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On June 26, 2015, the Internal Revenue Service (IRS) released Notice 2015-46, which clarifies the requirement in the Treasury Regulations under Section 501(r)(4) that a hospital's financial assistance policy (FAP) must include a list of providers delivering emergency or other medically necessary care at the hospital. Notice 2015-46 offers guidance on how to present and update the provider list for a hospital's FAP, clarifying some issues left unanswered by the final Section 501(r) regulations. By relaxing the strenuous and uncertain requirements regarding provider lists, the notice should offer administrative relief to hospitals.
Background
Section 501(r), created as part of the Patient Protection and Affordable Care Act of 2010 (ACA), imposes additional requirements on charitable hospital organizations.
Specifically, Section 501(r)(4) requires a hospital organization to adopt a written FAP and a written emergency medical care policy for each hospital it operates. The FAP must meet certain requirements set forth in the final regulations issued at the end of 2014, including listing the providers, other than the hospital itself, who deliver emergency or other medically necessary care in the hospital and specifying which providers are covered by its FAP and which are not.
This is a cumbersome requirement for large hospitals with numerous and ever-changing professionals delivering care at their facilities. Also, the regulations were unclear as to whether the provider list could be contained in a document separate from the FAP and whether an authorized body of the hospital would be required to re-adopt the FAP each time the provider list changed. In response to these concerns, the IRS released Notice 2015-46 identifying the methods a hospital can use to meet its FAP requirements.
Clarifications
Applicable for taxable years beginning after Dec. 29, 2015, Notice 2015-46 provides several significant clarifications related to the provider list requirement, including the following:
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A hospital may list in its FAP the name of a physician practice group instead of the name of each individual doctor and the services of the practice group that are covered by the FAP and which are not. A hospital also may list providers by referencing a department or type of service if it is clear which services and providers the FAP covers.
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A hospital may describe in its FAP the circumstances under which the emergency or other medically necessary care delivered by the provider will and will not be covered by the FAP.
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The provider list does not need to indicate whether a provider's services are, or may be, covered by another hospital entity's FAP or program.
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Subject to certain conditions, the provider list may be contained in a separate document from the FAP, such as in an addendum or appendix to the FAP.
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If only the provider list is changed, a hospital's authorized body is not required to re-adopt the FAP again.
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If a hospital updates the list of providers at least quarterly, it will be considered to have taken reasonable steps to ensure the accuracy of the list and corrected any minor omissions or errors on the list, which are requirements of the regulations.