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The Internal Revenue Service (IRS) and U.S. Department of the Treasury issued a final rule under Section 501(r) of the Patient Protection and Affordable Care Act. Under Section 501(r), non-profit hospitals must meet the following four requirements to maintain their charitable organization tax-exempt status:

  • Adopt a written financial assistance policy (FAP);
  • Comply with certain billing and collection practices;
  • Limit charges for FAP patients to equal or less than the amount generally billed to patients who have health insurance through Medicare, Medicaid and/or private insurers; and
  • Perform a community health needs assessment every 3 years.

Additionally, the final rule specifies a number of steps non-profit hospitals must take in enrolling patients in their FAP program such as presenting the FAP to all eligible patients between intake and discharge.

The final rule became effective on December 29, 2014.

The final rule is available at:

A summary of the final rule posted by the Treasury Department is available at:

Additional Requirements for Charitable Hospitals; Community Health Needs Assessments for Charitable Hospitals; Requirement of a Section 4959 Excise Tax Return and Time for Filing the Return; Final Rule, 79 Fed. Reg. 250, 78954-79016 (December 31, 2014).

U.S. Department of the Treasury. “Treasury Finalizes Patient Protection Regulations for Tax Exempt Hospitals.” Treasury Notes Blog. Dec. 29, 2014.

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