IRS Ruling Considered An Obstacle To ACOs

A ruling by the Internal Revenue Service creates a significant obstacle to a new type of health care network that the Obama administration has promoted as a way to provide better care at lower cost, industry lawyers and providers say.

Health care markets are rapidly changing as independent doctors and hospitals race to form networks, known as accountable care organizations, in which they coordinate care for patients. The doctors and hospitals have financial incentives to keep patients healthy and to control costs, and they can share in the savings if they meet performance goals.

The new entities, which now cover more than 28 million people, according to Leavitt Partners, a health care consulting firm, help manage care for Medicare beneficiaries, for people with employer-sponsored insurance and for consumers who buy coverage through online marketplaces under the Affordable Care Act.

In its recent ruling, the I.R.S. denied a tax exemption sought by an accountable care organization that coordinates care for people with commercial insurance. The tax agency said the organization did not meet the test for tax-exempt status because it was not operated exclusively for charitable purposes and it provided private benefits to some doctors in its network.

To read the full story, click here.

Sincerely,