The Patient Protection and Affordable Care Act (ACA), signed on March 23, 2010, added Internal Revenue Code (IRC) 501(r). The ACA has provisions that impact tax-exempt hospital organizations recognized under IRC 501(c)(3). IRC 501(r)(2) defines these tax-exempt hospitals organizations as 1) required by their state to be licensed, registered, or similarly recognized as a hospital, and 2) any other organization the Secretary determines has provision of hospital care as its principal IRC 501(c)(3) exempt function or purpose.

In addition to complying with the requirements of IRC 501(c)(3), these hospital organizations must comply with new requirements under IRC 501(r).

The Patient Protection and Affordable Care Act (ACA), Public Law 111-148, added IRC 501(r).

Public Law 111-148, Section 9007(c), Review of Tax Exemption for Hospitals, states "The Secretary of the Treasury or the Secretary’s delegate shall review at least once every three years the community benefit activities of each hospital organization to which section 501(r) of the Internal Revenue Code (as added by this section) applies."

Community Benefit Review cases are controlled, monitored, worked, and stored in the Reporting Compliance Case Management System (RCCMS).

The activity screens are viewable based on the role or permissions assigned within RCCMS.

Each level of the process completes the appropriate tabs:

Compliance Planning & Classification (CP&C)/Classification & Case Assignment (C&CA) does statistical reporting for the ACA Hospital Review groups.

The ACA Universe is a changing population due to hospital mergers, consolidations, terminations, and new determinations. Planning and Monitoring (P&M) maintains it.

The following actions/sources maintain the universe population:

The population is divided into three segments to ensure that each hospital is reviewed at least once every three years. Case selection is based on the three-year cycle. The P&M staff imports all cases into RCCMS.

ACA Activity Records within RCCMS require approved roles and permissions to access.

The ACA activity screens depend on the role/permissions assigned to examiners within RCCMS. At certain levels, tabs are viewable but are read only.

ACA employees have access to the Case Chronology tab, which records all automated actions.

The Hours per Case grid in the Closing tab, tracks hours spent on the case.

The examiner or manager enters any delays in the case processing.

Do not record time on the Case Chronology Record (CCR).

Return information is populated to the activity records from WebRICS.

Community Benefit Reviews are uploaded via WebRICS.

RCCMS adds cases as needed to ensure the pre-populated return information is from the most current return filed.

P&M analyst uses WebRICS to import cases into RCCMS Case Assignment group for Community Benefit Review.

After the analyst creates the case within RCCMS, the CA manager assigns the cases to the TE’s inventory to build the case by adding the appropriate case documents to the case file and completing the required fields on the ACA Activity screens.

An ACA TE located in C&CA completes case building in RCCMS.

The first step in building the cases is to update the status to Status 02 (Classification Processing (Case Building)).

All tabs are viewable, but only input information on the Header, Organization, Closing, and Facility tabs.

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TE completes the following required fields for each case on the ACA Activity screens in RCCMS:

In the Header, verify the "Validate for" is set to Establish, then select Save and Close.

Select "Actions-Establish" , then Send/Receive to establish case.

TE transfers established cases to group 7737 - select 400-Nationwide, Secondary Business 11210-EO Compliance, Employee Group 7737, Status Code 08-Selected Not Assigned, then Send/Receive a few times..

If an Activity Record needs to be manually established, the steps are:

Cases with errors to the EIN, phase, wave, or project code require an error case closure following these steps:

When the ACA review results in a compliance check referral, the manager will assign the ACA review to a TE to close the ACA review case and build the ACA compliance check activity.

The CA manager assigns established inventory to the RA, accepts closure requests and completes the triage review for the final close process.

The activity screens an examiner sees depend on the role/permissions the examiner has within RCCMS. At certain levels, tabs are viewable, but are read only based on the role/permissions. All ACA employees have access to the Case Chronology tab but do not input a case chronology record. The Hours per Case grid on the Closing tab is used to track hours spent on the case.

The return information populates from the activity records from RICS. Programming is in place to select the most recent filed return; because of this, cases load 75 at a time into RCCMS to secure the most recent return information. There may be an occasion when a subsequent return is filed. In this case, continue to review the return loaded to the case file and do not update the case to the subsequent return.

The examiner can access the Organization, RA Conclusion, Closing, Facilities/Surveys and Chronology tabs.

The examiner’s inbox (within RCCMS) will receive a message that a case has been added to their inventory.

The examiner completing the CBA review must complete the following fields on the Organization tab:

The examiner completing the CBA review must complete the following sections on the Conclusion tab:

The examiner performing the CBA review completes the sources and IRC 4959. Use the "Hours per case" tab to record all time spent on the case.

The required fields will highlight in red when you select Validate for Close.

Additional fields that may be required are:

The bottom section of the Closed By tab is automatically completed when the case is closed.

On the Facilities/Surveys tab, create and verify Facility Sub-records and Survey completion.

The New Facility button allows the addition of Facilities Sub-records identified during the review process but not included in the Schedule H.

On the Facility Sub-record, the examiner will verify or complete applicable fields, update any if necessary, and indicate if the facility will be included in the survey.

The examiner must complete the following fields:

Once the Facility Sub-record is updated, it must be included in the survey.

The surveys, created in RCCMS, address questions that pertain to the organization and questions that pertain specifically to each facility.

There are two surveys; an organizational survey and a facility survey.

The examiner must select the button for the survey they are completing.

The examiner answers the survey questions, either by selecting an option from the drop-down box corresponding to each question, by selecting the appropriate check box, or by entering a response when a given question calls for one.

An examination consists of the systematic inspection of the books and records of an organization for determining the correct tax liability.

More specifically, an examination is a review of an organization’s accounts and financial information to ensure information is reported correctly on filed returns. In addition, an examination may involve determining the organization’s current or additional tax liabilities (IRC 4959).

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If an examination is warranted on a Non-501(r) issue, complete a Form 5666, TE/GE Referral Information Report.

Any facts and circumstances considered when determining whether an examination referral is warranted must be documented fully when completing the referral paperwork.

A compliance check is a review, not an examination, conducted by the IRS to determine the following:

It does not directly relate to determining any tax liability for any period or the verification that a response on the return coincides with the books and records of the organization. Refer cases for compliance check consideration if:

When an examiner determines a case will be referred for a compliance check the examiner completes and saves the ACA Form 12 "ACA Compliance Check Referral" in the case file.

See Exhibit 4.70.1-1.

CL3 (R/C) will forward case related information concerning charitable hospital organizations to the ACA using Form 3210, "Document Transmittal" , and a completed ACA Form 15, "EO CL3 Referral to ACA Hospital Review Unit, " with the issues identified.

ACA Non-Hospital closures are those organizations included in the current ACA Universe that are either no longer exempt under 501(c)(3) or are not recognized as a state licensed hospital facility and therefore are no longer subject to IRC 501(r).

The purpose of the ACA Community Benefit Compliance Review program is to perform compliance reviews of tax-exempt hospital organizations to determine if they are compliant with the requirements outlined in IRC 501(r) and the community benefit requirement. There are instances during a community benefit review in which it becomes clear that an organization does not operate a hospital facility and does not belong in the ACA Universe. Examples include the following: organizations that have terminated, EINs that have consolidated to another EIN, organizations that merged with another organization, error accounts, group returns in which 501(r) does not apply, etc.

After identifying a Non-Hospital, exclude it from the hospital universe by closing the review with the appropriate non-hospital disposal code This ensures that the entity will not be included in the universe going forward.

Cases closed as a referral for examination or compliance check will be assigned to the manager for "Triage" review.

The manager will review all cases before closing and approve the cases for final closing evaluation.

The manager can access the following tabs in RCCMS:

The Organization, RA Conclusion, Closing, RAIC Review (1 of 2), and RAIC Review (2 of 2) tabs are read only. ,

The manager will self-assign the case in Status 77 (Manager Review).

The manager will complete the required fields on the Triage tab once the review is completed.