New Rules To Limit Tactics On Hospitals’ Fee Collections

by Robert Pear, The New York Times

SalFalko / Creative Commons

SalFalko / Creative Commons

WASHINGTON — The Obama administration has adopted sweeping new rules to discourage nonprofit hospitals from using aggressive tactics to collect payments from low-income patients.

Under the rules, nonprofit hospitals must now offer discounts, free care or other financial assistance to certain needy patients. Additionally, hospitals must try to determine whether a patient is eligible for assistance before they refer a case to a debt collector, send negative information to a credit agency, place a lien on a patient’s home, file a lawsuit or seek a court order to seize a patient’s earnings.

The rules, issued at the end of last year by the Treasury Department and the Internal Revenue Service, lay out detailed requirements for nonprofit hospitals that have or want tax-exempt status, about 60 percent of hospitals nationwide.

Health care lawyers said the rules could set an industry standard, influencing the practices of for-profit hospitals, because another federal agency, the Consumer Financial Protection Bureau, had endorsed them. The bureau has broad authority to supervise credit reporting companies and debt collectors.

For-profit hospitals, like other businesses, are typically owned by investors and pay dividends and taxes. By contrast, if a nonprofit hospital earns a surplus, it is normally reinvested in the organization, not distributed to shareholders. Nonprofit hospitals may qualify for tax exemptions if they can show that they are organized and operated for charitable purposes and provide “community benefits.”

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