Complying with the IRS 501r Requirements: Will Your Hospital Be Ready When the Tax Collectors Contact Your Organization?

Transcription

1 Cmplying with the IRS 501r Requirements: Will Yur Hspital Be Ready When the Tax Cllectrs Cntact Yur Organizatin? Mnday, December 19, 2016 Nn 1:00 Pacific / 1:00 2:00 Muntain / 2:00 3:00 Central / 3:00-4:00 PM Eastern Presented by Prestn Quesenberry, Leb & Leb LLP

2 Prestn Quesenberry Prestn Quesenberry advises clients thrughut the nnprfit sectr n a wide variety f legal and strategic issues, including qualificatin fr tax-exempt status, unrelated business incme tax (UBIT), charitable cntributins, dmestic and internatinal grant-making, jint ventures, lbbying and plitical activities and executive cmpensatin. He has a particular depth f experience advising charitable hspitals and ther tax-exempt rganizatins n regulatry issues related t the Patient Prtectin and Affrdable Care Act. A frmer senir attrney in the Tax Exempt and Gvernment Entities Divisin f the IRS Office f Chief Cunsel, Mr. Quesenberry drafted many f the Treasury regulatins and ther published guidance that play a critical rle in his clients business structures and peratins. Fr example, during his tenure at the IRS, he was extensively invlved in several guidance prjects relating t the Affrdable Care Act, such as regulatins under 501(r) and guidance n affrdable care rganizatins. He als helped draft regulatins regarding supprting rganizatins and prgram-related investments. The checklists included in this presentatin have been prepared by Mr. Quesenberry t help hspitals with their sectin 501(r) cmpliance wrk. Any questins cncerning these cmpliance requirements, please cntact Mr. Quesenberry directly. In additin, Mr. Quesenberry supprted the Department f Justice and field attrneys with litigatin and supervised attrneys in issuing private letter rulings and determinatin letters n exempt rganizatin issues, including matters related t UBIT, private fundatin excise taxes, plitical activities, and qualificatin fr tax-exemptin under a wide-variety f Cde sectins. Of Cunsel 901 New Yrk Avenue NW Suite 300 East Washingtn, DC quesenberry@leb.cm Practice Areas: Nnprfits and Tax-Exempt Organizatins Tax Tax Cntrversy and Litigatin Healthcare Educatin: Yale Law Schl, J.D., 2003 Editr, Yale Law Jurnal, Editr, Yale Jurnal n Regulatin Emry University, M.A., 1996 Duke University, B.A., 1992, magna cum laude, Phi Beta Kappa Admissins: District f Clumbia Clerkships: U.S. Curt f Appeals, Furth Circuit 2

3 Overview When the IRS Cmes Kncking Sectin 501(r)(4) Cmpliance Sectin 501(r)(5) Cmpliance Sectin 501(r)(6) Cmpliance Sectin 501(r)(3) Cmpliance 3

4 When the IRS Cmes Kncking. Audits fr 501(r) cmpliance are underway EO (exempt rganizatins) wrk plan: As f 6/30/16, 692 reviews, 166 exam referrals By 10/25/16, EO was reprting 300 exam referrals Reviews will cntinue in

5 Cmpliance with Statute r Regulatins? 501(r) is effective tax years beginning after 3/23/10 3/23/12 fr 501(r)(3) Final 501(r) regulatins are effective tax years beginning in 2016 IRS reviews reprtedly cvering the perid D questins n IDRs (Infrmatin Dcument Requests) implicate regulatins? Recmmendatin: Check cmpliance with regulatins ging back t

6 Cmpliance Checks: What if Errrs Are Discvered? Errr ccurring r cntinuing int 2016: Begin crrecting errr asap Hspital must be in prcess f crrecting upn IRS cntact if it wants errr t be excused pursuant t Rev. Prc If Frm 990 fr year in which errr is discvered cmes due and errr is mre than minr, disclse failure and crrectin in Part VI f Sch H If errr ccurred in tax years beginning befre 2016 and did nt recur r cntinue in 2016 tax year, yu have tw ptins: Crrect (and, if mre than minr, disclse) as described abve; r Argue that hspital cmplied with the statute 6

7 Sectin 501(r)(4) Cmpliance D plicies cntain everything they re suppsed t? FAP (financial assistance plicy)(and assciated dcuments) Billing and cllectin plicy Emergency medical care plicy Were plicies widely publicized? Were plicies prperly adpted and implemented? 7

8 Were Plicies Widely Publicized? IDRs (infrmatin dcument request) Website Psting and Translatins Translatin Methdlgy Ntifying Patients f the Hspital Remaining Widely Publicizing Requirements 8

9 Were Plicies Widely Publicized? Mst f the 501(r)(4) IDRs appear t be related t widely publicizing Sample IDRs: IDR #1: Were all f the FAP dcuments available n a website during the year? IDR #2: Prvide a cpy f any translated FAP dcuments IDR #3: Describe the methdlgy used t ensure that LEP (limited English prficient) ppulatins served by the hspital have access t the translated dcuments 9

10 Website Psting and Translatin The fllwing dcuments need t be available n a website and translated: FAP Plain language summary (PLS) FAP applicatin AGB (amunts generally billed-t individuals with insurance) percentages (if separate) Billing and cllectin plicy (if separate) List f prviders (if separate)? (See Ntice ) The abve als need t be available upn request as paper cpies by mail and in public lcatins in hspital 10

11 Translatin Methdlgy Prir t 2016, are translatins required at all? Prir t 2016, hspitals clearly may use threshld f 10% f cmmunity served Fr 2016: the lesser f 1,000 individuals r 5% f the cmmunity served by the hspital r f the ppulatin likely t be affected r encuntered by the hspital Quted language frm HHS s Guidance n Title VI Prhibitin n Discriminatin Against LEP Ppulatins. Different and narrwer cncept than cmmunity served by the hspital facility 11

12 Ntifying Patients f the Hspital IDR #4: Make arrangements fr an nsite tur f all signage and publicatins n FAP in hspital Public display r ther means f attracting patient s attentin Has t be in emergency rm and admissin areas Has t say hw and where t btain mre infrmatin abut the FAP and FAP applicatin prcess and t btain FAP dcuments IDR #5: Prvide a cpy f a representative billing statement Telephne # f relevant hspital ffice r department Website address where cpies f FAP dcuments may be btained. 12

13 Remaining Widely Publicizing Requirements Must ffer a paper cpy f the PLS t patients as part f the intake r discharge prcess Ntifying brader cmmunity Can target effrts n thse cmmunity members wh are mst likely t require financial assistance frm the hspital facility Evidence? 13

14 Were Plicies Prperly Adpted and Implemented? Establishing a FAP (r ther plicy) requires bth adptin by an authrized bdy and cnsistently carrying ut the plicy IDR #6. Prvide a list f all f the cmmittees f the Bard f Directrs/Trustees and cpy f the minutes f the meetings held by the Bard f Directrs Authrized bdy can be full bard, authrized cmmittee, r authrized individual Evidence f apprval and (w/ cmmittee r individual) evidence f authrity IDR #7. Prvide cpies f any cmplaints, including legal cmplaints, in which a patient alleged that a hspital failed t cmply with its FAP r 501(r)(4). If yu have received cmplaints, dcument hw they were reslved 14

15 Sectin 501(r)(5) Cmpliance Nt listed in EO wrk plan as area being reviewed Questin 1: D the 501(r)(5) requirements nly apply t FAPeligible individuals? Answer: Yes, but FAP-eligible is defined withut regard t whether an individual has applied If individual hasn t applied, hspital wn t always knw that s/he is nt FAP-eligible If hspital desn t knw, shuld fllw safe harbr in 501(r)-5(d): If later determined t be FAP-eligible refund Dn t request r charge mre than AGB as a pre-cnditin fr prviding medically necessary care 15

16 Sectin 501(r)(5) Cmpliance (cnt) Questin 2: Can AGB calculatin be based n when care was prvided as ppsed t when it was allwed by health insurer? Fr years prir t 2016, yes Fr future years: Request IRB guidance? What dllar amunt wuld be used fr care prvided at the very end f the 12-mnth measurement perid? Des 120-day phase-in perid permit actual amunt allwed t be used fr care prvided during 12-mnths? 16

17 Sectin 501(r)(6) Cmpliance Listed in EO Wrk Plan as area f review Only aware f ne related IDR If n ECAs (extrardinary cllectin actins) reasnable effrts requirements d nt apply Presumptive FAP-eligibility determinatins Ntificatin and prcessing applicatins Special ntice when ECA = deferring r denying care 17

18 Presumptive FAP-eligibility Determinatins Must describe in FAP If presumptively granted free care (r mst generus discunt), reasnable effrts have been made If less than mst generus discunt and want ability t engage in ECAs t cllect discunted amunt, then must Ntify hw t apply fr mre generus assistance Give a reasnable perid f time t apply gt mre generus assistance 18

19 Ntificatin and Prcessing Applicatins Wait 120 days after first pst-discharge bill befre engaging in ECAs At least 30 days befre ECAs are initiated-- Prvide a written ntice abut ECAs (30-day ECA ntice), plus PLS Attempt t call r rally ntify Prcess any applicatins received 240 days after the first pstdischarge bill. Will be >240 days if-- N 30-day ECA ntice sent as f day 210 (and/r deadline stated in ntice is later) Incmplete applicatin was submitted tward the end f the applicatin perid 19

20 Details n Prcessing Cmplete Applicatins Suspend ECAs Ntify in writing f eligibility determinatin and basis If eligible, then Reverse ECAs If ther than free care, crrected billing statements that shws hw amunt was determined and AGB fr care Refund verpayment 20

21 Prcessing when ECA is denying care Instead f 30-day ECA ntice, prvide FAP applicatin and ntice stating deadline fr submitting FAP applicatin Prcess applicatins received befre deadline n an expedited basis 21

22 Sectin 501(r)(3) Cmpliance: IDRs 1. Prvide a cpy f hspital facility's CHNA (cmmunity health needs assessment) cnducted during the tax year r in either f the tw immediately preceding tax years 2. Prvide the dates that each CHNA was adpted by an authrized bdy f the hspital facility and evidence f each CHNA's adptin (i.e., cpies f bard meeting minutes r reslutins, etc.) 3. Prvide a cpy f the written implementatin strategy (IS) that yur facility adpted with respect t CHNA 4. Prvide the dates that each IS was adpted by an authrized bdy f the hspital facility and evidence f each IS's adptin (i.e., cpies f bard meeting minutes r reslutins, etc.) 5. Identify a persn frm yur facility wh has knwledge f actins taken t slicit public input frm persns wh represent the brad interest f yur cmmunity and wh was respnsible fr the cntent the CHNA and the IS 22

23 Questins

24 CHECK LIST APPENDIX 24

25 Checklist #1 25

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27 Checklist #1 27

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35 Checklist #1 35

36 Checklist #2 36

37 Checklist #2 37

38 Checklist #2 38

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40 Checklist #2 40

41 T Cmplete the Prgram Evaluatin The URL belw will take yu t HFMA n-line evaluatin frm. Yu will need t enter yur member I.D. # (can be fund in yur cnfirmatin when yu registered) Enter this Meeting Cde: 16AT71 URL: Yur cmments are very imprtant and enables us t bring yu the highest quality prgrams!