Staying on top of IRS regulations is critical for hospitals to maintain their tax-exempt status. IRS 501(r)(4) compliance is one of the most crucial aspects of the 501(r) requirements and managing those requirements can be tedious. Many hospital executives are taking a different approach, though.

Why IRS 501(r) Compliance is Critical to Hospitals

Tax-exempt hospitals in the United States have a set of requirements they must adopt to maintain their IRS 501(c)(3) status. In addition to the general requirements for tax-exempt status, as of December 29, 2014, hospitals must follow these new guidelines:

• Community Health Needs Assessment: Every hospital must conduct a CHNA once every three years and implement strategies to address any issues the assessment uncovers.
• Financial Assistance Policy and Emergency Medical Care Policy: Each hospital facility needs to establish written policies for financial assistance criteria and emergency medical care definitions.
• Limitation on Charges: Hospitals need to have a limit on what they charge for medically-necessary services provided to FAP-eligible patients.
• Billing and Collections: Tax-exempt hospitals must create a billing and collections policy that allows patients to apply for financial assistance before collections activities take place.

All hospitals are required to follow these requirements, as well as adopt new reporting requirements that include updates about community services the hospital provided during the year.

Hospitals that don’t adhere to the IRS 501(r) compliance standards and reporting requirements are at risk of losing their IRS 501(c)(3) tax-exempt status.

How Medical Billing Software Can Improve IRS 501(r) Compliance

The additional IRS requirements can create a lot of extra work for hospital executives. Between addressing healthcare issues found in the CHNA and creating policies that adhere to all of the requirements, healthcare professionals have an overwhelming responsibility.

One way to reduce the burden of the new requirements is with medical billing software. Technology is a powerful tool when it comes to streamlining processes and reducing compliance errors.

The top reasons to invest in medical billing software for IRS 501(r) compliance are:

• Increased efficiency: Medical billing software offers a streamlined way for patients to easily apply for financial assistance for their healthcare needs.
• Improved patient experience: Patients want to be able to apply online, by mail, or over the phone, and they want to receive decisions quickly.
• Rigid compliance standards: Technology ensures that data is held securely and all information is used and held to the highest standards required by the IRS.

The right medical billing software system will give hospitals a practical dashboard, the ability to control client-specific financial decision-making, and reporting that meets the Form 990 qualifications.

How to Effectively Manage IRS Section 501(r)(4)

As part of the IRS Section 501(r) requirements, every hospital facility must establish a written policy for both financial assistance and emergency medical care. Both components are packed with a lot of minor requests from the IRS.

Financial Assistance Policy

The financial assistance policy (FAP) governs how patients qualify for financial aid with their medical care, especially as it relates to emergency care. The FAP must include:

• Eligibility criteria: Every hospital must establish their criteria for offering financial assistance to its patients, whether it is free or discounted.
• Patient charges: To stay within the limitation on charges, hospitals must keep their patient charges in line with the Amounts Generally Billed (AGB) and disclose that information to patients.
• Financial assistance application: The FAP must clearly state how patients can apply for financial assistance, as well as describe what information or documentation may be necessary to apply.
• Unpaid medical bills: With or without a separate billing and collection policy, hospitals must outline what actions may be taken if a bill remains unpaid and all efforts have been made to ensure FAP-eligibility.
• Outside sources: Any information that a hospital obtains about a patient that didn’t come from the patient itself must be disclosed along with a description of how the information was used.
• Other providers: Hospitals must provide a list of providers offering emergency or medically-necessary care and whether or not they are covered by the financial assistance policy.

In addition to this information, the financial assistance must be widely available to the public. This means the policy, application form, and plain-language summary should be available on the hospital’s website. Paper copies should be available in public places like hospitals or available for free by mail, and community members should be informed so they can disseminate information to the appropriate people.

To satisfy the website requirements of IRS Section 501(r)(4), a hospital must do these three things:

1. Provide a complete, current copy of the FAP document on the hospital facility’s website with a clear link indicating what the documents are. If the hospital facility doesn’t have its own website, the hospital organization website is suitable, provided the link back to the FAP document is very conspicuous.
2. Offer a copy of the FAP document that anyone can access, download, print, or view without any special computer equipment – hardware or software. The document must be free to download and accessible without anyone providing any information or creating an account.
3. Keep the website address of the FAP documents readily available to provide them to anyone who asks about accessing them.

If all of these conditions are met, a hospital facility is considered to have made its financial assistance policy widely available to the public.

Emergency Medical Care Policy

Part of IRS Section 501(r)(4) focuses on how emergency medical care is handled for all patients, not just those who are FAP-eligible. Emergency medical care can have many definitions, but it’s commonly defined in the Emergency Medical Treatment and Labor Act (EMTALA), a section of the Social Security Act.

Subchapter G of Chapter IV of Title 42 of the Code of Federal Regulations, a subchapter of the EMTALA that focuses on the standards of the Centers for Medicare and Medicaid Services (CMS), dictates what medical conditions a hospital facility must provide. If a hospital facility provides care that meets these standards, it will generally satisfy this particular standard.

The emergency medical care policy must also prohibit a hospital facility from discouraging patients from seeking emergency care. This includes, but is not limited to, requiring payment before emergency medical care is performed or allowing debt collection to happen in the hospital or emergency department.

Why Every Hospital Needs to Focus on IRS Section 501(r)(4)

Aside from ensuring that every hospital retains its tax-exempt status, IRS Section 501(r)(4) provides an opportunity for hospitals to offer their services to the community.

A clear financial assistance policy will reduce how long it takes to make a decision, clarify any confusion patients may have, and offer security to people who cannot afford healthcare.

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To avoid losing its 501(c)(3) tax-exempt status, a hospital must adhere to guidelines the IRS put in place as well as meet reporting and excise tax requirements. Keeping 501(c)(3) status requires a concerted effort from healthcare professionals.

How IRS Regulations Impact a Hospital’s 501(c)(3) Status

Every hospital that wants to maintain tax-exempt status has to follow the same guidelines. For a hospital to receive 501(c)(3) status, it must meet these basic requirements:

• Exempt purposes: Every tax-exempt organization must be either charitable, educational, literary, religious, or scientific, or it must provide public safety testing, the fostering of amateur sports competitions, or the prevention of cruelty against children or animals.
• Earnings: For a hospital to get or keep its tax-exempt status, it cannot pay any of its earnings to private shareholders or other individuals. It also cannot serve the interests or net earnings of private parties.
• Action organizations: Hospitals and other tax-exempt organizations are not able to substantially participate in activities that influence legislation and they cannot campaign for (or against) any political candidate.

While these are just the basic requirements to get 501(c)(3) status, they are the foundation for how the Affordable Care Act approaches additional IRS requirements. Without this status, hospitals are not able to receive payments for government-funded healthcare programs.

Hospitals can lose their tax-exempt status if they fail to adhere to any of these initial requirements, but those are the only rules for healthcare facilities.

4 IRS Section 501(r) Requirements That Help Maintain 501(c)(3) Status

After the Affordable Care Act was rolled out, the IRS made updates to its regulations. IRS Section 501(r) includes additional requirements that hospitals must meet to keep their 501(c)(3) status:

1. Section 501(r)(3): Community Health Needs Assessment

Once every three years, tax-exempt hospitals must complete a Community Health Needs Assessment, or CHNA. The CHNA must solicit input from people who serve the community interests and/or have expertise in public health. The CHNA should be made widely available to the public, as well.

Every CHNA must define who makes up the community, assess the health needs of that community, and offer strategies for dealing any of said needs that come up during the CHNA process. The implementation strategy is a written plan for how a hospital intends to address the health needs, or why they are not addressing the need if that is the case.

2. Section 501(r)(4): Financial Assistance and Emergency Medical Care Policies

Every hospital facility must have a financial assistance policy (FAP.) This policy will outline eligibility criteria, as well as provide information on how patients are charged and what happens if they do not pay their medical bills. The FAP must be widely available to the public and it should include information on how people can apply for financial assistance.

In addition to the FAP, hospitals must also establish a written emergency medical care policy. This policy will stipulate what qualifies as emergency medical care for all patients, and how charges will be assessed for medical care that isn’t considered medically necessary.

3. Section 501(r)(5): Limitation on Charges

In respect to patients that are FAP-eligible, hospital facilities are obligated to limit how much they charge for emergency and medically-necessary care. They cannot charge more than the Amount Generally Billed (AGB) for patients who have private health insurance.

There are two ways that hospitals can calculate AGB. One way is using the look-back method, which multiples a hospital’s gross charges for medical care by specific AGB percentages that are calculated annually. The other way, the prospective method, uses the same billing and coding process as a hospital would use for Medicare or Medicaid patients.

4. Section 501(r)(6): Billing and Collections Policy

Before a hospital can engage in extraordinary collection actions, or ECAs, it must make reasonable efforts to determine whether a patient is eligible for financial assistance or not. Reasonable efforts include giving patients a 120-day notification period and a 240-day application period to apply for financial assistance.

If a patient does not complete the application process or is determined not to be FAP-eligible, hospitals are able to participate in collection activities like deferring medically-necessary care until medical bills are paid or selling the debt to a third-party.

Tips to Help Maintain a Hospital’s 501(c)(3) Status

Without a doubt, 501(c)(3) compliance is a top priority for most hospital executives and healthcare professionals. Though, keeping policies and procedures up-to-date can be challenging and time-consuming.

Fortunately, there are ways a hospital can streamline its practices to ensure 501(c)(3) status is never at risk:

• Find a tax professional: The only person qualified to help hospitals maintain their IRS tax-exempt status is a tax professional. Hiring a professional will ensure hospitals meet their requirements.
• Choose medical billing software: Technology like medical billing software is one of the most efficient ways to both increase patient satisfaction and decrease 501(r) compliance errors.
• Create a compliance checklist: A compliance checklist is the first step in putting together a comprehensive policy that addresses the 501(r) requirements.

Hospitals that invest in their tax professionals and medical billing software will see the best results. Both of these options offer a legal avenue to compliance that doesn’t require hospital professionals to start from scratch.

Put Focus on 501(c)(3) Requirements for Hospitals

If a hospital is already providing emergency medical care and other healthcare services that are covered by Medicare or Medicaid, maintaining 501(c)(3) status is critical for continued operations. Without this status, hospitals will lose payments from government-funded sources.

If a hospital wants to start providing medical care that is covered by Medicare or Medicaid, it needs to follow these guidelines to obtain tax-exempt status.

501(c)(3) requirements are the basis for a hospital’s ability to collect payments from the government. Following them must be a priority for hospital executives.

The post How to Keep Your Hospital’s 501(c)(3) Status appeared first on Charity Care Management Software - Caritas360.

Patient satisfaction doesn’t end with receiving quality care at the hospital. It’s something that needs to be considered throughout the entire billing process for each patient.

Unfortunately, IRS regulations add an enormous amount of responsibility to healthcare providers which can make patient satisfaction seem minor. They have an obligation to securely collect information and make unbiased financial decisions, and they need to do it in a timely manner.

Cloud-based medical billing software, such as Charity Care Management Software, is the most effective solution for hospitals that want to stay in compliance while providing top-notch patient care in a timely manner.

What is Cloud-Based Medical Billing Software?

Medical billing software is a broad term that encompasses a number of platforms for billing patients. Traditionally, medical billing software was loaded onto a computer’s hard drive or a local server, taking up a lot of physical and digital space. Today, hospitals have access to cloud-based medical billing technology that frees up space and time.

While there are many options, generally all medical billing software will have similar features that help hospitals streamline their processes:

• Patient information: The foundation for medical billing software is typically patient information. This will include sensitive personal information and it may even include confidential medical information.
• Financial requirements: Hospitals that offer subsidized care will appreciate being able to include patient financial information for easy decision-making. Financial information is necessary to determine how much assistance is offered.
• Reporting standards: All medical billing software should come with reporting and compliance standards that meet the minimum IRS requirements. The best platforms will offer more robust compliance standards.
• Security features: Since medical billing software contains a lot of personal information, data security is a primary concern for hospitals. The best medical billing software systems will have a full suite of security features that protect data both internally and externally.

In addition to these features, some medical billing software systems are both desktop- and mobile-optimized and include the ability to upload documents if necessary. Cloud-based systems provide all of this in a convenient portal that is easy to use for both healthcare professionals and patients.

How Charity Care Management Software Can Increase Patient Satisfaction

Patient satisfaction is an important part of every hospital’s brand and reputation. Without it, hospitals run the risk of losing their patients and their relationship with insurance companies.

1. Improved Application Process for Patients

Medical billing software that incorporates web-based hospital financial assistance can make it easier for patients to apply for financial help. With features like two-factor authentication and the ability to save the application and return later, the best medical billing software gives the patient control over their application process.

Charity Care Management Software has a user-friendly electronic medical financial assistance application (eMFA) that allows patients to apply for financial assistance for more than one medical bill at a time. This reduces the amount of time patients have to spend filling out forms – a significant way to increase patient satisfaction.

2. Faster Decision Times for Healthcare Professionals

The Charity Care Management Software doesn’t just improve the process for patients. With an innovative virtual Charity Care administration office (vCCA), hospital administrators can accept web-based applications as well as applications over the phone or by mail. The vCCA integrates seamlessly with the eMFA that patients complete.

The streamlined process for patients and healthcare professionals means that applications can be processed more quickly. Clients can set their financial assistance parameters for instant decision-making on some applications, and others can be reviewed manually. The less time patients have to spend waiting for an answer, the happier they are going to be.

3. More Comprehensive Information About Billing Statements

Regardless of whether a patient is eligible for financial assistance or not, every patient wants a clear understanding of what they are being billed for. Medical billing software makes it easy for hospitals to communicate what charges are for, how financial assistance is applied, and what balance needs to be paid.

Charity Care Management Software is a comprehensive platform that not only determines how much financial assistance a patient qualifies for – it gives them the tools they need to resolve their outstanding medical bills. And with enhanced security features like anonymous detection and buffer overflows, it’s one of the most secure medical billing platforms available to hospitals.

Why Choose Charity Care Management Software

Choosing the right cloud-based medical billing software is a big decision. There is a financial investment in the software, plus an investment of time and resources for getting it running and everyone up to speed with the new technology.

Charity Care Management Software is a powerful tool for hospitals that want to accept electronic applications for financial assistance.

There are three reasons every hospital needs this medical billing software for their patients:

1. Form 990 reporting: Every tax-exempt hospital has to submit Form 990 with their audited financial statements. Charity Care Management Software has tools that support the completion and submission of Form 990.
2. Integrated data: The integration of data between the patient application and the hospital administrators’ portal is one of the most practical features of Charity Care Management Software. It reduces errors in transmission, which speeds up approval rates.
3. Future enhancements: Charity Care Management Software is continuously being improved. Enhancements coming in the future include algorithms that are based on the Federal Poverty Level and a preliminary screening tool for patients.

Medical billing software should be focused on patient satisfaction. Charity Care Management Software has both patients and administrators in mind with every update to the platform.

Charity Care Management Software for 501(c)(3) Healthcare Organizations

Every healthcare organization that wants to maintain its tax-exempt status needs to have medical billing software in place. Charity Care Management Software not only increases patient satisfaction through efficient processes, but it also offers all of the tools a hospital needs to maintain its 501(c)(3) status.

The post How to Improve Patient Satisfaction with Charity Care Management Software appeared first on Charity Care Management Software - Caritas360.

Without the ability to manage their revenue cycle, hospitals have no way to budget for their financial obligations. Management of the revenue cycle gives hospitals an opportunity to plan for the coming quarter or year.

What is Hospital Revenue Cycle Management?

A hospital’s revenue cycle is all of the clinical and administrative tasks associated with capturing, managing, and collecting patient payments. It looks at all of the functions from the creation of an account to the final payment on the account. A robust revenue cycle might even calculate how much each step of the process costs the hospital.

Hospital revenue cycle management requires keen attention to every aspect of a patient’s interaction with a hospital. There are several places that revenue can be lost, especially as it relates to insurance claims:

• No referral to see a specialist when a referral is required
• Registration, coding, and/or billing errors in data entry
• Unverified health insurance
• Underpaid health insurance claims
• Denied health insurance appeals

To ensure a hospital has a healthy revenue cycle, it needs to find ways to reduce instances of unpaid or underpaid claims while simultaneously maximizing the amount of revenue it collects from patients.

How to Optimize the Hospital Revenue Cycle Management Process

Optimizing the hospital revenue cycle management process is one part analyzing historical data and one part predicting the future based on historical findings.

1. Encourage Patients to Apply for Financial Assistance Early

Hospitals lose a lot of revenue to unpaid medical bills. For a lot of patients, though, financial assistance is available for emergency medical care and medically-necessary services. While hospitals cannot conduct debt collection practices in the emergency room, providing information about financial assistance with discharge papers can encourage people to apply for help before their account is past due. Hospitals cannot discourage people from seeking medically-necessary care.

If a patient has more than one medical bill that needs to be paid, they are able to apply for assistance for multiple billing statements. Hospitals must give their patients a 120-day notification period and a 240-day application period to apply for financial assistance. For multiple bills, they may look at the most recent statement as the effective date.

2. Perform a Community Health Needs Assessment

One of the IRS Section 501(r) requirements is that hospitals must perform a Community Health Needs Assessment (CHNA) once every three years. This assessment covers a significant amount of information, like what defines the community and what medical needs people have. The CHNA should have input from community leaders, especially those with expertise in public health. Once the assessment has been conducted, a strategy must be put in place to address the concerns.

A CHNA can give hospitals insight into why people aren’t using their services. If community healthcare needs aren’t being met, hospitals will see a decline in patient services. Hospital revenue cycle management relies on having a stable, if not growing, set of patients. It also relies on having patients that trust the facility.

3. Review Processes to Find Weak Points in the System

The best way to update a hospital revenue cycle management system is to review how things are currently working and find ways to improve them. For example, if claims are being left unpaid because of registration, coding, and billing errors, a hospital may want to look into systems that reduce the amount of manual data entry being performed. Streamlining processes can make the revenue cycle more efficient.

Some of the best processes to review include how medical care is coded for insurance claims, how costs are calculated that might result in underpaid claims, and how to ensure insurance is verified more quickly. It may be worth looking into how hospital staff impacts the revenue cycle compared to healthcare technology.

How Technology Can Impact Hospital Revenue Cycle Management

When it comes to hospital revenue cycle management, technology like medical billing software can create a significant increase in revenue streams. Technology has the ability to reduce errors in transmission as well as verify information that was submitted by a patient.

Other ways technology can impact hospital revenue cycle management are:

• Improving the quality of financial assistance applications: Not only does technology increase the number of applications, but it gives people a user-friendly way to provide accurate data that improves the quality of financial assistance applications.
• Increasing how much patients pay for their bills: When patients have access to transparent billing statements, they are more likely to review them and set up payment arrangements. Medical billing software gives patients multiple payment options for convenience.
• Encouraging patient engagement: Patients that engage with their healthcare facilities tend to be happier with their quality of care. The happier patients are, the more predictable their revenue cycle becomes, which makes management much easier.

Technology can also make employees more efficient. This is yet another way that hospitals can improve their revenue cycles – more efficient employees mean more work gets done in the same amount of time, which means less money is spent on payroll.

Why Optimize Hospital Revenue Cycle Management Today

While hospitals certainly have some security in any economy, the most successful hospitals know how to optimize their hospital revenue cycles. They constantly strive to innovate processes that increase revenue while working to eliminate procedures that contribute to inefficiencies. They are updating their policies before the IRS even updates theirs.

Optimizing hospital revenue cycle management gives every hospital the chance to improve the patient experience by making financial assistance easier to get and increase hospital revenues through patient engagement and quality of care.

Every hospital needs to spend time reviewing their revenue cycle whenever they can.

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Staying organized while adhering to IRS 501(r) compliance requirements is critical if hospitals want to maintain their tax-exempt status. Failure to comply with even one of the requirements can result in a hospital losing its 501(c)(3) status.

Fortunately, every hospital can maintain its tax-exempt status by following the IRS 501(r) compliance requirements and focusing their organization efforts around those guidelines. Hospitals can achieve this through cloud-based technology and diligent processes.

How Organization Improves IRS 501(r) Compliance

When it comes to ensuring a hospital is meeting all of the IRS 501(r) compliance requirements, organization is an effective way to keep track of internal duties and responsibilities. Getting and staying organized may not be at the top of any professional’s to-do list, but it can ensure a hospital facility meets important deadlines and performs all required tasks.

If a hospital is serious about creating a compliant environment, workspace and digital organization can improve a hospital’s IRS 501(r) compliance requirements by:

• Improving workflow efficiency: Whether organizing a corner desk or a cloud-based desktop, having an organized workspace makes it easier to access frequently used files, software, and systems.
• Reducing errors: Being organized means hospital executives are less likely to create small mistakes that can lead to losing their 501(c)(3) tax-exempt status – or put patient information at risk.
• Increasing attention to detail: The fine points of IRS regulations are where many organizations have trouble, but organization makes it easier to focus on critical details.
• Creating crucial processes: For digital organization, hospitals can create automated systems that make IRS 501(r) compliance more intuitive and less prone to risk.

While it isn’t a new concept, organization gives healthcare professionals the mental and physical space to perform their jobs. When they have quick access to their productivity tools and a workspace that is free of clutter, hospital executives can get their jobs done with less stress and without losing important documents.

Organization and cloud-based workflow solutions are also critical to staying in compliance with HIPAA regulations. The right technology can reduce paperwork and make it easier for patients to apply for secure medical financing.

How to Get Organized While Following the IRS 501(r) Compliance Requirements

IRS 501(r) compliance requirements have a lot of fine points for hospitals to follow. Every hospital facility should have a streamlined approach to organization if it wants to cover all of the details.

1. Create an IRS 501(r) Compliance Checklist

The minute details of IRS Section 501(r) can create problems for hospitals that aren’t organized. An IRS 501(r) compliance checklist can ensure each requirement is met. The checklist should be as comprehensive as possible and include things like:

• What policies need to be written or revised to comply with IRS requirements
• When reports and tax documents are both available from and due to the IRS
• How the hospital plans to approach the three-year Community Health Needs Assessment requirements

Once the checklist is complete, a timeline should be constructed to approach each of the checklist components.

2. Set Up a Calendar for Reporting Documents and Deadlines

Every hospital – like any business – is required to submit annual reports and tax documents to the IRS. To get organized and set the hospital up for success, a calendar should be completed that includes deadlines for anything that needs to be submitted, like:

• Audited financial statements to the IRS every year
• Form 990 with all community involvement for the taxable year
• Community Health Needs Assessment progress updates based on the previous assessment’s results

While a desk or wall calendar can be a practical place to write these dates, a web-based calendar will offer the ability to set up reminders for the deadlines.

3.  Schedule a Plan for Reviewing Written Policies

Whether a hospital is creating their first written policies for IRS Section 501(r) or it is just reviewing the policies for compliance reasons, every hospital should have a plan for when and how often it will review those policies. Policies that routinely need to be reviewed are:

• Financial Assistance Policy
• Emergency Medical Care Policy
• Billing and Collections Policy

Each of these policies is comprehensive and has its own set of requirements, which is why hospitals should put together the compliance checklist before scheduling their plans.

Tips for Staying Organized While Adhering to the IRS 501(r) Compliance Requirements

Organization is just the first step to ensuring a hospital is properly adhering to IRS 501(r) compliance requirements. Once a hospital gets organized, the trick is staying organized while dealing with the day-to-day activities of financial assistance.

Hospitals that want to stay organized while adhering to IRS Section 501(r) requirements should:

• Create digital reminders: Either a reminder on a mobile device or a web-based reminder that pops up on a laptop, digital reminders will help keep hospitals on task by making sure the right people get the job done on time.
• Use technology to automate processes: Cloud-based technology, like medical billing software, can streamline processes and reduce the errors associated with manual data entry while also speeding up the time it takes for hospitals to get paid.
• Delegate tasks to other professionals: Consider hiring a tax professional to outline how the IRS 501(r) requirements impact the hospital. A tax professional can ensure hospitals are following the most recent guidelines.

Every hospital executive and healthcare professional has a different method for staying organized, but hospitals should have policies and procedures in place that ensure all aspects of the 501(r) requirements are addressed.

How Technology Can Help Hospitals Stay Organized

Technology is one of the most effective ways for hospitals to get and stay organized while following IRS 501(r) compliance requirements. Medical billing software, like Charity Care Management Software, can increase a hospital’s capacity to organize data while providing a premier patient experience.

Charity Care Management Software offers critical benefits that can help hospitals manage HIPAA and IRS requirements, like:

• Enabling patients to submit web-based applications at their convenience.
• Providing quick decision-making capabilities to hospital administrators.
• Consolidating information to make end-of-year reporting more efficient.

This will not only save time but reduce the amount of paperwork hospitals deal with every year, making Charity Care Management Software a practical solution.

The post How to Stay Organized While Adhering to IRS 501(r) Guidelines appeared first on Charity Care Management Software - Caritas360.

From senior management professionals to CEOs to financial planners, staying on top of IRS regulations is critical for hospital organizations with tax-exempt status. It can also be a serious time constraint for many executives in the healthcare industry. Regulations change or are added frequently, and they often come with a list of new tasks to accomplish, like implementing new policies and putting together extensive reports.

Recent updates to the Affordable Care Act – IRS Section 501(r) – have made it more tedious for 501(c)(3) healthcare organizations to retain their tax-exempt status. While the regulations help provide financial security to low-income patients, they add a layer of complexity to hospital guidelines. They can, however, make hospital financial policies more efficient when used correctly.

How IRS Section 501(r) Impacts 501(c)(3) Healthcare Organizations

The Affordable Care Act (ACA) went into effect on March 23, 2010. As part of ongoing efforts to make the ACA more effective for low-income patients, updates to the regulations were made on December 29, 2014.

There are several key dates associated with the ACA updates:

• 501(r) provisions: All of the 501(r) provisions, except the CHNA requirements, are applicable to tax years beginning after the ACA was enacted in 2010.
• 501(r) regulations: All of the 501(r) regulations apply to the tax years that begin after December 29, 2015. Prior tax years need to have a “reasonable, good-faith interpretation of Section 501(r)[.]”
• CHNA requirements: The CHNA requirements apply to tax years that begin after March 23, 2012.

These requirements apply to any facility in the United States (50 states and Washington D.C. only) that is licensed or registered as a hospital organization. Organizations that operate multiple buildings in the same state are considered one facility, but out-of-state buildings will likely be considered separate facilities.

Failure to follow the ACA regulations can pose a serious risk to 501(c)(3) healthcare organizations. The biggest threat to a tax-exempt hospital that doesn’t adhere to these new requirements is losing their 501(c)(3) eligibility – losing their tax-exempt status puts an entire organization in danger. Fortunately, the requirements aren’t difficult to adopt.

The Comprehensive Guide to IRS Section 501(r) Requirements

In addition to the IRS 501(c)(3) requirements, IRS Section 501(r) enhances the minimum financial and emergency medical care requirements of hospital facilities that maintain tax-exempt status.

Section 501(r)(3): Community Health Needs Assessment

Section 501(r)(3) focuses on the Community Health Needs Assessment. This may include everything from preventing illnesses to addressing the behavioral, environmental, and social factors that impact the community.

There are two components of Section 501(r)(3):

• 501(r)(3)(A): The first requirement of Section 501(r)(3) is that every hospital must conduct a community health needs assessment (CHNA) once every three years. The organization must also implement a strategy that meets the needs identified in the CHNA.
• 501(r)(3)(B): The second requirement of Section 501(r)(3) governs the CHNA. It mandates that the CHNA allow for input from people “who represent the broad interests of the community”, and that the CHNA be made available to the public and widely distributed.

Every hospital organization is required to document its CHNA in a comprehensive report that includes a definition of the community the hospital serves, how the CHNA was conducted, and a thorough description of the interests and needs of the community. The report also needs to cover all efforts made to encourage feedback from low-income, medically underserved, and minority populations.

Section 501(r)(4): Financial Assistance Policy and Emergency Medical Care Policy

To ensure that hospitals offer emergency medical care and medically-necessary care, the ACA requires stringent financial standards around those services.

Section 501(r)(4) requires hospital facilities to establish two different types of policy for financial assistance in emergency situations:

• Financial assistance policy: The FAP needs to cover all medically-necessary care, including emergency services. It needs to establish criteria for any financial assistance, how to apply for assistance, and how patients are charged.
• Emergency medical care policy: To qualify what counts as emergency care, hospital facilities must establish a policy that defines emergency medical conditions they treat. Generally, if a hospital accepts Medicaid, they cover the appropriate medical conditions.

The FAP must include information about all discounts and free healthcare they offer, and anyone that is FAP-eligible cannot be charged more than the Amounts Generally Billed (AGB.) The AGB policy should be outlined in the FAP, as well.

Section 501(r)(5): Limitation on Charges

Expanding on the financial assistance policy, Section 501(r)(5) covers the limitations on charges a hospital can bill its FAP-eligible patients.

The limitations on charges are determined based on whether or not care is considered medically necessary by the hospital’s policies:

• Medically-necessary care: Hospital facilities can choose to define medically-necessary care by using the Medicaid standards, other standards required by state law, or a generally-accepted standard of care in the community.
• All other medical care: For medical care that isn’t considered necessary, the limitations on charges mandate that FAP-eligible patients receive care that is less than the standard gross charges for the care.

Both of these situations rely on the AGB calculation. However, every hospital facility can choose how it wants to calculate AGB. The two acceptable ways to determine AGB are with the look-back method or the prospective method. Each hospital must choose one, and organizations with multiple facilities can choose different options for each facility.

Section 501(r)(6): Billings and Collections

Section 501(r)(6) exclusively deals with how hospital facilities engage in billing and collection activities concerning FAP-eligible patients.

To ensure patients have sufficient time to see if they qualify for financial assistance, hospitals must make a reasonable effort to determine eligibility during the:

• Notification period: After a billing statement is sent post-discharge, the 120-day notification period begins. Hospitals should provide written notification of financial assistance options, as well as make reasonable efforts to verbally notify patients of their options.
• Application period: The application period, which begins at the same time as the notification period, is 240 days long. Patients are eligible to apply for financial assistance during this period and can apply for assistance for multiple episodes of care.

Before engaging in “extraordinary collection actions”, or ECAs – this includes activities like selling the debt to a third-party or reporting negative information to credit bureaus – hospitals must make reasonable efforts to notify people of their financial assistance options.

IRS Section 501(r) Reporting Requirements for 501(c)(3) Healthcare Organizations

In an effort to streamline financial reporting for ACA guidelines, IRS Section 501(r) requires every hospital facility to use Form 990, Schedule H, Hospitals.

Hospitals can use this form to list out the community benefits it provides during the tax year, including its:

• Community Health Needs Assessment
• Financial Assistance Policy
• Emergency Medical Care Policy
• Billing and Collection Policy

If a hospital has more than one facility, they must also complete Section B for each of the facilities listed in Schedule H, Section A. Each hospital must also submit an audited copy of their financial statements. Any hospital that wants to obtain or retain its 501(c)(3) tax-exempt status must submit the required reports and statements every year.

How to Create an IRS Section 501(r) Compliance Checklist

Staying in compliance is a top concern of most healthcare professionals. Whether someone is putting together policies for a new hospital facility or trying to salvage policies of an existing organization, an IRS Section 501(r) compliance checklist is the most efficient way to ensure every detail is covered.

1. Schedule the Community Health Needs Assessment

A CHNA needs to have been performed within the last two taxable years for it to qualify. There are five required steps to conducting a CHNA that should go in a compliance checklist:

• Define the hospital’s community
• Assess the healthcare needs of the community
• Solicit input from members of the community
• Document the CHNA process in a report
• Provide the CHNA report to the public

For this step to be considered complete, a hospital facility must perform all of these steps, including the distribution of the CHNA report to the public. The report must be considered widely available to the public, as well.

2. Set Amounts Generally Billed

Section 501(r) requirements base several performance indicators on how a hospital sets its AGB. The look-back method should include claims from a prior 12-month period by:

• Only Medicare fee-for-service
• Medicare fee-for-service and private insurers that paid claims to the facility
• Medicaid, either by itself or with Medicare and private insurers

Hospitals that choose the look-back method of calculating AGB should provide the AGB percentage the facility uses plus describe how they were calculated. For the prospective method, hospitals can use:

• Medicare fee-for-service
• Medicaid
• Both

The FAP has the option to explain how people can find the appropriate information and how they can calculate the AGB. This information must be provided in writing and at no charge.

3. Establish Written Financial and Emergency Policies

To create a comprehensive IRS Section 501(r) compliance checklist, a hospital organization needs to establish a financial assistance policy that addresses several requirements by including:

• Eligibility criteria and basis for calculating charges
• Information on how to apply for financial assistance
• What may happen if a bill remains unpaid
• A plain-language summary of the policy
• Translation of documents where applicable

The FAP is one of the most important components of Section 501(r) requirements and, in conjunction with the emergency medical care policy, provides care for eligible patients without discrimination.

4. Adopt an Appropriate Billing and Collection Policy

The goal is to verify whether patients are eligible for financial assistance before engaging in ECAs. Hospitals that sell the debt to third-parties are equally responsible for ensuring:

• No ECAs are attempted to collect payment of the debt
• Interest is not charged in excess of the legal rate
• Debt is returnable or recallable to the hospital if FAP-eligibility is verified
• The patient does not overpay once FAP-eligibility is verified

While this type of sale isn’t considered an ECA and doesn’t require reasonable efforts to be made before making the sale, if any of these conditions are not met, the sale cannot happen until those efforts have been made.

5. Create a Timeline for Reporting Standards

The IRS generally expects hospital facilities to submit reports annually. Creating a timeline for when each report is due is the final touch to the compliance checklist:

• CHNA report: While this assessment is only performed once every three years, the CHNA report should include any efforts made to solve community health needs.
• Audited financial statements: These will need to be submitted every year and will likely take the most time to prepare.
• Financial and emergency care policies: Every facility will need to submit this information as part of Form 990, Schedule H, Hospitals.
• Billing and collections policy: This should include information on any payments the hospital collects as well as any debt that is sold to third-parties.

An efficient reporting process will start with the data that is most easily accessible and build from there, though it is best to consult a tax professional before putting together a reporting process to ensure all IRS regulations are met.

How to Maintain IRS Section 501(r) Compliance

Creating a compliance checklist is just one step in putting together a policy that meets the IRS Section 501(r) requirements. Compliance requires a commitment to put policies and processes in place that conform to rigorous IRS standards.

There are other ways to keep a hospital in full compliance, though:

• Invest in software and technology that is designed around 501(r) compliance standards.
• Hire a tax professional to ensure adequate reporting standards are in place.
• Routinely monitor regulations and update processes accordingly.

While updates to the ACA can be frustrating and confusing, they offer an opportunity to review hospital policies. Advancements in technology can streamline processes and a tax professional can find ways to make policies more efficient. With help, maintaining IRS Section 501(r) compliance can be a simple task.

The post The Comprehensive Guide to IRS Section 501(r) appeared first on Charity Care Management Software - Caritas360.

Like patient satisfaction, patient engagement is an effective way to encourage people to continue using a particular hospital facility or doctor’s office. People have choices for their medical care, and they want to work with healthcare organizations that put patient needs first.

This means hospitals have one more thing to focus on, though it doesn’t have to be exacerbating.

With all of the IRS requirements that hospitals have to follow, patient engagement can seem like a small detail in a sea of regulations. However, patient engagement can increase a hospital’s bottom line through effective hospital revenue cycle management.

What is Patient Engagement and is it Important for Hospitals?

Today, people have access to a wealth of medical information at the tip of their fingers. While this certainly has its risks, it is primarily beneficial for patients to take their health into their own hands. When people take control of their health, they are able to make better decisions about their medical care and their finances.

Patient engagement is the complex interaction between a person, their health, and their healthcare team. Small ways hospitals can encourage patient engagement include:

• Allowing patients to access their medical records online
• Giving patients the ability to schedule appointments online
• Offering patients a web-based financial assistance application
• Accepting payments online regardless of financial assistance eligibility
• Encouraging patients to monitor their nutritional intake and exercise habits

Part of patient engagement is giving patients more transparency. Medical records were (and in some cases, still are) extremely hard to obtain for most patients. Healthcare organizations can empower their patients by giving them full access to their medical records – this gives people the chance to ask questions that can lead to future appointments and medical services.

For hospitals, patients are customers. The success of the organizations depends on having patients that are satisfied with both their quality of care and the financial impacts of that care. If patients are satisfied with their care, they are also more likely to take care of unpaid medical bills.

How Patient Engagement Can Impact Hospital Revenue Cycle Management

Hospital revenue cycle management gives healthcare organizations the opportunity to control how patient engagement impacts revenue. It approaches the revenue cycle from a patient-to-patient perspective so hospitals can see where they make the most impact.

1. Patients Can More Easily Access Their Billing Statements

One aspect of patient engagement is giving patients access to their billing statements. This may include providing more comprehensive information about the items in the bill as well as a breakdown of how financial assistance is applied to any charges.

Hospitals that rely on the mail system to deliver billing statements are at a significant disadvantage. Mail gets lost regularly and it’s easy for people to avoid opening a non-descript envelope. Medical billing software that has email functionality can improve collection efforts for hospitals, which helps manage the revenue cycle more efficiently.

2. Patients Can Apply for Financial Assistance More Quickly

For a hospital to maintain its 501(c)(3) status – which it needs if it’s going to accept payments for Medicare and Medicaid patients – it must have a policy in place that outlines criteria for financial assistance eligibility. A web-based application can increase the number of people who apply for aid.

An online application for financial assistance typically takes less time to complete than an application by mail or over the phone, and medical billing software like Charity Care Management Software has integrated features like the ability to save and return later. This makes it more likely someone will apply for financial assistance, which helps streamline the hospital revenue cycle.

3. Patients Can More Readily Return to the Same Hospital

Some patients are going to need more medical care than others. Hospitals want to encourage those patients to return to their facility and patient engagement is one way to improve the chances that they will, which helps set a foundation for hospital revenue cycle management.

With online financial assistance applications, patients may be able to apply for help with more than one medical bill. Giving patients the ability to take care of several billing statements at once is an effective way to ensure they return to the same facility. Patient engagement ensures that hospitals see continued investment from their patients.

Tips for Increasing Patient Engagement and Satisfaction

Increasing patient engagement and satisfaction should be a significant focus of healthcare professionals. Not only does it help with hospital revenue cycle management, but it also increases the likelihood that patients will refer people to the same hospital. All of these are ways to increase a hospital’s bottom line.

Fortunately, there are ways to increase patient engagement and satisfaction with a little planning and investment:

• Encourage patient feedback: Whether in the form of anonymous surveys or public reviews of the facility, patients appreciate being able to leave actionable feedback for hospitals.
• Give patients a portal: Most people want to be able to access their health information online and a billing portal supports both their wants and the hospital’s needs.
• Offer patients the chance to participate: Many patients want to be able to participate in their healthcare, so provide an extra level of transparency to get conversations started.

Every hospital facility is different, but there are some common things hospitals can do to encourage patient engagement and, ultimately, hospital revenue cycle management.

How Medical Billing Software Can Improve Patient Engagement

Before people had choices in their medical care, hospitals didn’t focus as heavily on providing a platform for patient engagement. Patient satisfaction might have been a follow-up call from a rushed nurse. With advancements in technology, though, hospitals have a unique opportunity to enhance their services and improve their hospital revenue cycle management.

Medical billing software, like Charity Care Management Software, puts control of their healthcare in the patient’s hands. It enables them to apply for financial assistance from the comfort of their home, gives them access to their billing statements, and provides a convenient way to pay bills. All of these patient engagement techniques lead to a healthy hospital revenue cycle.

The post How Patient Engagement Impacts Hospital Revenue Cycle Management appeared first on Charity Care Management Software - Caritas360.