The Internal Revenue Service has denied tax-exempt status to an accountable care organization, creating a major hurdle for the new type of medical network promoted by the Obama administration as part of its health-care reform, The New York Times writes. The new entities, formed by hospitals and doctors to coordinate care across communities, have been championed by the White House as a way to better manage patient health and lower costs.
The IRS ruled that an unnamed accountable care group formed by a nonprofit health-care system and covering commercially insured patients did not qualify for tax-exempt status because it did not operate exclusively for charitable purposes or community benefit. The tax agency cited the organization’s negotiating with private insurers for the benefit of doctors in its network.
The decision “appears to be a serious obstacle for nonprofit hospitals striving to coordinate care for their communities,” as the government has encouraged them to do, said Melinda Hatton, senior vice president of the American Hospital Association. It does not affect accountable care organizations that solely serve Medicare beneficiaries, but many such groups also cover people with private insurance.