The Internal Revenue Service (IRS) is ratcheting up surveillance of non-profit hospitals regarding their levels of community benefits and patient financial assistance.
The IRS reviewed 692 hospitals in fiscal 2016, which ended late last month, Bloomberg BNA has reported. Of those, 166 were referred for a closer “field examination.” The increased scrutiny is specific to 501(r) requirements under the Affordable Care Act, which mandate that hospitals formulate clear written financial assistance policies for patients and make reasonable efforts to determine if patients are eligible for assistance prior to taking any collection actions. The IRS is supposed to review each hospital every three years.
The U.S. Treasury Department issued regulations as to how the rules are to be enforced in 2014. Penalties for non-compliance include being subject to an excise tax or even losing a tax exemption entirely.