IRS Rules Against Tax Exemption for ACO Serving Commercial Enrollees

The Internal Revenue Service (IRS) has denied a request for tax exempt status from an undisclosed accountable care organization (ACO) that serves individuals enrolled in commercial plans. The IRS concluded that the organization “did not meet the test for tax-exempt status because it was not operated exclusively for charitable purposes and it provided benefits to some doctors in its network.” ACOs that participate in Medicare, however, can be tax-exempt because they advance the “charitable purpose of lessening the burdens of government.” Implications of the ruling for ACOs and for hospitals that participate in ACOs with tax-exempt status is unclear.

Massachusetts: New Law Strikes Compromise on Hospital Payment

Governor Charlie Baker (R) signed a bill creating a $45 million, five year fund to ensure that hospitals that charge lower prices to insurers receive more money, reports MassLive.com. The bill also creates the Special Commission to Review Variation in Prices among Providers, which will make longer-term policy recommendations by March 2017. 1199SEIU, a union representing health care workers in Massachusetts, had been pushing for a bill or a ballot measure that would have limited disparities in the amount commercial insurers can pay different hospitals for the same procedure. Union leaders have indicated they will withdraw the ballot measure.

Texas: Uninsured Rates Decrease Since ACA Implementation

The uninsured rate among Texans ages 18-64 has dropped by nearly 30% since the implementation of the Affordable Care Act, lowering the State’s uninsured rate below 1999 levels, according to a report by Rice University’s Baker Institute for Public Policy and the Episcopal Health Foundation. Each of the ten demographic sub-groups studied experienced substantial uninsurance rate decreases, ranging from 15% to 51%. Texans ages 50-64 and Texans with incomes between 139% and 399% of the FPL experienced the most significant drops in uninsured rates, 51% and 42% respectively. Additionally, the largest percentage point decreases were experienced by Hispanics (11.9 percentage points) and Texans ages 50-64 (10.8 percentage points). The authors note that the lowest income Texans, whose uninsurance rate remains high at 46%, would be covered through Medicaid expansion, but Texas has opted not to expand. The authors analyzed data from the Health Reform Monitoring Survey, a quarterly survey of adults ages 18-64 launched in 2013.