ACA Requirements for Nonprofit Hospitals
Section 501(r) of the Internal Revenue Code (added by the ACA) requires nonprofit hospitals to: (1) establish a written financial assistance policy (FAP), (2) publicize the FAP widely in the community, (3) limit charges to financially assisted patients to the amount generally billed to insured patients, (4) not engage in extraordinary collection actions (liens, lawsuits, wage garnishment) before determining FAP eligibility.
What Constitutes Adequate Publicity
Hospitals must: post the FAP on their website, provide written notice to patients before discharge and with billing statements, make FAP applications available in person and online, translate materials into languages spoken by significant populations in the service area, and notify patients of the FAP through signage in the emergency department and admissions areas.
Extraordinary Collection Actions
Before engaging in extraordinary collection actions (selling debt, reporting to credit bureaus, suing, garnishing, placing liens), the hospital must: notify the patient about the FAP, provide an application, allow a reasonable application period (at least 120 days), and process any submitted application. Actions taken before completing this process may violate Section 501(r).
Enforcement
If a nonprofit hospital fails to comply with Section 501(r), it risks losing its tax-exempt status. File complaints with: the IRS (Form 13909), your state health department, your state attorney general, and CMS. Community health advocacy organizations can also help hold hospitals accountable.
Frequently Asked Questions
What if the hospital never told me about charity care?
If the hospital failed to publicize its FAP or offer you an application, they may have violated Section 501(r). You can still apply retroactively. The hospital's failure to notify you may also be a defense against collection actions.
Can a hospital sue me if I applied for charity care?
Not while the application is pending. Under Section 501(r), the hospital must process your application before taking any extraordinary collection action. If they sue you while an application is pending, bring this to the court's attention.
Does charity care apply to emergency room visits?
Yes. Nonprofit hospital charity care applies to all services provided by the hospital, including emergency room visits. Emergency rooms must treat you regardless (EMTALA), and the financial assistance policy applies to the resulting bill.
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