A new provision in Section 501 of the Internal Revenue Code, which takes effect under Obamacare, sets new standards of review and installs new financial penalties for tax-exempt charitable hospitals, which devote a minimum amount of their expenses to treat uninsured poor people. Approximately 60 percent of American hospitals are currently nonprofit.

A new provision under Obamacare will fine tax-exempt hospitals via the Internal Revenue Service:

A new provision in Section 501 of the Internal Revenue Code, which takes effect under Obamacare, sets new standards of review and installs new financial penalties for tax-exempt charitable hospitals, which devote a minimum amount of their expenses to treat uninsured poor people. Approximately 60 percent of American hospitals are currently nonprofit.

Fines could be as high as $50,000 for non-compliance. Some wonder if this provision is designed to end the existence of non-profit hospitals altogether.

Nonprofit hospitals should be advised that the new PPACA requirements will play a significant role in how they operate and report, specifically when it comes to billing and collections for services provided to the uninsured. The new law leaves many gray areas and hospitals themselves will have to establish eligibility criteria for financial assistance. Following the new procedures as best they can will ensure the best chance of maintaining their tax exempt status,” wrote D. Douglas Metcalf, partner at the law firm Lewis and Roca, in a 2013 op-ed entitled “Will nonprofit hospitals disappear under Obamacare?”

Read “Obamacare installs new scrutiny, fines for charitable hospitals that treat uninsured people” atThe Daily Caller.

[This post was amended after speaking with Mike Bulthaus, Senior Director of Communications at St. Jude’s Children’s Hospital. He told Acton in a private email, “Implementation of the Affordable Care Act does not impact the way in which St. Jude provides care. Many services provided at St. Jude have never been covered by insurance and will not be in the future. We have a unique model where 75 percent of the funds needed to operate St. Jude come from our generous donors. Families never receive a bill from St. Jude for treatment, travel, housing or food because all a family should worry about is helping their child live.

St. Jude Children’s Research Hospital has complied with all requirements of the Patient Protection and Affordable Care Act (ACA) since it was passed in 2010 and anticipates no problems in meeting all requirements of ACA now or in the future.”]

This article appeared on the Acton Institute PowerBlog and is used with permission.