)-4(b)(1)(iii)(F)).
Under the notice, an FAP’s list of providers, other than the hospital facility itself, must specify which providers providing emergency or other medically necessary care in the hospital are covered by its FAP and which are not. A hospital may list the names of individual doctors, practice groups, or any other entities that are providing care in the hospital using the name in the contract with the hospital or on patients’ bills. Alternatively, a hospital may specify providers by referring to a department or a type of service if that makes clear which services and providers are covered. Similarly, if no providers in a department are covered by the FAP, the provider list may include the department and indicate that none of the services are covered.
If a provider is covered by a hospital facility’s FAP in some circumstances but not others, the hospital facility must describe the circumstances in which the care will and will not be covered.
A hospital’s provider list must indicate whether the services of a particular provider are or are not covered by the FAP, but need not indicate whether that provider’s services are (or may be) covered by another entity’s financial aid policy or program.
The list of providers may be separate from the FAP, such as in an appendix, provided that it includes the date on which it was created or last updated. If a hospital facility maintains its provider list in a separate document, the FAP must state that the list is separate and explain how the public can easily obtain it free of charge, both online and on paper.
A hospital organization has established an FAP for a hospital facility only if an authorized body of the hospital facility has adopted the policy for the hospital facility and the hospital facility has implemented the policy. If a hospital updates the provider list in an FAP and makes no other changes to it, the hospital’s authorized body does not need to adopt the FAP again.
If they are promptly corrected, minor omissions and errors that are either inadvertent or due to reasonable cause are not considered failures to comply with Sec. 501(r). Under the notice, omissions or errors, including a failure to include a provider in a list or identify a service the FAP covers, will be considered minor and either inadvertent or due to reasonable cause if the hospital takes reasonable steps to ensure that its list is accurate. A hospital that, at least quarterly, updates its list of providers as described in the notice will be considered to have taken reasonable steps to ensure that its list is accurate.
These new rules apply to tax years beginning after Dec. 29, 2015.
—Sally P. Schreiber ( sschreiber@aicpa.org ) is a JofA senior editor.
