On December 29, 2014, the IRS issued a final regulation clarifying rules established under the Affordable Care Act (ACA), which govern the debt collection practices of charitable hospitals. The final regulation further simplifies the compliance process outlined in the IRS’s 2012 proposed guidance.
In a blog post, Emily McMahon, Deputy Assistant Secretary for Tax Policy at the U.S. Treasury, summarized charitable hospitals’ responsibilities under the ACA. Charitable hospitals:
  • May not charge patients eligible for financial assistance more for emergency or medically necessary care than the amounts billed to individuals with insurance.
  • Must establish and publicize policies regarding financial assistance.
  • May not engage in extraordinary collection actions, including reporting debt to credit agencies, assigning or selling debt to a collections firms, or garnishing wages until they have made reasonable efforts to determine whether the patient is eligible for financial assistance.
  • Must conduct and publicize a community health needs assessment at least once every three years, and must disclose its efforts to meet those needs on its annual tax filing.
The final rules uphold these responsibilities, while also streamlining the compliance process for providers. Charitable hospitals:
  • Must translate information on financial assistance into any language spoken by at least 1000 people in or 5 percent of the community served, which ever is less. (The earlier guidance specified 10 percent)
  • Must include general notifications about the hospital’s financial assistance policies on medical bills and in the hospital, but individual written and oral communications about such policies are now only required when the hospital plans to use extraordinary collections actions.
Charitable hospitals are required to make a good-faith effort to comply with the new regulations immediately, however they do not go into effect until the taxable year beginning December 29, 2015.