Healthcare Reform Tightens Tax-Exempt Requirements

Philip Betbeze, for HealthLeaders Media , January 13, 2011
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Nonprofit hospitals and health systems are facing new demands in the charitable care arena under the Patient Protection and Affordable Care Act. While limited in scope, the regulations add more teeth to tax-exemption requirements.

Among them:

• Assess community health needs and implement plans to meet those needs
• Provide financial assistance and emergency care
• Limit certain billing and collection actions and limit charges to the uninsured for emergency care
• Report on community health needs and provide annual audited financial statements to the Internal
Revenue Service

Many hospitals and health systems may be doing these things already, but if not, there's a powerful incentive to start: the possible loss of tax-exempt status under Section 501 of the Internal Revenue Code of 1986.

In recent times, many hospitals have transformed into community-based health systems, as is the case with Summa Health System, which owns or manages six hospitals in the Akron, OH, area.

There is a difference between marketing and community relations functions, which typically have been focused in the marketing department, says Roxia Boykin, vice president of community benefit and diversity at Summa.

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