IRS to Address Concerns Regarding Hospital Provider Listing
One of the most controversial provisions released in the final regulations relates specifically to the requirement for a hospital facility to include, in its financial assistance policy (“FAP”), a listing of all hospital providers, other than the facility itself, providing emergency or other medically necessary care at the hospital facility and whether or not that provider is covered by the hospital facility’s FAP.
This provision has become a major point of contention between hospitals and the IRS. As a result, the IRS is now considering requests to modify, or perhaps even withdraw, this provision from the final regulations.
Hospital Provider Listing Background
The final regulations provide that a hospital facility’s written FAP must contain six components including, as outlined above, the requirement to include in its FAP a listing of hospital providers, other than the hospital facility, delivering emergency or other medically necessary care in the hospital facility. In addition, hospital facilities are required to specify those providers who are covered by the hospital’s FAP and those who are not.
IRS senior technical reviewer (exempt organizations), Preston Quesenberry, stated that “the provision ended up in the final rules because the IRS received comments that patients sometimes receive separate bills from physicians and other hospital providers who don’t offer financial assistance through the hospital’s financial assistance plan.” Certain commentators wanted to ensure that patients knew which providers in each hospital facility are actually part of the hospital facilities staff and which ones are covered by the hospital’s FAP.
Response from the Community
On May 1, 2015 Janis M. Orlowski, MD, MACP, Chief Health Care Officer of the Association of American Medical Colleges, and Melinda Reid Hatton, Senior Vice President and General Counsel of the American Hospital Association, wrote a joint letter to the IRS in an effort to express their concerns regarding the new provider listing requirement.
They wrote that the new provider listing requirement was unexpected since this provision was not included in any of the proposed regulations, nor was it the subject of any request for comments. They believe that, had this provision been subject to request for comments, then the hospital facilities would have been able to help the IRS understand the significant burden this provision creates.
Additionally, they believe the provider listing is an unreasonable provision due to the fact that providers on this list change regularly. It is common knowledge throughout the industry that physicians regularly move or change aspects of their practice. Keeping this list current and up to date would be a formidable task for the majority of hospital facilities.
Ms. Orlowski and Ms. Hatton concluded their letter by urging the IRS to “move swiftly in withdrawing the current requirement so that the change is made well before the regulations go into effect at the end of 2015”.
Conclusion
On May 6, 2015 Mr. Quesenberry spoke at a luncheon in Washington, D.C. sponsored by the D.C. Bar Taxation Section’s Exempt Organizations Committee. He indicated that the IRS not only understands that the provision has generated great concern and confusion but that the IRS is currently addressing the matter.
The provisions included in the final regulations were created in an effort to increase transparency, however, Mr. Quesenberry noted that the IRS certainly does not want to require something that is not useful to patients, transparency-wise, and also creates a large administrative burden on behalf of the hospitals. While no promises are being made as to the removal of the provision from the final regulations, Mr. Qusenberry did note that the IRS is tracking requests from the American Hospital Association and others to eliminate it. He stated that the IRS “is thinking through the issue and thinking through what makes sense”.
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