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AHA urges IRS to update rules hampering efforts to transform care

November 16, 2012

The AHA yesterday urged the Internal Revenue Service to update private-use rules for health care facilities financed with tax-exempt bonds that are hampering arrangements between hospitals and physicians to reduce costs and improve the quality of care. In a letter to the agency, AHA called for changes to certain requirements under IRS Revenue Procedure 97-13 that present hurdles to arrangements such as accountable care organizations, bundled payments and other financial and quality incentives. The current rules "present a barrier to hospital and medical foundation use of particular arrangements that are encouraged by the ACA, such as accountable care organizations, bundled payments and other shared savings programs," AHA Senior Vice President and General Counsel Melinda Hatton wrote. "Furthermore, hospitals face significant penalties right now under the law's readmission reduction and value-based purchasing programs. Rev. Proc. 97-13 prevents the types of arrangements that can effectively align incentives among physicians, hospitals and other health care service providers to meet the goals of these two policies."