You’re more vulnerable than you think: Don’t lose your not-for-profit status

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One county government hospital has already lost its not-for-profit status under the 501 (r) requirements of the Affordable Care Act. Becker’s Hospital Review reports that an unnamed hospital lost its 501(c)(3) exemption status for “failure to conduct a community health needs assessment, adopt an implementation strategy and make it widely available to the public.”[1]

Keith Hearle, president of Verite Healthcare Consulting, said this was the first time he had heard of “an instance in which a hospital lost its not-for-profit status over 501 (r) requirements, according to an article published by the Healthcare Financial Management Association (HFMA) about the hospital’s status loss. “’I would be surprised if it is a one-off,’ said Hearle, who has been expecting more IRS enforcement after his own reviews indicated widespread hospital vulnerability due to poor compliance.”[2]

The HFMA reports that, “Among the reasons for the IRS action against the county government hospital was its finding that the hospital did not make the CHNA widely available to the public through a website, although it had paper copies available on request.”[3]

The HFMA outlines the requirements under section 501 (r):[4]

  • Conducting a community health needs assessment (CHNA) at least once every three years
  • Making the CHNA publicly available on a website
  • Adopting an implementation strategy to meet the needs identified in the CHNA
  • Adopting a financial assistance policy and publicize the policy, including posting it on a website
  • Limiting the amounts charged to individuals who are eligible for financial assistance
  • Making individuals aware of the financial assistance policy prior to engaging in certain collection actions

If you are an administrator for a not-for-profit hospital, what are you doing, this very moment, to ensure that your hospital doesn’t fall victim to the same plight as the county government hospital? To keep your 501(c)(3) exemption status safe, you must be proactive and do much more than just wait for people to request charity.

HealthQRS can help you comply with regulation 501 (r)’s requirements. HealthQRS’ solution provides charity policies before and at the point-of-service and helps fulfill the assessment requirement. Our solution ensures your financial assistance policies, eligibility criteria, methods used to calculate, applications and billing and collection procedures are documented, stated consistently and billed per your policies. We also make sure you limit charges for services to levels equivalent to amounts generally billed for insured patients. We determine an individual’s eligibility for financial assistance prior to taking extraordinary measures to secure payments. Our solution makes it simple for an auditor to audit individual patients as required and to ensure that you are in full compliance with 501 (r).

Our system keeps your not-for-profit status safe by:

  1. Automatically determining if consumers are eligible for charity just by taking the names and addresses of your patients. We use publicly published information to automatically determine if consumers are eligible for charity based on the percentages that you choose regarding federal poverty guidelines.
  2. Automating tiered charity allowances and calculating that on the front end when the consumer is with the registrar. Our system alerts the registrar as to whether the consumer has a 50, 75 or 100 percent level of charity. And if you opt to utilize our e-commerce solution, consumers can see what percentage they qualify for as they are shopping for services.
  3. Ensuring you remain compliant by not charging an uninsured patient more than you charge an insured patient. Our system ensures that you are offering average contract rates.
  4. Providing an incredible audit trail for both federal and state auditors to ensure you are consistently compliant.

Plus, by using our e-commerce medical marketplace, you will meet the requirement to post the CHNA on a public website. HealthQRS has perfected the platform to provide you with full compliance from the moment a patient enters your facility, or even before that if they are shopping for services on the medical marketplace. And because we are a software as a service (SaaS), you don’t incur any capital expenses, only a low monthly fee.

In addition to helping you remain compliant with 501 (r), HealthQRS can help you establish an e-commerce retail solution that will attract consumers and grow your market share. We can install retail solutions in your “storefronts,” i.e., your hospitals, clinics and practices, that allow your office teams to tell consumers exactly what they owe. You can provide automated alerts to patients for necessary preventive services they need as well as how much they will cost, and they can schedule and pay for those services right from the alert. These cutting-edge features are popular with employers and can serve as a marketing tool for your organization, helping you to expand your reach and become the “go to” facility for healthcare.

We have over 12 years of experience developing healthcare retail experiences for consumers and our founders have over 50 combined years of e-commerce experience. We can have you set up in a matter of weeks at the point-of-service and online. We invite you to learn more about HealthQRS and our e-commerce medical marketplace. Why not  contact us right now for more information or click here to schedule a demo? Or click here for a quick, 6-minute video about our e-commerce strategy.


[1] Ayla Ellison, “IRS revokes hospital’s tax-exempt status for failure to comply with ACA rule,” Becker’s Hospital Review, Aug. 17, 2017,

[2] Rich Daly, “IRS Makes First Revocation of Hospital Not-for-Profit Status Under 502(r),” HFMA, Aug. 15, 2017,

[3] Ibid.

[4] Ibid.

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