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July 10, 2012 10:16:49 am

AHA Responds to Proposed IRS Rules for Nonprofit Hospital Debt Collection

The Internal Revenue Service (IRS) has issued proposed rules for nonprofit hospitals for the collection of debt.  The rules are in response to the consumer protections portion of the Affordable Care Act (ACA).   Approximately six in ten hospitals will be impacted by the rules if they go into effect. 


The American Hospital Association (AHA) disagrees that the new rules are necessary.  In an email statement, an AHA representative said, “America's hospitals strive to be responsive to the patients and communities they serve and many have developed innovate ways to make patients aware of financial assistance available to them.  The IRS proposed rules could discourage hospitals' innovations and best practices, because they are overly prescriptive.” 


The rules would prevent hospitals from using aggressive debt collection tactics against low-income patients who don’t pay their medical bills, including:

  • Reporting negative information about the patient to the credit reporting agencies
  • Placing liens on a patient's property
  • Foreclosing on real property
  • Seizing bank accounts or other personal property
  • Filing civil suits
  • Causing arrests or detainment, and
  • Garnishing wages.


The AHA said it will work to improve the proposed rules.  The public comment period ends September 24, 2012, with the rules expected to take effect shortly thereafter. 


For a more detailed report on proposed IRS rules, please visit Fox Business.   To learn more about REDW’s Tax services, please contact Jimmy Trujillo; for Healthcare services, please contact Steve Cogan or Chris Tyhurst. 


The information contained in this blog is not intended to be tax advice, is of a general nature, and is based on authorities that are subject to change. Application to your specific situation should be determined in consultation with your tax advisor. IRS Circular 230 Disclosure: Any tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any matters addressed herein.


Tags: Healthcare, Tax


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