201 W. Short St.

Lexington, KY 40507

October 3, 2011

Douglas H. Shulman

Commissioner of Internal Revenue

Room 5203

Internal Revenue Service

Courier’s Desk

1111 Constitution Avenue, NW

Washington, DC 20224

Re: Holding Hospitals Accountable for Financial Assistance and Community Benefit

Dear Commissioner Shulman:

We were disappointed to learn of the Internal Revenue Service’s (“the Service”) recent decision[i] to make reporting on compliance with consumer protections in the Affordable Care Act (“ACA”) optional for tax-exempt hospitals for Tax Year 2010. These protections, found in Section 9007 of the ACA and codified as Section 501(r) of the Internal Revenue Code, offer significant relief from medical debt and improve access to health care for low- and middle-income families.[ii]

We represent health care consumers in the Commonwealth of Kentucky. We have experience working with local hospitals regarding financial assistance and community benefit. These programs provide essential services for some of the neediest in our state. We were greatly encouraged by the ACA’s provisions and do not want to delay implementation of these important policies.

Information about financial assistance and other community benefit programs can be difficult for consumers to consistently obtain from hospitals in Kentucky. Requiring every tax-exempt hospital to report detailed information about these programs is consistent with the ACA requirements and a strong step forward to ensuring that communities have consistent, comparable information about the programs offered by their local hospitals. We are concerned that the Service’s decision to delay reporting on ACA compliance will unintentionally keep communities and individual consumers in the dark about programs that can give them access to timely health care they can afford.

Based on our observations of the issues facing our community, we believe that:

  • The requirements for tax-exempt hospitals found in Section 501(r) are a critical, if underappreciated, building block for successful implementation of the ACA.[iii]
  • Though tax-exempt hospitals could face additional reporting and may need to adjust their policies to comply with the ACA’s requirements, the brunt of the burden of inadequate financial assistance, billing and community benefit practices falls on consumers. When establishing reporting metrics and guidance, the Service should place equal weight on the impact its policies will have on vulnerable populations and communities served by tax-exempt hospitals.
  • There is significant and immediate need for the Service to issue additional guidance on Section 501(r) that prioritizes the needs of vulnerable communities.

We urge the Service to ensure reporting requirements are thorough and enforced for Tax Year 2011 and beyond and to develop consumer-friendly guidance on these provisions this year. As you consider guidance and reporting for Tax Years 2011 and beyond, we welcome the opportunity to discuss our recommendations and experiences in Kentuckyin greater detail with you and your staff. If you would like additional information, please do not hesitate to contact us at (859) 233-0323.Thank you for your many efforts in this arena to date.

Sincerely,

Anne Hadreas, Health Law Fellow

Kentucky Equal Justice Center

Lexington, KY

Julianne Ewen, President

Kentucky Coalition of Nurse Practitioner and Nurse Midwives

Louisville, KY

Cindy M. Rosser, M.Div.

Michael Quinlan Brain Tumor Foundation

Brain Injury Alliance of Kentucky

Louisville, KY

Marian McClure Taylor, Executive Director

Kentucky Council of Churches

Lexington, KY

cc:Timothy Geithner, Secretary, United States Department of the Treasury

Kathleen Sebelius, Secretary, United States Department of Health and Human Services

[i] “Portion of Form 990 Schedule H Optional for Tax-Exempt Hospitals for Tax Year 2010,” Internal Revenue Service Announcement 2011-37. Accessed June 22, 2011 at

[ii] See Section 9007 of the Patient Protection and Affordable Care Act (Pub.L. 111-148 and 111-152).

[iii]Under the Affordable Care Act, tax-exempt hospitals must:

  • Develop written, robust financial assistance policies
  • Fairly limit what they charge for services
  • Avoid taking extraordinary debt collection actions without first making reasonable efforts to qualify patients for financial assistance
  • Develop and implement plans to address community health needs, in consultation with community members and public health experts.