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The American Hospital Association (AHA) is offering advice to health care providers on how to comply with temporary regulations the Internal Revenue Service (IRS) issued Jan. 10 on so-called "excess benefits." The term refers to benefits that hospitals provide to those with substantial influence over those organizations. The regulations are an outgrowth of a 1996 law that did away with a prior situation in which the only sanction available to the IRS was to revoke the organization’s tax-exempt status. Under the new rules, the IRS can impose monetary penalties on the individual who received the excess benefit and the manager who approved the payment.
The AHA recommends that hospitals share the advisory with their board, chief financial officer, legal counsel, and compliance officer; examine existing roles and relationships to determine which arrangements are affected by the rule; and review the approval process for arrangements affected by the rule to provide the board and managers the full benefit of the rule’s presumption of reasonableness.