irs

Study: Few hospitals offering subsidized EMRs

Anne Zieger — Wed, 24 Sep 2008 09:46:19 -0400

When HHS and the IRS both gave their OK to hospitals offering subsidized EMRs to their physicians, it was a big day. Hospitals had been waiting impatiently for the go-ahead for quite some time, and many implied that they were eager to move ahead. As it turns out, though, surprisingly few have moved forward with such programs, according to a new study from the Center for Studying Health System Change.

The study, which looked at 24 hospitals in 12 metro areas, found that hospitals were holding off because they weren't getting much interest from physicians, were investing their energy in other projects, or their budgets had little room to pay for such a subsidy. Of the 24 hospitals studied, only seven were developing a strategy for offering subsidies for EMR purchases, and only four had near-term plans to roll out such subsidies.

Researchers found that the most common subsidy approach was direct financial support to physicians with access to EMR discounts received by the hospital. Some hospitals, meanwhile, favored subsidizing EMRs for doctors less than the 85 percent maximum allowed--or using other strategies to force doctors to make a bigger financial commitment.

To learn more about this study:
- read this Modern Healthcare article (reg. req.)
- read this Center for Studying Health System Change issue brief

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SPOTLIGHT: IRS probe triggers firing of OH hospital exec

Anne Zieger — Tue, 15 Jul 2008 20:08:29 -0400

A publicly-owned health system based in Cleveland has fired its top facilities executives after an IRS inquiry suggesting that he accepted gifts from a construction firm. MetroHealth System dug into the behavior of Vice President of Construction and Facilities John Carroll after it got a letter from the IRS. In the letter, the IRS said that Cleveland's East West Construction Company had distributed gift cards for local retailers through Carroll, as well as channeling gifts, dinners, and payment for hotel and travel charges to system employees. Article

Case study: WY hospital expands charity care

Anne Zieger — Wed, 25 Jun 2008 01:24:53 -0400

A Wyoming hospital has expanded its charity care policy to allow more patients to qualify for free care, one of many not-for-profits taking steps to make sure they will make the right impression when they fill out their Form 990 Schedule H. Right now, Wyoming Medical Center incurs about $30 million annually in uncompensated care expenses, 80 percent of which comes from bad debt and 20 percent of which pays for charity care. Elsewhere, it's more common for there to be a 50/50 split, according to hospital CEO Nancy Brandt. To address this inequity, the hospital will now use a sliding scale when it comes to charity care, and allow patients at 200 percent or less of the federal poverty level to apply for free care. It will also let patients with income of up to 275 percent of the federal poverty level to apply for some form of subsidized care. To help facilitate the application process, the hospital is switching out its five-page application for a much simpler one-page application that is estimated to take five minutes to complete. While the previous form asked questions about patient circumstances, the new form will ask questions only related to income verification.

To learn more about the hospital's program:
- read this InsideARM article

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CMS now says NPI must match IRS data

Anne Zieger — Wed, 18 Jun 2008 00:40:09 -0400

Providers have been going through some serious headaches already working to make sure they use their National Provider Identifier number properly to avoid getting claims bounced by Medicare. Now, CMS has raised the stakes again. In a move that surprised most observers, the agency announced that doctors will have to reconcile their NPI data with their IRS legal name data if they want to get their Medicare claims paid.

This is an extremely stringent requirement that should prove quite difficult to meet, experts say. Every aspect of a doctor's data must match in both databases, including exact name spellings, use of initials and even any blank spaces in the data. This new requirement only makes things worse for providers, many of whom continue to have trouble getting CMS to tell them why their claims are bouncing. All CMS will tell most physicians with NPI troubles is to start again with a new NPI enrollment, which could take months to process. Now, with the new and unexpected demand to match IRS data, providers could be faced with yet another reason for getting another NPI number.

To find out more about the new requirement:
- read this Healthcare Finance News article

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Not-for-profits face endowment spending pressure

Wed, 11 Jun 2008 06:59:59 -0400

As we recently reported in our sister publication FierceHealthcare, medical schools, including Harvard, have recently begun offering students much bigger subsidies on their tuition costs. Now, I don't doubt that these organizations have good intentions, but they're also under pressures that are going to be a huge source of stress for not-for-profits over the next year or two.

Over the last several months Congress, the IRS and some states have begun pushing colleges and universities (including medical schools) to spend more of their endowment funds each year, with many critics seeking to force endowments to disburse 5 percent of their assets annually. Massachusetts, for example, is considering a 2.5 percent tax on endowment assets over $1 billion.

Much of the hullabaloo is over endowments enjoyed by high-profile universities like Harvard, which controls $35 billion in such funds and makes a nice fat target. However, it's been further encouraged by the bullish returns such funds have earned; for example, from June 30, 2005 to June 30, 2008, schools with more than $1 billion in endowments earned 16.4 percent return on their investment, according to the National Association of College-University Business Officers.

In theory, this could lead to bigger subsidies for medical student tuition, more choice for students and maybe an influx students who can afford to specialize in primary care. Over the short term, however, you can be confident that the schools aren't going to take changes in endowment rules lying down.

It will be interesting to see where this leads this year. Let's see whether colleges find a way to compromise with the regulators and in the process, foster more options for medical students. While no institution likes being forced to spend money as others see fit, being forced to make medical school cheaper for worthy candidates would be an outcome the industry could benefit from, I think. How about you? - Anne

AHA says IRS form 990, Schedule H need revision

Wed, 21 May 2008 06:59:58 -0400

The American Hospital Association has filed a letter with the IRS arguing that the agency could do more to accommodate small, cash-strapped institutions in its instructions for filling out Form 990 and the accompanying Schedule H aimed at not-for-profit hospitals. The AHA's input comes as part of the IRS comment period on the draft instructions, which will remain open until June 1st.

In its nine-page comment letter, the AHA raised a number of concerns over core definitions. For example, it cited worries over the agency's definition of "subsidized services," which would exclude physician clinics, skilled nursing and ancillary services. The AHA argued that these services can often be part of a non-profit's charitable mission.

The AHA also cited several definitions that it considered to be too broad, including "key employee" and "facility," which it argued would result in healthcare organizations having to engage in onerous amounts of reporting which don't provide value to the organization itself.

To get more information on the AHA's critique:
- read this Modern Healthcare article (reg. req.)
- read the AHA letter (.pdf)

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Crisis may change tax-exempt bond rating system

Wed, 09 Apr 2008 06:59:58 -0400

With public-finance markets in turmoil, and auction-rate bond interest rates spiking to unheard-of levels, officials are starting to pay attention to the way agencies evaluate bonds. Traditionally, there's been a big gulf between the tax-exempt, municipal bond market accessed by not-for-profit hospitals and the corporate bond market tapped by for-profits. The two have been rated and managed separately for a very long time. Now, some officials are suggesting that there should be a single global rating system that would spontaneously improve the ratings of most municipal bond insurers.

Generally speaking, it has been easier to get a high rating in the corporate bond market than it is in municipal bonds. To make things work on their side, not-for-profit issuers have been using bond insurers to get the AA rating they needed to attract investors. For a long time, that was OK, but when the subprime mess turned many financial markets upside down (when the bond insurers themselves started to go south), it wasn't any more. Through no fault of their own, hospital bond issue rates skyrocketed as bond insurers' own ratings fell. This led to calls for a new ratings system.

Now, the three major ratings agencies have begun to mull such changes. Moody's for example, plans to begin issuing globally-scaled ratings for tax-exempt bonds on an issuer's request. Fitch Ratings and Standard & Poor's, meanwhile, are hanging back a bit and considering their options. However, they're likely to face continuing pressure to make more adjustments, as the tax-exempt muni bond market is far from healed.

To learn more about this issue:
- read this Modern Healthcare piece (sub. req.)

Related Articles:
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IRS seeking input on instructions for Form 990

Wed, 09 Apr 2008 06:59:54 -0400

As most FierceHealthFinance readers know, the IRS released a redesigned Form 990 last year. The new Form 990, which has sparked much discussion and controversy among not-for-profit healthcare organizations, includes a new schedule for hospitals (Schedule H) and tax-exempt bonds (Schedule K). Schedule H, which is likely to prove taxing to hospitals for the first year or two, requires hospitals to provide a lot of information on operations that it didn't before, including community benefit levels, charity care, aggregate bad debt expense, Medicare shortfall information and more.

Now, the IRS is asking the healthcare community to let it know whether its instructions for filling out this form, which include tools designed to make it easier to answer questions and to promote uniform reporting, are clear enough for public use. Through June 1 of this year, it's accepting comments on the draft instructions. The agency will post all comments on its website. To comment, you can email thoughts to Form990Revision@irs.gov in text form. Yeah, I know, this doesn't sound very exciting, but the truth is, if you don't like what they've got, it never hurts to declare that clearly in a public forum. Hey, sound off while you can!

To learn more about the Form 990 update process:
- read this Modern Healthcare piece (reg. req.)

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CA hospitals allowed to restructure debt

Wed, 19 Mar 2008 07:59:57 -0400

A group of six California hospitals and health systems won much-needed approval to restructure or refinance outstanding debt turned into a ticking time bomb by the bond crisis. The move follows similar steps by Massachusetts bond authorities, who also are dealing with their share of hospital bond crises.

At an emergency meeting of the California Health Facilities Financing Authority, the board took steps to make refinancing easier for tax-exempt hospitals and systems ready to jump out of the gyrating bond market. One big winner was San Francisco-Catholic Healthcare West, a 39-hospital system that was able to refund up to $2.2 billion to restructure auction- or variable-rate debt. The board also approved refinancing for 417-bed Hoag Memorial Hospital of Newport Beach, $69 million for 264-bed Lucile Salter Packard Children's Hospital of Palo Alto, $314 million for four-hospital Scripps Health of San Diego, $665 million for 466-bed Stanford Hospitals and Clinics, and $625 million for 22-hospital system Sutter Health.

To learn more about the hospitals' refinancing:
- read this Modern Healthcare piece (reg. req.)

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