1. By Kathy Whitmire, Managing Director, HomeTown Health In collaboration with Michele Madison, Attorney Morris, Manning & Martin

2.  IRS 501(r) creates new obligations for non- profit tax exempt organizations  Applies to 501(c)(3) organizations that operate one or more hospitals  Each 501(c)(3) hospital organization is required to meet four general requirements on a facility-by-facility basis

3. 1. establish written financial assistance and emergency medical care policies, 2.limit amounts charged for emergency or other medically necessary care to individuals eligible for assistance under the hospital's financial assistance policy, 3.make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy before engaging in extraordinary collection actions against the individual, and 4.conduct a community health needs assessment (CHNA) and adopt an implementation strategy at least once every three years.

4. 1. Eligibility criteria for financial assistance, 2. Determination of whether such assistance includes free or discounted care; 3. Basis for calculating amounts charged to patients; 4. Method for applying for financial assistance; 5. Actions the organization may take in the event of nonpayment, including collections action and reporting to credit agencies; and 6. Measures to widely publicize the policy within the community to be served by the organization.

5. 1. EXAMPLE POLICY 2. EXAMPLE APPLICATION 3. APPLICATION INSTRUCTIONS

6.  Must provide, without discrimination, care for emergency medical conditions to individuals regardless of their eligibility under the financial assistance  The policy must prevent discrimination in the provision of emergency medical treatment, including denial of service, against those eligible for financial assistance under the facility’s financial assistance policy or those eligible for government assistance

7.  Hospitals must limit amounts charged for emergency or other medically necessary care that is provided to individuals eligible for assistance under the organization’s financial assistance policy to not more than the amounts generally billed to individuals who have insurance covering such care.

8.  CANNOT use Gross Charges  It is intended that amounts billed to those who qualify for financial assistance may be based on either the best, or an average of the three best, negotiated commercial rates, or Medicare rates

9.  Forego extraordinary collection actions against an individual before the organization has made reasonable efforts to determine whether the individual is eligible for assistance under the hospital organization’s financial assistance policy.

10.  Extraordinary collections include: ◦ lawsuits, ◦ liens on residences, ◦ arrests, ◦ body attachments, or ◦ other similar collection processes

11. Reasonable efforts includes  notification by the hospital of its financial assistance policy upon admission;  and in written and oral communications with the patient regarding the patient’s bill, including invoices and telephone calls, before collection action or reporting to credit agencies is initiated

13.  Conduct Once Every 3 Years  Consider: ◦ (1) input from persons who represent the broad interests of the community served by the hospital facility, including those with special knowledge of or expertise in public health and ◦ (2) be made widely available to the public. Section 501(r)(3)(B).

14.  May be conducted together with one or more organizations, including related organizations.  In 990- describe how the organization is addressing the needs identified in each CHNA conducted under section 501(r)(3) and a description of any needs that are not being addressed, along with the reasons why the needs are not being addressed.

15.  $50,000 excise tax on a hospital organization that fails to meet the CHNA requirements of section 501(r)(3).  This tax must be reported

17.  The materials and information presented and contained within this document are provided by MMM as general information only, and do not, and are not intended to constitute legal advice.  Any opinions expressed within this document are solely the opinion of the individual author(s) and may not reflect the opinions of MMM, individual attorneys, or personnel, or the opinions of MMM clients.  The materials and information are for the sole use of their recipient and should not be distributed or repurposed without the approval of the individual author(s) and Morris, Manning & Martin LLP.  This document is Copyright ©2011 Morris, Manning & Martin, LLP. All Rights Reserved worldwide. 17

18. 18 Michele Madison, Partner, Morris, Manning & Martin, LLP Healthcare & Healthcare IT Practices mmadison@mmmlaw.com Direct: 404-504-7621