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January 07, 2014 at 10:10 AM
Nonprofit health plans could find supporting quality improvement activities less attractive.
The Internal Revenue Service has set new tax rules for quality efforts in a final regulation that implements Section 9016 of the Patient Protection and Affordable Care Act.
The regulation appeared today in the Federal Register and take effect immediately. They apply to tax years beginning after Dec. 31, 2013.
Drafters of PPACA Section 9016 wanted to push nonprofit Blue Cross and Blue Shield plans and other nonprofits to spend more of their revenue on patient care and less on administration and increasing reserves.
The nonprofit plans use a federal income tax break, described in Section 833 of the Internal Revenue Code, to reduce their taxes.
The well-known PPACA medical loss ratio rule now requires all carriers to spend 85 percent of large-group revenue and 80 percent of individual and small-group revenue on health care and quality improvement efforts.
PPACA Section 9016 – a much less-publicized section – requires nonprofit plans that get the IRC Section 833 nonprofit plan tax break to have MLRs.
