Challenges for Non-profit Hospitals for 2006 and Beyond

(PYA Alert dated March 31, 2006)


For non-profit hospitals nationwide, this year could be the start of increased examination into tax-exempt status and provisions for charity care. As an example, an Illinois Attorney General recently announced plans to tackle the charity care issue. Currently, 1.8 million people are uninsured in Illinois, a common problem in all states. The proposed Illinois legislation outlines specific discounts to the uninsured, and would compel hospitals to spend at least 8 percent of annual operating costs on charity care. The Attorney General believes that non-profit hospitals have not extended sufficient charity care when bound to do so under tax-exempt status. The proposed legislation also contains the following conditions:

• Patients must be given itemized hospital bills in clearly understandable language and should be allowed to make payments in installments.
• Hospitals cannot refer bills to collection agencies while claims are pending with insurers.
• A hospital board must approve the use of collection measures, such as liens on property or wage garnishment, and providers can use only licensed collection agencies.
• A corporate office of the hospital must decide if patients will be pursued legally.
• Patients have the right to challenge a bill, and organizations must provide a statement of patient billings rights.
• Patients can file complaints about hospital billing practices with the Attorney General’s office.
  

Also proposed, an organization’s violation of these conditions could result in monetary penalties of $1,000 to $10,000 per violation.

Combined with existing scrutiny on charitable activities and tax-exempt status, this proposed legislation heightens examination of provider operations and should serve as a cautionary indication of what could become commonplace. Non-profit hospitals should ensure that organization-wide operations are federally compliant and strive to provide charitable benefits to their patients and communities as required by law.

PYA’s Revenue Cycle professionals can assist you in establishing or refining processes to deal with these and many other challenges. Our dedicated team spans the entire revenue cycle, from patient access through final patient account resolution, and includes all administrative, clinical, compliance, coding, and financial processes and functions.

Please contact Mark Cameron or Vijay Madyastha if you are interested in learning more about PYA’s Revenue Cycle or any other services.

The information provided via PYA Alert, Tax Planning Alert, or Audit and Accounting Alert should not be construed as accounting, auditing, consulting, or legal advice on any specific facts or circumstances. The contents are intended for general information purposes only.  Please contact us at (800) 270-9629 to discuss your specific situation or to discuss any specific questions you may have.

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