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Thompson Coburn Health Care Law Alert
The Heat Is On … Nonprofit Hospitals Under Fire Again
In response to escalating concerns by Congress and the IRS
regarding the extent to which nonprofit hospitals are satisfying their
community benefit standards, the IRS recently mailed community benefit
questionnaires to 600 nonprofit hospitals. The questionnaire (IRS Form 13790)
is essentially a data-gathering tool designed to elicit information from each
responding hospital regarding the extent to which the hospital’s activities are
consistent with its stated tax-exempt purposes. Although the primary focus of
Form 13790 is charity care, Form 13790 also poses questions which extend into
the areas of governance practices and compensation.
Form 13790 is divided into three parts. Part I requests basic
identifying information about the hospital. Part II contains 72 questions
focused on the hospital’s community benefit activities and governance
practices, including questions regarding:
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Patient demographics (insurance coverage status, participation in Medicare and
Medicaid)
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Instances of denial of care among insured and uninsured patients
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Uncompensated care (number of patients receiving such care, amount spent by the
hospital on such care, treatment of bad debt, reporting of uncompensated care
expenditures, timing of decisions regarding free care)
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Billing and collection practices
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Community outreach programs
Part III contains nine questions which inquire as to the
hospital's compensation of those individuals who are considered "disqualified
persons" under the intermediate sanctions rules of Section 4958 of the IRS
regulations.
Two notes of caution:
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Although Form 13790 is deemed by the IRS to be a "compliance check" and
therefore voluntary in nature, the IRS cautions that it retains "the option of
opening a formal examination" of a hospital regardless if it responds to the
questionnaire.
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Hospitals receiving Form 13790 and choosing to respond should proceed with care
since other interested parties, including class action plaintiffs and state
regulatory bodies, may be able to obtain copies of the completed forms for
discovery purposes.
For your reference, following is a link to Form 13790:
http://www.irs.gov/pub/irs-tege/eo_hospital_questionnaire.pdf.pdf
In a related development, Senator Chuck Grassley (R-Iowa),
Chairman of the Senate Finance Committee and the leader of Congressional
nonprofit reform efforts, recently sent letters to the chief counsel of the IRS
and the commissioner of the IRS’ Tax-Exempt and Government Entities Division
urging increased scrutiny and "stepped-up enforcement" of nonprofits, including
nonprofit hospitals. For a copy of Senator Grassley's press release regarding
those letters, see :
http://finance.senate.gov/press/Gpress/2005/prg060106.pdf
If you have any questions regarding Form 13790 or recent
nonprofit reform efforts, please contact me or any member of the Thompson
Coburn Health Care Group.
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