The Internal Revenue Service issued final rules regarding billing and collections practices for not-for-profit hospitals over the holiday, 79 Fed. Reg. 78954 (Dec. 31, 2014). This Notice finalizes requirements that were proposed in 2012 as part of the Affordable Care Act.

These rules will require non-profit hospitals to have a number of policies and procedures in place regarding financial assistance and collection efforts. For example, the rules require that non-profit hospitals must describe the reasonable efforts that they will undertake to identify consumers that may be eligible for financial assistance, and restrict debt collection activities.

Specifically, the rules:

  • Require non-profit hospitals to establish and publicize a policy that clearly states its financial assistance eligibility criteria; and
  • Prohibit non-profit hospitals from engaging in “extraordinary collection practices” (ECAs) until the hospital has made an effort to determine whether a patient is eligible for financial assistance.
  • Extraordinary collection practices are “actions that require a legal or judicial process,” which includes attempting to collect a debt or reporting a debt to a credit bureau.

Given these changes and policies, we suggest that non-profit hospitals work with AGG or other outside counsel to review current policies and procedures, particularly those related to debt collection, to ensure that the hospital is or will be in compliance with these requirements. The consequences of failing to adhere to these rules are severe, and may including losing non-profit status.