Tax Exempt Bonds

Hospitals likely to need help with identity theft fight, IRS rules

Anne Zieger — Wed, 22 Oct 2008 03:36:42 -0400

Hospitals are groaning and accounts receivable management companies are cheering at the federal regulations going into effect at the beginning of next month. A handful of regulatory actions affecting how hospitals deal with their financial information are likely to push hospitals into calling in extra help from vendors and consultants, observers say.

As we've previously reported, starting November 1, hospitals will be required by the FTC to develop a written plan of how they will comply with new Red Flag Alert legislation, designed to force creditors to protect consumers from identity theft. Hospitals must make sure the monitoring is based on the facility's specific history with identity theft, updated annually and approved by its board. Also, at the beginning of 2009, hospitals will have to deal with revisions to IRS Form 990, which requires hospitals to document management policies, political campaigning and lobbying, non-cash contributions and information on tax-exempt bonds.

Tougher regulations like these are creating an opportunity for vendors like TransUnion and software vendor nTelagent, which offer software that verifies a patient's identity to fight identity theft. Tools like these offer providers methods for tracking down inaccurate Social Security numbers, doubtful age information, questionable insurance data and more. Some packages like these offer prompts to employees telling them how to handle the specific issue, too.

Meanwhile, hospitals are likely to need plenty of consulting help compiling information for their Form 990s, which will require information on governance and management, political campaigning and lobbying, non-cash contributions and tax-exempt bonds. Later, in the 2010 filing year, the ante will only be raised further, will hospitals being required to document bad debt expense and charitable giving.

To learn more about the changes:
- read this InsideARM piece

Related Articles:
FTC cracks down on medical identity theft
Trend: Identity thieves get better at stealing medical records
The growing problem of medical identity theft
IRS releases instructions for new Form 990

Turmoil ensues as Wells, Citi fight for Wachovia

Anne Zieger — Tue, 07 Oct 2008 16:05:43 -0400

In our last issue, we made it sound as though the $2.16 billion acquisition of Wachovia's banking assets by Citigroup was a done deal. We alerted you to the acquisition, by the way, because Citigroup is the largest manager of tax-exempt bonds--an important vehicle for many healthcare organizations--and you can never tell what difference such a change in ownership structure would make.

Well, what a difference a week makes. Only a couple of days later, Wells Fargo came in with a $7 a share competing offer, far besting Citi's $1 a share bid. Wells Fargo is proposing to buy both Wachovia's brokerage and banking operations, a move that would create a huge entity that would rival Citibank on the retail banking side of the house.

Now, Citi and Wells Fargo are locked in a legal battle over the right to gobble up Wachovia. As of this writing, Citigroup had won a legal victory from a New York judge, which temporarily blocked Wells Fargo from negotiating with Wachovia by extending Citi's exclusivity agreement. However, analysts say Wells Fargo is far from out of the game, given the fact that it's bidding more and that the buyout won't call for government assistance (which Citi's will).

To learn more about this battle:
- read this Associated Press article

Related Article:
Healthcare lending leader Citigroup acquires Wachovia

Healthcare lending leader Citigroup acquires Wachovia

Anne Zieger — Wed, 01 Oct 2008 10:03:44 -0400

The market turmoil has wreaked yet another change in the financial landscape for healthcare financial managers with the acquisition of banking company Wachovia by healthcare lending colossus Citigroup for $2.16 billion. The acquisition, part of an industry reorganization that could expand substantially, consolidates the healthcare lending market just a bit further. It leaves untouched Wachovia's brokerage operations, however, which weren't part of the deal.

Citigroup, at present, ranks as the largest manager of tax-exempt bonds, with a full one-fifth of the market, according to Thomson Reuters. The buyout comes one week after Bank of America agreed to pick up Merrill Lynch in a $50 billion stock deal. Stay tuned for more consolidation to come--we'll keep you posted.

To learn more about the acquisition:
- read this Modern Healthcare piece (reg. req.)
- read this piece from FierceFinance

Updates on regulatory risks

Anne Zieger — Thu, 19 Jun 2008 10:23:28 -0400

Because everyone uses healthcare, regulators take a shot at the system from time to time to prove that they're paying attention. Still, things are particularly intense this year, with tax issues and financing questions looming larger than they have before. With tax exemptions for non-profit hospitals under scrutiny, the use of tax-exempt bonds being examined, endowment use being questioned, and the ongoing carnival of changes that is Medicare reimbursement, you'll see a fair amount of discussion at the show around agency rule-making.

Among hospital types, expect to see some furrowed brows over the impending Form 990, Schedule H, in which not-for-profit hospitals will report on their charitable activities to the IRS. Given that some Congressional hospital critics, like Sen. Chuck Grassley (R-IA), have questioned whether some hospitals deserve not-for-profit status at all, filling out the Schedule H will be a high-stakes exercise. (As we've mentioned elsewhere, the June 25th educational session on how to cope with the new Form 990 is likely to be a standing-room-only affair.) Of course, the trade show exhibit floor will feature quality time with consultants like Grant Thornton, who are offering to help with the problem, too.

While you're at the show you may also wish to check out the buzz on what's happening in patient collections in your colleagues' home states--as it seems that state legislatures are pretty interested in how hospitals deal with uninsured and self-pay patients. In Illinois , for example, the legislature is considering a bill that would set limits on what hospitals would be allowed to charge and collect from some uninsured patients. And the Minnesota legislature recently passed a bill (later vetoed by the governor) that would have banned providers from collecting, using or sharing medical debt information to qualify patients prior to providing elective services. It seems likely that other states are going to get involved in these issues in coming months, too.