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Health Law and Policy Assignment -
You are the Chief Operating Officer of a tax-exempt community hospital with approximately $400 million in annual revenue. The CEO has informed you that she is about to begin negotiations with a for-profit medical group, with over 300 physicians, to form an Accountable Care Organization that would participate in the Medicare Shared Savings Plan. The ACO will be formed as an LLC (i.e. neither a partnership nor a corporation). The hospital may be asked to invest up to $6 million in the ACO. She wants to make sure that the hospital's tax-exemption will not be jeopardized on account of this arrangement, so she has asked you to prepare a list of key "talking points" for her to use as she enters the negotiations, including things to ask for and things to avoid and the reasons why they are important.
The CEO is an inquisitive person, so merely citing IRS guidance ("the reason is that the IRS says so") is not likely to please her. She will want to know why. She has retained legal counsel with regard to complying with the Medicare rules in forming an ACO, so you may ignore that issue concentrate on the tax issues.
Please prepare a short memorandum with the "talking points," keeping in mind that the document should be structured as a tool for the CEO to use in negotiations as opposed to a lengthy memo.
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