On October 8, 2014, the IRS released drafts of the 2014 Form 990, Schedule H and Instructions, proposing significant changes related to a hospital facility's compliance with Section 501(r) of the Internal Revenue Code. These include additions and modifications to the Schedule H questions concerning a hospital facility's financial assistance policy (FAP), Community Health Needs Assessment (CHNA), and billing and collection practices.

Several new CHNA-related questions have been proposed, including a requirement that the hospital facility list other non-hospital organizations with which it collaborated in conducting its CHNA. Additional proposed changes to CHNA-related questions include:

  • Requiring the hospital facility to report certain information relating to its implementation strategy to meet significant community health needs identified through the CHNA, including asking whether the implementation strategy is posted on a website (and, if it is not, asking whether the implementation strategy is attached to the return);
  • Changing the checkbox for CHNA from “Available upon request from the hospital facility” to “Made a paper copy [of CHNA] available for public inspection without charge at the hospital facility”; and
  • Requiring the hospital facility to explain its method for addressing CHNA-identified needs and, if applicable, why identified needs are not being addressed.

Key changes also have been proposed to the FAP-related questions. These include:

  • Removal of “Uninsured discount,” “Medicaid/Medicare,” and “State regulation” as financial assistance eligibility factors to be identified on the Schedule H;
  • Addition of questions regarding use of federal poverty guidelines to determine eligibility for financial assistance, as well as a checkbox for “Underinsurance status”;
  • Several new checkboxes relating to whether the FAP explains the hospital facility’s financial aid application process; and
  • Expansion of the checkboxes of measures used to publicize the FAP. If the hospital facility’s FAP and financial aid application are available online, the URLs must be provided.

Proposed changes to questions relating to a hospital facility’s billing and collection practices include:

  • Explanation that the billing and collection practices questions also apply to “other authorized parties” acting on the hospital facility’s behalf, such as, for example, third-party collection agents;
  • Replacement of the checkboxes for “Lawsuits,” “Liens on residences,” and “Body attachments” with one that reads “Actions that require a legal or judicial process”;
  • Inclusion of a query related to “Selling an individual’s debt to another party”; and
  • Addition of a new checkbox for reporting a lack of effort before engaging in collection activities.

The draft Form 990, Schedule H and related draft instructions refer to proposed regulations for Section 501(r) issued in 2012 and 2013. While hospitals may rely on the proposed regulations, the proposed regulations are not binding until issued in final form. Before finalization of regulations, however, hospitals must satisfy the existing statutory requirements of Section 501(r).

For the draft 2014 Form 990, Schedule H, click here. For the draft Instructions, click here.