AHA asks IRS to affirm that tax-exempt hospitals can participate in non-Medicare ACOs

The AHA yesterday urged the Internal Revenue Service to publish guidance affirming that hospitals may participate in accountable care organizations without generating a tax cost or incurring “the catastrophic loss” of their tax-exempt status. “Such guidance will remove what appears to be a serious obstacle for nonprofit hospitals striving to coordinate care for their communities and make other improvements in delivering population health,” wrote Melinda Reid Hatton, AHA senior vice president and general counsel, in response to a recent IRS ruling that denied tax-exempt status to an ACO not participating in the Medicare Shared Savings Program. While an MSSP ACO would have received the opposite result, the IRS concluded that the ACO generated impermissible private benefit to physicians “without any discussion of how the community benefits from coordinated care and better management of health care costs,” AHA notes.