I need help interpreting the patient refund rule mentioned in the IRS rule, 501(r)(4), Financial Assistance Policy.
Here is a very common scenario at our acute care hospital. A patient had services in 2016. The original patient balance was $3,000, and the patient has been making $100 monthly payments since 2016. Now, however, the patient can no longer make the payment and wants to apply for financial assistance. The patient would qualify for 100 percent assistance as of her financial situation today. Do we have to refund her the $2,400 she has paid on the account? Our current financial assistance policy does not address covering prior balances, it only says the financial assistance approval is good for the future six months.
Answer: This sounds like legal counsel would need to offer an opinion, but from a practical standpoint, I would say the balance at the date the person qualified for assistance would be the only amount considered. Previous amounts should not be considered and, therefore, not refunded.
This question was answered by: David A. Williams, FHFMA, CPA, partner, Horne LLP, and a member of HFMA’s Mississippi Chapter.
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