WASHINGTON -- Nonprofit hospitals could lose their tax-exempt status if they enter into joint ventures that provide doctors with improper benefits or result in illegal Medicare or Medicaid kickback schemes, the Internal Revenue Service said in a recent internal legal memorandum.

The memo -- general counsel memorandum 39862 -- effectively changes IRS policy by roking three private letter rulings and modifying a 1987 legal memo that had allowed hospitals to set up joint ventures that maintained or attracted doctors by guaranteeing them the gross or net revenues from certain departments or services over a period of time.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.