1. plantemoran.com JANUARY 27, 2015 501 (r) Final Regulations

2. plantemoran.com +Overview +Community Health Needs Assessment (CHNA) and Implementation Plan +Financial Assistance and Emergency Medial Care policies +Billing and Collections +Limitation on Charges +Failure to meet 501r 501 (r) Final Regulations - Agenda 1

3. plantemoran.com Overview 2

4. plantemoran.com On December 29, the IRS issued final regulations regarding compliance with IRC §501(r) for charitable hospitals. +Effective on or after December 29, 2015 +For tax years prior to the effective date, an organization can rely on the proposed regulations issued in 2012 and 2013. Overview 3

5. plantemoran.com Who is required to comply with the 501(r) regulations? +Hospital organizations facilities that are required by a state to be licensed, registered, or similarly recognized as a hospital and operated as a charitable organization under IRC §501(c)(3). +This includes hospital facilities operated through a disregarded entity and those operated through a partnership. Overview 4

6. plantemoran.com IRC §501(r) and related regulations require hospitals (as defined) to meet the following criteria: +Conduct a community health needs assessment (CHNA) +Adopt an implementation plan +Establish a written financial assistance policy (FAP) +Establish an emergency medical care policy +Limitation on charges +Extraordinary collection actions Overview 5

7. plantemoran.com Community Health Needs Assessment and Implementation Plan 6

8. plantemoran.com Community Health Needs Assessment +Solicit input +Written report +Formally adopted by the board +Widely available +Joint reporting Community Health Needs Assessment (CHNA) 7

9. plantemoran.com When do the requirements take effect? +The CHNA must be conducted at least once every three years +A new hospital organization must meet the CHNA requirements by the last day of the second taxable year beginning after the later of the exemption date or the first date on which the hospital was licensed. +A short year is considered a tax year. +If an organization ceases to operate or transfers ownership before the end of the tax year, then it is not required to meet the CHNA requirements with respect to that year. Community Health Needs Assessment (CHNA) 8

10. plantemoran.com +Formally adopt +Issue a report +Make widely available +Solicit input +evaluate the impact of any actions taken since the prior CHNA +The implementation must be adopted on or before the 15th day of the fifth month after the end of the taxable year that the CHNA was conducted Implementation Plan 9

11. plantemoran.com Financial Assistance & Emergency Medical Care Policies 10

12. plantemoran.com Financial Assistance and Emergency Medical Policies Who are required to establish and implement FAP and emergency medical care policies? How is medically necessary care defined? Discounts and assistance under FAP Process for applying for assistance under FAP What needs to be included in the FAP for non-payment? How should the FAP be “widely publicized?” 11

13. plantemoran.com Financial assistance and emergency medical care policies +Who must have a FAP and emergency medical care policy? 501(c)(3) Hospital facilities Substantially related entities +Partnerships +Disregarded entities Note for transparency: The FAP should include a list of the providers in the facility and which are and are not covered by the FAP 12

14. plantemoran.com Medically necessary care +Emergency and other medically necessary care defined Flexibility in definition May use definition under state law Medicaid definition Generally accepted standards of medicine in community Examining physician’s determination 13

15. plantemoran.com Discounts and assistance +Are all discounts are required under the FAP? No- +Discounts not under FAP cannot be included as “financial assistance” in Schedule H +Discounts under FAP are subject to amounts generally billed (AGB) limitations +Eligibility for assistance under FAP must be disclosed 14

16. plantemoran.com Applying for assistance +What information is required in the FAP or FAP application for those applying for assistance? Information and documentation requirements required for determining financial assistance eligibility Contact information to assistance with FAP application Disclosure of when prior FAP-eligibility determinations are used Any other information to help with transparency of process 15

17. plantemoran.com Non-payment under FAP Billing and collections policy and calculating AGB (covered in next section or presentation) FAP should include detail of actions that may be taken in the event of nonpayment if there is no separate billing and collections policy 16

18. plantemoran.com Widely Publicizing FAP Make FAP, FAP application form, and plain language summary of FAP widely available on a Web site Make paper copies available upon request and without charge (at a minimum in the emergency room and admissions areas) Notify and inform members of the community served by the hospital facility Current patients are notified by paper copy of plain language summary at intake or discharge Setting up conspicuous public displays 17

19. plantemoran.com Accessibility to LEP individuals Require translation of the FAP, FAP application form, and plain language summary of the FAP for limited English proficient (LEP) language groups Required when community served by the hospital facility or the population likely to be affected or encountered by the hospital facility consist of the lesser of 1,000 individuals or 5 percent 18

20. plantemoran.com Billing and Collection Requirements 19

21. plantemoran.com Billing and Collection Requirements + Extraordinary Collection Actions (ECAs) What is an Extraordinary Collection Action? Who does this apply to? Types of Extraordinary Collection Actions Notification Period Application Period Presumptive Eligibility 20

22. plantemoran.com Billing and Collection Requirements +What is an Extraordinary Collection Action? Actions related to obtaining payment of bills for care covered under the hospital facility’s Financial Assistance Policy (FAP). 21 FAP Determinations Billing Extraordinary Collection Actions

23. plantemoran.com Billing and Collection Requirements +Who does this apply to? The individual receiving emergency or other medically necessary care, or Any other individual who has accepted or is required to accept responsibility for the first individual’s bill. 22 Individual Purchaser of Debt Debt Collection Agency Substantially Related Entity

24. plantemoran.com 23 Extraordinary Collection Actions Sale of Debt Collection of Unpaid Bills Before Rec. Svs. Actions Requiring Legal/Judicial Process Reporting to Credit Agencies Billing and Collection Requirements Not ECAs Certain Liens Sale of Debt with specific contractual obligations (see regs.) Filing a claim in a bankruptcy proceeding Other

25. plantemoran.com 24 Application Period 240 Days Notification Period 120 Days Period begins upon generation of first post- discharge billing statement Possibility of up to a 30-day extension of periods Billing and Collection Requirements

26. plantemoran.com Billing and Collection Requirements +Presumptive FAP-Eligibility Determinations A hospital facility may presumptively determine that an individual is eligible for: +The most generous assistance available under its FAP; or +Less than the most generous assistance available under the FAP, Based on information other than that provided by the individual or based on a prior FAP-eligibility determination. 25

27. plantemoran.com Limitations on Charges 26

28. plantemoran.com Limitations on Charges +Amounts Generally Billed (AGB) A hospital facility must limit the amounts charged for any emergency or other medically necessary care it provides to a FAP-eligible individual to not more than amounts generally billed to those with insurance. 27 ( Sum of claims allowed by health insurance / Sum of associated gross charges for those claims ) x gross charges 12-Month Look-back Medicare FFS; Medicare FFS+Private; Medicaid; OR Medicaid Combo Look-Back Method Using current billing and coding process, estimate how much Medicare FFS or Medicaid would allow for the care Both Insurance payments + patient responsible portion Prospective Method

29. plantemoran.com Limitations on Charges +Amounts Generally Billed (AGB) Highlights +Up to 120-days to start applying a new AGB rate +One method at any one time +Multiple AGB percentages +For all other medical care (non-emergency or non-medically necessary), if under FAP, charges limited to less than gross charges 28

30. plantemoran.com Failure to Meet Requirements 29

31. plantemoran.com Penalty Relief? +Omissions or errors that are minor and either inadvertent or due to reasonable cause +Willful failure due to gross negligence, reckless disregard, and willful neglect +Under section 4959 provide that a hospital facility failing to meet the CHNA requirements “will” be subject to an excise tax not withstanding correction and disclosure of the failure Failure to Meet 501(r) 30

32. plantemoran.com Questions? 31