美国国税局（IRS）否決了不参与医疗照护结余共用计划（Medicare Shared Savings Program）的责任制治疗组织（Accountable Care Organization）的税务豁免（英文版）

Earlier this month, the IRS released a denial of an exemption application for an accountable care organization ("ACO") outside of the Medicare Shared Savings Program ("MSSP") that was seeking exemption under section 501(c)(3). This is the first publicly available IRS ruling on a non-MSSP ACO, and it confirms that the IRS is not yet persuaded that the private benefit to physicians from integrated contracting combined with population health analytics is only incidental to the community benefits of pursuing better care and better health for patients at lower cost. This ruling casts doubt on whether ACOs that are not 100 percent MSSP or Medicaid ACOs can qualify for tax-exempt status. It also could affect any ACO or clinically integrated network that does not participate exclusively in MSSP or Medicaid and is structured as an LLC or partnership in which one or more section 501(c)(3) health care providers is a member or partner.

The ACO in question was formed as a separate corporation by an existing nonprofit tax-exempt health care system. The ACO proposed to create a clinically integrated network of health care providers that included: (i) physicians employed by the system; (ii) physicians who are part of independent practice groups and members of the medical staff of hospitals and facilities affiliated with the system; and (iii) physicians practicing at hospitals that were not affiliated with the system. Approximately half of the physicians in the network were in the last two categories.

To achieve its goals of better care, better health, and lower cost, the ACO represented the participating providers in negotiating and executing contracts with third-party payors. The terms of the contracts would create financial incentives that would reward the providers for collaborating to provide better care at lower cost while keeping patients healthier. The ACO also proposed to gather and analyze data, including clinical data on patients and provider performance data, to help the participating providers meet the performance goals and earn the financial incentives.

The IRS concluded that the ACO was operating for the private benefit of the participating physicians and not exclusively to promote health for the benefit of the community as a whole. Therefore, it did not qualify for section 501(c)(3) exemption because it was not operated exclusively for charitable purposes. The IRS did not explain how it measured the extent of private benefit to the physicians relative to the extent of the benefit to the broader community from the improvement of population health and health outcomes combined with reduced costs.

This is a single IRS denial letter, and even though it was reviewed at the national level by the IRS appeals function, it is not precedential. It is possible that another ACO equipped with more data on the effectiveness of ACOs in improving population health, an ACO with a narrower network limited to system employees and medical staff members, or an ACO that participates in MSSP or Medicaid and also contracts with commercial payors could persuade the IRS to rule favorably. The paradigm in health care delivery is shifting from providing hands-on care to improving population health and reducing the need for and acuity of care. So far, however, the IRS seems unprepared to accept this new paradigm of population health management as an activity that necessarily promotes the health of a sufficiently broad segment of the community to satisfy the community benefit standard for exemption under section 501(c)(3).

In the meantime, section 501(c)(3) tax-exempt health care providers that are already participating in non-MSSP ACOs should review their arrangements and assess whether they may need to take action if their ACO is structured as a pass-through (partnership or LLC taxed as a partnership). The activities of a pass-through entity are attributed to the tax-exempt participant for tax purposes as if the tax-exempt participant were conducting the activities directly.

Based on the approach in this denial letter, the IRS likely would treat non-MSSP/non-Medicaid ACO activities as an unrelated trade or business, making the income received from the ACO subject to unrelated business income tax. Treating ACO activities as unrelated also raises the potential for impermissible private use if ACO activities are taking place in, or ACO participants have special privileges at, facilities financed with tax-exempt bonds unless a safe harbor applies. If the ACO activities become a substantial part of the section 501(c)(3) organization's overall activities, participation in the ACO also could jeopardize exemption under the IRS's current approach.

Tax-exempt health care providers may want to assess the scope of potential unrelated business income from ACO activities and review compliance with bond financing safe harbors for private use. Depending on the results of that review, it may be helpful to restructure participation in the ACO to protect against the risk of an exemption dispute with the IRS, such as by using a taxable subsidiary to hold the hospital's interest in an ACO organized as an LLC or setting up the ACO as a taxable corporation, and/or to revise any existing contractual arrangements in light of the private use safe harbors.

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