Internal Revenue Code Section 501 (r) (4) Affordable Care Act

A primary statute designed to introduce transparency into the hospital industry billing practice is Internal Revenue Code Section 501 (r) (4).  Tax exempt hospitals under the Affordable Care Act (Law) are required to have a written financial assistance policy, and an emergency medical care policy.

The financial assistance policy is to include 5 important directives:

1. Eligibility criteria for financial assistance, and whether such assistance is free or discounted care.  The policy should discuss all the information needed to qualify for the reduced cost (discounted care) or no cost (free care) medical treatment.

2. The basis for calculating amounts charged to patients.  Demonstrate how the billed amount correlates to the listed gross fee.

3. The method to apply for financial assistance.  What is the exact information necessary to receive assistance.  This usually begins with filling in a financial assistance application.

4.  In the case of an organization that does not have a separate billings and collection policy, the action taken by the hospital in the event of non payment.  This is asking for process and time frames. 

5.  Measures the hospital is taking to publicize their financial assistance policy within the community it serves.  This should include posting on the website and placement throughout the hospital where public can obtain a written copy.  Go to the hospital website, press the site map prompt, and search for "Financial Assistance" prompt. 

The emergency medical care policy prevents the hospital from billing an individual who qualifies for financial assistance more than Medicare or a similar insurance company would reimburse the hospital for the bill. 

The statute cleverly cues the medical consumer to question why an individual would ever pay more money than another person is paying to a hospital for the exact same service.  Hospitals that do not comply risk losing their federal tax exempt status.

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