January 28, 1999 | Read Time: 1 minute
The Internal Revenue Service has decided to rescind the charity status of what is believed to be Utah’s largest health-maintenance organization.
The health-insurance provider, IHC Health Plans, initially received tax-exempt status from the revenue service in 1985. But the I.R.S. has been in the process of re-examining its policies for H.M.O.’s since 1986, when Congress amended the Internal Revenue Code to prohibit some types of insurance providers from receiving tax-exempt status.
Douglas J. Hammer, a vice-president and general counsel at Intermountain Health Care, the non-profit medical organization that owns IHC, says the government’s decision has broad implications. “This isn’t just an issue for IHC Health Plans,” he says. “This is a sign that the I.R.S. is attempting to apply new rules across the board to non-profit H.M.O.’s nationally.”
Mr. Hammer says he thinks that the revenue service has taken too long to clarify its position regarding H.M.O.’s. “If we knew what the rules were for the last 13 years, we could have arranged our plan in such a way to meet those rules,” he says.
Even so, Mr. Hammer says he is confident that IHC Health Plans will ultimately match the government’s criteria for tax-exempt status. He says representatives of the Utah H.M.O. are scheduled to meet with I.R.S. officials this month to try to persuade them to reverse the decision. If those talks prove to be unsuccessful, the H.M.O. plans to appeal to U.S. Tax Court.
