American non-profit hospitals have long qualified for tax exempt status under federal law as “charitable” organizations. They are often afforded exempt status from state and local property, sales, and income tax under similar requirements. The Affordable Care Act imposed additional requirements that hospitals must meet if they wish to retain federal tax exempt status. These include:
- Establishing written financial assistance and emergency medical care policies,
- Limiting amounts charged for emergency or other medically necessary care to individuals eligible for assistance,
- Making reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s policy before engaging in extraordinary collection action, and
- Conducting a Community Health Needs Assessment (CHNA) at least once every three years, which must be widely publicized, and adopting an strategy to implement the CHNA.
The IRS released final regulations implementing the 501(r) requirements in 2015. The regulatory requirements were effective for tax years following the end of 2015.
The IRS has reportedly been conducting compliance reviews of tax exempt hospitals and has levied a $50,000 excise tax against some hospitals that have been out of compliance with 501(r) requirements. In August, however, the IRS released for the first time a notice dated February 14, 2017 actually revoking the 501(c)(3) status of a hospital that had failed to implement and publicize its CHNA.
The hospital’s situation was complicated as it was not only tax exempt under 501(c)(3) but was also being operated by the local county government. It carried out a CHNA to meet Medicare requirements but neither took steps to implement the CHNA nor posted it on a website. Hospital executives represented to the IRS that they did not need 501(c)(3) status and that it might in fact limit some of the hospital’s activities. They also indicated that they did not have the resources to conduct a proper CHNA. Considering these facts, the IRS revoked the hospitals 501(c)(3) status.
This is hardly a typical situation for noncompliance with 501(r) requirements, but is at least an indication that the government will revoke 501(c)(3) status in situations where a hospital willfully violates the requirements of 501(r)
Judge Mandates Status Reports In Challenge To Prohibition On Gender Identity And Pregnancy Termination Discrimination
On August 16, 2017, Judge Reed O’Connor entered an order in the Franciscan Alliance case requiring the government to file a status report on or before October 16, 2017 and every 60 days thereafter. The Franciscan Alliance and several other plaintiffs, including several states, have sued challenging a HHS regulation promulgated under section 1557 of the Affordable Care Act prohibiting discrimination on the basis of gender identity or termination of pregnancy.
Late in 2016, Judge O’Connor, a federal district court judge in Texas, entered a preliminary injunction against the enforcement of the rule. On July 10, 2017, Judge O’Connor remanded the issue to HHS to reconsider its rule. HHS stated in an August 4 status report that it has submitted a draft proposed rule amendment to the Justice Department for review. Following that review, the rule will be submitted to the Office of Management and Budget for interagency clearance, after which it will be published for comment as a proposed rule. Until then, HHS will continue to comply with the injunction against enforcement of the challenged provisions of the rule. The court will continue to monitor the rulemaking process.
Treasury IG Report Details IRS Record On ACA-Mandated Letters
On July 31, 2017, the Treasury Inspector General for Taxpayer Assistance (TIGTA) issued a report on the implementation by the Internal Revenue Service of an ACA requirement—specifically, that the Treasury Department must send a notice each year to individuals who file a tax return and are not enrolled in minimum essential coverage (MEC) informing them of the availability of coverage through the exchanges.
The report found that the IRS did not send these notices out in 2015 for filing year 2014. The agency focused instead on understanding filing behavior; updating form instructions and publications to include information on the MEC requirement; coordinating with tax preparers and software developers regarding the requirement; and including information on the availability of exchange coverage in correspondence regarding individual mandate compliance.
In November of 2016 and January of 2017, the IRS did send out over 7 million letters to individuals who had filed a 2015 tax return and either claimed an individual mandate exemption or paid the penalty, notifying them of the availability of exchange coverage. The letters were sent at these times rather than in the preceding June because the IRS and CMS concluded that this was the optimal time for encouraging individuals to enroll in coverage. Some of the letters encouraged taxpayers to enroll in coverage, while others encouraged them to either enroll in coverage or claim an exemption. Some of these letters included a personalized penalty amount for the individual taxpayer while some included the standardized penalty amount. CMS paid about $3.7 million for preparing and mailing the letters.
The notice was not sent to 3.3 million taxpayers who filed “silent returns” which failed to identify MEC coverage, pay a penalty, or claim an exemption, as CMS decided that these individuals were less likely to enroll in coverage. Also, the notice was not sent to a group of 1.9 million individuals who filed a 2015 return and claimed an exemption or paid a penalty but were randomly selected to serve as a control group to measure the effectiveness of the letter.
The IRS is not sending out the notices for 2017, but is sending out notifications to transmitters of electronically filed returns to share with taxpayers who file a form 8965 exemption report with missing or incorrect information, pay a mandate penalty, or file a silent return informing them of the availability of marketplace coverage.
The TIGTA noted that the IRS letter stated that most taxpayers could get coverage through HealthCare.gov for $75 a month or less after financial assistance was applied. The TIGTA suggested that this statement was misleading — according to its analysis, exchange premiums for 3.4 million (63 percent) of taxpayers exceeded $75 a month, averaging $168 a month, after financial assistance. It noted that the $75 a month figure was for low-cost (presumably bronze-level) health plans and not for the plans that enrollees actually selected. The TIGTA suggested that the IRS should have independently verified this claim rather than relying on HHS’ estimates.
Administration Will Make CSR Payments For August
Multiple media sources are reporting that the White House has confirmed that cost-sharing reduction payments will be made for August. This will lessen the financial impact on insurers of a CSR payment termination during 2017, if one occurs, as it will mean one less month that insurers will have to absorb the cost of termination themselves. It does nothing, however, to clarify for insurers or state insurance regulators what they should assume regarding CSR payments in determining which insurers will participate in the individual market and what premiums they will charge for 2018.
Health insurers offering qualified health plans through the marketplaces for 2018 must file their rates for 2018 by September 6, 2017. As no guidance has been offered as to whether CSRs will be paid in 2018 (or even in September 2017), state regulators should presumably instruct their insurers to file their rates based on an assumption that CSRs will not be paid, or at least to file two sets of rates assuming on the one hand that CSRs will be paid and on the other hand that they will not be. As the CBO has projected and multiple insurers have confirmed in rates already filed, the nonpayment of CSRs would result in significant rate increases, probably in the order of 20 percent in most states. If no action is taken by the White House or by Congress very soon, it should be assumed that these are the rates that will be in effect.
Congress could, of course, specifically appropriate funding for the CSRs. The CBO has confirmed that such an appropriation would not increase the budget deficit since it has already assumed an appropriation to exist. A CSR appropriation is high on the agenda of a number of members of Congress of both parties. But even assuming the most rapid conceivable schedule for both houses to enact and the President to sign such an appropriation, it would still come after the rate filing deadline — which is the day after Congress reconvenes on September 4.
Only the Trump administration can at this point provide assurances that the CSRs will be paid at least through the end of the 2017 and for 2018 unless the appellate court in House v. Price decides at some point to affirm the lower court judgment—now on hold—that the payments must end. The only responsible step for the administration at this point is to immediately provide such assurances, and to state that it intends to work with Congress to clarify that an appropriation exists as quickly as possible and independent of any other actions Congress might take on health care reform. Senator Lamar Alexander (R-TN), Chair of the Senate Health, Education, Labor, and Pensions Committee, has urged the President to continue the payments, at least through September, while Congress takes action.
Any other approach simply increases the likelihood, indeed the certainty, that premiums in many state individual markets will increase dramatically for next year. A failure to take action is also likely to result in the number of counties without any insurer in the individual market for 2018 beginning to grow again.
Nevada-Centene Arrangement Leaves Only Two Bare Counties For 2018
Centene announced on August 15, 2017, that it had worked out an arrangement with Nevada to offer coverage in the 14 Nevada counties that had previously had no insurer signed up to offer coverage through the exchange for 2018. This leaves the “bare county” problem largely solved for 2018, with only two counties remaining in the country—one in Wisconsin and one in Indiana—with no insurers currently offering coverage for 2018. Between them they have fewer than 400 current exchange enrollees.
The bare county problem may reappear, however. As noted earlier, the CBO report on terminating cost-sharing reductions projects that 5 percent of Americans would live in counties with no 2018 coverage if the CSR payments are terminated.
from Health Affairs BlogHealth Affairs Blog http://ift.tt/2whB2Vh
No comments:
Post a Comment