The saying that “no good deed goes unpunished” may soon be true for charitable hospitals under Obamacare.
The new law means charitable hospitals treating uninsured Americans will face heightened scrutiny regarding their non-profit status and could face hefty fines, according to The Daily Caller.
A new provision of the Internal Revenue Code’s Section 501 installs new review standards and financial penalties on tax-exempt charitable hospitals, which reserve a minimum amount of their expenses to treat the uninsured poor.
“[Obamacare] requires tax-exempt hospitals to do a community needs survey and file additional paperwork with the IRS every three years. This is to prove that the charitable hospital is still needed in their geographical area — ‘needed’ as defined by Obamacare and overseen by IRS bureaucrats,” John Kartch, spokesman for Americans for Tax Reform, told the Daily Caller.
The regulations apparently are motivated by the fact that hospitals providing charity for the uninsured could discourage enrollment in Obamacare. Not only that, but Kartch said the government stands to gain by tightening the screws on non-profit hospitals.
“Failure to comply, or to prove this continuing need, could result in the loss of the hospital’s tax-exempt status. The hospital would then become a for-profit venture, paying income tax — hence the positive revenue score” for the federal government, Kartch added. “Obamacare advocates turned over every rock to find as much tax money as possible.”
With more Americans getting insurance under Obamacare, the Daily Caller reported, non-profit hospitals will have a harder time meeting the required thresholds for treating uninsured patients, driving more hospitals into the taxpaying, for-profit category. Non-profits failing to meet government standards could be slapped with $50,000 fines.
“The hospital must disclose in its annual information report to the IRS (i.e., Form 990 and related schedules) how it is addressing the needs identified in the assessment and, if all identified needs are not addressed, the reasons why (e.g., lack of financial or human resources). Each hospital facility is required to make the assessment widely available. Failure to complete a community health needs assessment in any applicable three-year period results in a penalty on the organization of up to $50,000,” according to a report of new Obamacare provisions by the congressional Joint Committee on Taxation (JCT).
According to the Daily Caller, the government wants to know how and why charitable hospitals will provide discounted or free care to the poor, requiring such hospitals to create, implement and publicize a written financial assistance policy. The policy would explain the methods hospitals use to screen applicants for assistance and how they calculate the bills accrued by patients.
A delegate under the Department of Health and Human Services will review the reports and audited financial statements of charitable hospitals. The delegate and HHS secretary must then try to identify trends in the hospitals’ spending and send a report of those findings to congress by 2015, the JCT report says.
“Nonprofit hospitals should be advised that the new PPACA requirements will play a significant role in how they operate and report, specifically when it comes to billing and collections for services provided to the uninsured. The new law leaves many gray areas and hospitals themselves will have to establish eligibility criteria for financial assistance. Following the new procedures as best they can will ensure the best chance of maintaining their tax exempt status,” D. Douglas Metcalf, partner at the law firm Lewis and Roca wrote in a 2013 op-ed called “Will nonprofit hospitals disappear under Obamacare?” according to the Daily Caller.
The White House did not respond to the Daily Caller’s request for comment.