Washington, D.C., partner T.J. Sullivan was quoted in BNA’s Health Care Daily Report on the topic of community benefit reviews of tax-exempt hospitals mandated by the Affordable Care Act.
Under the health care reform law, the Internal Revenue Service (IRS) is required to review the community benefit provided by the hospitals at least once every three years. The IRS has identified 3,377 tax exempt hospitals from its own systems, as well as a Medicare/Medicaid website, whose community benefit activities will be reviewed to determine if they are meeting the requirements for tax exemption.
Some practitioners have used the term “stealth reviews,” as hospitals will not be notified that they are being reviewed and will not know when the reviews begin or end.
Five factors are listed under the IRS's 1969 community benefit standard as a way for hospitals to measure how well they are serving their communities. Among them is a board made up of a broad base of community members, an accessible medical staff, and a full-time emergency room open to all, regardless of ability to pay.
Failure to comply with the new requirements can lead to enhanced penalties or loss of tax exemption.
T.J., a partner in the Health Law Practice Group, said the real risk is not for each reviewed facility, but for the nonprofit hospital sector as a whole, because of the required reports and identification of trends that IRS must provide to Congress based on the new law's reviews.
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