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The IRS Sounds-Off
Staff Reporters
According to the Internal Revenue Service [IRS], a survey of nearly 500 not-for-profit hospitals in 2006 revealed that 9 percent total revenues were dedicated to community benefit. The just finalized 2006 report warned that attempts to set a percentage threshold for determining compliance may have a
“disproportionate impact on hospitals, depending upon their size, where they are located their community benefit mix, and other hospital and community demographics.”
Link: http://greisguide.com/?p=1059
Definition
The current “community benefit” standard was established by the IRS in 1969 in Revenue Ruling 69-545. The standard sets out factors to be considered in measuring community benefit, including: (i) a board made up of a broad base of community members; (ii) an open medical staff; (iii) participation in Medicare and Medicaid; (iv) application of surplus funds toward improving facilities, equipment, patient care, medical training, research, and education; and (v) a full-time emergency room open to all regardless of ability to pay (the emergency room standard applies differently to tax-exempt Long Term and Acute Care Hospitals [LTACH] that do not maintain a full array of emergency department services). Under the current community benefit standard, individual hospitals are given flexibility to determine what services will-best serve their communities.
www.HealthDictionarySeries.com
Assessment
Some pundits suggest that if Congress doesn’t establish new charity care requirements, the IRS should revert to its community benefit standard last in force in 1969.
Interim Report: http://greisguide.com/wp-content/uploads/2009/02/eo_interim_hospital_report_072007.pdf
Conclusion
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Filed under: Glossary Terms, Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance, Quality Initiatives | Tagged: community benefit, congress, IRS, LTACH, Medicaid, medicare, non-profit hospitals, not-for-profit hospitals, Revenue Ruling 69-545, www.healthdictionaryseries.com | 8 Comments »
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