“Provider Listing” Requirement of the Affordable Care Act

By Rachel Spurlock and Janice M. Smith
| 6/30/2015

Time is running out for charitable hospitals to comply with the final regulations under IRC Section 501(r), which was added by the Patient Protection and Affordable Care Act of 2010. Hospitals must comply with the final regulations, which dictate the requirements of financial assistance, emergency medical care, and billing and collection policies – as well as the requirements of community health needs assessments – for tax years beginning after Dec. 29, 2015.

The most controversial provision of the final regulations is the requirement that a hospital’s financial assistance policy (FAP) must list the providers, other than the hospital facility itself, delivering emergency or other medically necessary care in the hospital facility and specify which providers are covered by the FAP (and which are not). The hospital community argues that this requirement could mean listing literally thousands of physicians and other providers by name and maintaining a list that could change daily. The Association of American Medical Colleges (AAMC) and the American Hospital Association (AHA) wrote a joint letter in May to the IRS and U.S. Department of the Treasury requesting that the provider listing requirement be withdrawn, arguing “this regulatory requirement was unexpected, is confusing and extraordinarily burdensome for hospitals, and will not provide patients with information they need.” Among other things, AAMC and AHA asserted that the provision was not included in any proposed regulations and that the hospital community did not have an opportunity to comment on the requirement.

The IRS has responded to hospital industry pressure by releasing IRS Notice 2015-46. Significant provisions of the notice include:

  • A hospital facility may include the name of a practice group rather than the name of each individual doctor. Alternatively, a hospital facility may specify providers by reference to a department or a type of service.
  • The listing must make clear to the consumer which services are and are not covered by the FAP.
  • If a provider is covered by a hospital facility’s FAP in some circumstances but not in others, the hospital facility must describe the circumstances in which the care delivered by the provider will and will not be covered.
  • A hospital facility may maintain the list of providers in a document separate from the FAP. The list must be dated and available to the public free of charge.
  • Although updates to the FAP require approval of the hospital’s board of directors, updating the provider list is not considered an update to the FAP that requires board approval.
  • A hospital facility that updates its provider list at least quarterly will be considered to have taken reasonable steps to ensure that the list is accurate for purposes of the penalty provisions of Section 501(r). 

Notice 2015-46 attempts to balance legitimate concerns from the hospital provider community about maintaining a burdensome disclosure requirement with the concerns of community advocates seeking to inform patients of the extent and reach of financial assistance that is available to them. With hospitals now working diligently to achieve compliance with the Section 501(r) final regulations, it is hoped that this clarification will ease some of the burden of the provider listing requirement and allow sufficient time to create the list and a process to maintain it regularly.

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Rachel Spurlock
Partner, Healthcare Tax Services Leader
Janice Smith
Janice Smith
Managing Director