1 I. INTRODUCTION This report presents the findings and recommendations of a joint Internal Revenue Service/Insurance Industry task force, based on a study of the problems faced by carriers in reporting to the IRS payments made to health care providers. - The study was divided into two parts: An examination of the systems and procedures of the carriers, to II. DEFINITIONS A. Carrier 2 Any organization making health care payments: (1) in exchange for the payment of a premium; (2) in accordance with an employee benefit program; or (3) in connection with a government-sponsored health care program. Included are Blue Cross and Blue Shield Plans, group practice plans, and commercial health, life, casualty and property insurance companies. Also defined as carriers are organizations which administer self-insured health benefit programs for their employees or members. B. Provider A person or organization providing personal health care services. In this report, the terms provider, supplier, and health care practitioner are used interchangeably. C. Assigned Payment A payment made directly by a carrier to a provider: (1) upon the authorization (assignment) of the person receiving the health care; (2) pursuant to contract provisions; or (3) as required under a government financed health care program. refer to this as a direct payment.) (Some carriers A payment made by a carrier to any person in reimbursement of amounts paid or payable by that person to a provider for health care services. (Some carriers refer to this as an indirect payment. 3 III. BACKGROUND Revenue Ruling 69-595 (Appendix A) requires information returns to be filed with respect to assigned payments aggregating $600 or more annually to certain health care suppliers under health, accident, and sickness insurance plans or medical assistance programs. This ruling applied to payments made on or after January 1, 1969; however, carriers whose accounting systems and procedures were not geared to retrieving and reporting this information for payments made in 1969 were allowed to begin reporting with respect to payments made on or after January 1, 1970. At the time Revenue Ruling 69-595 was issued, the Congress had under consideration the "Tax Reform Act of 1969" (Public Law 91-172) to which the Senate Finance Committee had added an amendment (Appendix B) designed to broaden the existing statutory information reporting requirements covering health care payments. This provision, which would have required carriers to file information reports not only with respect to assigned payments but also with respect to payments made to insured individuals or other third parties in reimbursement of amounts paid or payable to a provider, was subsequently deleted in the Senate-House Conference. On December 31, 1969, the IRS issued TIR 1026 (Appendix C) granting a one-year postponement in the application of Revenue Ruling 69-595 with respect to health care payments made by carriers in their regular business. Carriers are now required to report on payments made in their regular business on or after January 1, 1971. The additional year's delay was not extended to payments made under government-sponsored health care programs. |