As part of the Patient Protection and Affordable Care Act (PPACA) enacted on March 23, 2010, four new requirements have been imposed on non-profit hospitals.
Under new section 501(r) of the Internal Revenue Code, in order to maintain its tax-exempt status, a hospital will now need to conduct a community health needs assessment once in every three-year period, implement a financial assistance policy, place certain limitations on charges, and abide by certain billing and collection requirements. These new requirements apply to any organization that operates at least one facility required by a state to be licensed, registered or similarly recognized as a hospital, and any other organization the IRS determines has the provision of hospital care as the principal function or purpose for which it obtained tax-exempt status. For any tax-exempt organization that owns and operates more than one hospital facility, each facility must separately meet the new requirements, which generally became effective for taxable years beginning after March 23, 2010. The community health needs assessment must be completed for taxable years beginning after March 23, 2012 or a tax of $50,000 will be imposed on a hospital for each taxable year that it fails to conduct such assessment.
At this time no formal regulatory guidance has been issued on how to meet the requirements of Code section 501(r) and many questions remain concerning practical implementation by hospitals. Guidance on this Code section is part of the IRS 2011 work plan, and IRS officials have commented that efforts are under way to address the complex issues presented by these requirements.