IRS Releases Schedule H Instructions on Charges for Needy Patients

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IRS posts Form 990 Schedule H instructions for tax-exempt hospitals for 2010, resolving an industry dispute over how those who qualify for financial assistance are to be charged for services under the Patient Protection and Affordable Care Act. The instructions indicate that a hospital can initially look to gross charges in setting rates, as long as the amount that ultimately is charged or billed to a patient has been reduced or discounted so that the individual is actually being charged less than the amounts specified in tax code Section 501(r), T.J. Sullivan, a partner with Drinker Biddle & Reath, tells BNA. Under the law, hospitals can only charge individuals who are eligible for financial assistance an amount that is “generally billed to individuals who have insurance covering such care.”

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