A regional health information organization in Vermont said it has been classified by the Internal Revenue Service as a 501(c)(3) charity, the latest in a growing line of RHIOs that are expanding their funding sources as a result of the tax-exempt status.

Both California Regional Health Information Organization and CareSpark, an Appalachian RHIO, also recently announced they had been classified as charities by the IRS.

Vermont Information Technology Leaders, Inc. (VITL), which operates the statewide RHIO, filed for tax-exempt status on Oct. 14, 2005. It's operated since then with funds totaling $1 million contributed by various health plans, state government agencies and the Community Grant Foundation of the Vermont Association of Hospitals and Health Systems.

The group used those funds to run a pilot program since January 2008 that has assisted various physician practices with implementing electronic health records and redesigning their workflow, and to operate a statewide health information exchange.

"To my knowledge, we've not had anybody say they won't donate money to us because we were not tax-exempt," said Steve Larose, VITL's vice president for external affairs. "However, tax-exempt status is something all donors are looking for, and now we can go solicit funds and show donors the IRS letter."

VITL will also be able to include the potential impact of the charity status into funding estimates, he said, and build it into the RHIO's budgets.

The IRS has apparently taken the past few years to decide on how to categorize RHIOs, which were a completely new phenomenon when VITL and others applied for tax-exempt status. A slew of announcements from RHIOs are now expected.