The Law of Tax-Exempt Healthcare Organizations. Bruce R. Hopkins

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Название The Law of Tax-Exempt Healthcare Organizations
Автор произведения Bruce R. Hopkins
Жанр Личностный рост
Серия
Издательство Личностный рост
Год выпуска 0
isbn 9781119639077



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Revenue Manual.145.1 The IRS moved the material to these guides, used by IRS Exempt Organization examiners, to improve access and availability.

      The ATG provides an explanation of the activities of HMOs, including the difference between direct provider and arranger HMOs that has been central to the ability of HMOs to qualify as charitable organizations in the IRS's view. It also discusses the role of physicians within the HMO structure, HMO contracts with hospitals and enrollment in an HMO, HMO premiums, and HMO governance.

      The ATG then analyzes the ability of HMOs to qualify as either a charitable organization or as a social welfare organization, including a discussion of Medicaid HMOs and HMOs as an integral part of a health care system. Finally, the ATG explains the application of the rules pertaining to the provision by HMOs of commercial‐type insurance and the application of the unrelated business income rules to such activities.

       p. 292. Insert following the final paragraph:

      The recipient of this ruling is a state‐licensed nonprofit health maintenance organization that arranges for the provision of medical services to its enrollees who receive Medicaid health benefits. It is not a direct provider of medical services. It was previously recognized by the IRS as a tax‐exempt social welfare organization. It subsequently merged into an organization that was recognized as a tax‐exempt charitable organization. It also began to arrange for the provision of commercial healthcare services to individuals and group subscribers. It does so through contracts with various physician groups, hospitals, and other healthcare providers.

      This ruling, by itself, reflects a continuation of the truce between the IRS and nonprofit health maintenance organizations structured and operated as arrangers of healthcare services rather than as direct providers of those services (which are the vast majority of them). The IRS has generally recognized such organizations as social welfare organizations rather than as charitable ones for more than 20 years. What is more noteworthy is the report of examination that is included with the ruling. That report advocates for the revocation (or denial) of exemption for arranger‐type HMOs either as charitable organizations or as social welfare organizations.

      The report is based largely on two asserted principles: first, organizations that substantially serve their members and not the community as a whole cannot qualify as charitable or social welfare organizations; and second, organizations that are operated in a manner similar to commercial organizations can likewise not qualify for exemption in either category.

      The ruling is issued against a backdrop of continuing incremental changes in the operation of nonprofit health maintenance organizations and their increasing resemblance to traditional commercial insurance providers. Also in the mix is the ongoing uncertainty regarding the meaning of a 1986 change in federal law (designed largely to bar continued tax exemption for Blue Cross and Blue Shield plans) that denies tax exemption for substantial providers of commercial‐type insurance, and its application to HMOs.

      The IRS concluded that the organization was not operated primarily for the promotion of social welfare, since the overwhelming majority of its activities related to providing healthcare plans to its paying subscribers. The number of its subscribers who were low‐income and qualified for subsidies was minor in relation to its subscriber populations as a whole. In addition, its social welfare activities represented a minor component of its overall activities. The IRS stated that to qualify for tax exemption as a social welfare organization, an organization's activities must primarily benefit the community rather than its own members.

      The IRS also determined that the organization