October 23, 2019 Senator Grassley asks UVA Medical Center whether its obligations as a 501(c)(3) entity are being met Senate Finance Committee Chairman Chuck Grassley (R-Iowa) wrote the University of Virginia Health System (UVAHS) on October 17, 2019, to follow up on a news report from Kaiser Health News that discussed potential issues around UVAHS' legal obligations as an IRC Section 501(c)(3) tax-exempt hospital. This inquiry follows Sen. Grassley's February 2019 announcement that he was renewing his probe of tax-exempt hospitals (see Tax Alert 2019-0460). Background In June 2016, Sen. Grassley announced that he had asked the IRS for detailed information on the agency's oversight of tax-exempt hospitals' compliance with IRC Section 501(r), citing two instances of tax-exempt hospitals that had recently changed their collection practices and financial assistance policies following media scrutiny (see Tax Alert 2016-1049). IRC Section 501(r), added to the Code under the Affordable Care Act, requires each tax-exempt hospital to (1) complete a community health needs assessment (CHNA) and implementation strategy every three years; (2) establish a written financial assistance policy (FAP) and emergency medical care policy that meets certain requirements; (3) limit amounts charged for emergency or other medically necessary care provided to individuals eligible for assistance under the organization's FAP to no more than the amounts generally billed to insured individuals; and (4) make reasonable efforts to determine whether an individual is FAP-eligible before engaging in extraordinary collection actions against that individual. The IRS published final regulations (TD 9708) in January 2015, providing tax-exempt hospitals with guidance on conforming to the IRC Section 501(r) requirements (see Tax Alert 2015-0029). October 17 letter The October 17 letter asks for details regarding certain facts alleged in the Kaiser Health News article, including (1) clarification on various UVAHS policies dealing with charity care, debt collection practices, and financial assistance offerings; (2) copies of some of these policies; and (3) details regarding billing practices and the pricing of services to insured versus uninsured patients. Specifically, Sen. Grassley requested information on UVAHS' policies on using the judicial process to obtain outstanding balances as well as its efforts to inform patients that financial assistance is available. Sen. Grassley has asked UVAHS to respond to each question by Tuesday, November 19, 2019. Implications This most recent request for information from Senator Grassley should serve as a timely reminder for all tax-exempt hospitals to review their debt-collection policies, financial assistance programs, and overall billing practices, especially as they concern healthcare services provided to low-income individuals. Tax-exempt hospitals should also review and be prepared to articulate the benefits they provide to their community, particularly as they relate to any needs or deficiencies identified in the most recently conducted CHNA. Please contact your EY professional for further information. ———————————————
| |||||||||
| |||||||||
