Hospital Group Objects to IRS's Collection Form

The American Hospital Association is fighting the Internal Revenue Service’s proposed Schedule H form relating to the billing practices of non-profit hospitals and their use of third party agencies.  

The IRS proposed the Schedule H form in a bid to garner more information from not-for-profit medical providers and their contributions to their local communities (“New IRS Form Means More Collections Details by Hospitals,” Sept. 25). Not-for-profit hospitals receive an estimated $12 billion in tax breaks annually.  

The association, which represents nearly 5,000 hospitals, writes in a recent letter to the agency that the information required in the Schedule H has no relation to the “community benefit” standard that make non-profit hospitals and medical facilities eligible for tax exemption status.  

Many hospitals wouldn’t be able to provide the required information because they do not keep data in the discrete categories requested by the IRS, according to the letter signed by Melinda Reid Hatton, the AHA’s senior vice president and general counsel. 

“For example, many, if not most, hospitals classify patients as “self pay,” not “insured” and  “uninsured” as the chart suggests,” Hatton wrote. “Sorting data to satisfy the chart’s requirements would be immensely burdensome.”  

The IRS had also proposed implementing Schedule H in 2009 but the AHA would like to postpone that until 2010, giving hospitals time to update their data collections systems.

“Even under ideal conditions, the burden of reconfiguring financial and data recordkeeping systems to capture by January 1, 2008 the substantial amount of information required just for Schedule H is a daunting task,”  the letter stated. 

Not-for-profits provide about 80 percent of the medical care in the U.S. In a recent study by the IRS on non-profit hospital contributions to their local communities, the agency noted that uncompensated care accounted for 56 percent of the total community benefit expenditures of the vast majority of the 487 non-profit hospitals polled.

But some say not-for-profit hospitals do not provide the benefits locally that they write off on their taxes, which led to demands that non-profit medical providers release more details about their charity care and debt collection practices.