Concerns Raised Over Hospital Charity Care Practices
Some lawmakers have raised concerns that many not-for-profit hospitals "are not providing enough charity care to justify their tax-exempt status" and have said that they will "set standards for the industry if it does not do so itself," the New York Times reports.
Senate Finance Committee Chair Chuck Grassley (R-Iowa) has said that he might introduce legislation to clarify standards for tax exemptions received by not-for-profit hospitals. In a recent letter to the American Hospital Association, Grassley said that he has "serious concern" about the billing and debt collection practices of not-for-profit hospitals, as well as the high salaries of some officials, joint ventures with for-profit groups and use of for-profit subsidiaries.
House Ways and Means Committee Chair Bill Thomas (R-Calif.) also has begun to examine the practices of not-for-profit hospitals.
Internal Revenue Service Commissioner Mark Everson said that not-for-profit and for-profit hospitals have few differences "in their operations, their attention to the benefit of community or their levels of charity care." He said that the standards used by IRS to determine tax exemptions for not-for-profit hospitals have remained about the same since 1969.
Since that time, IRS has not specifically required not-for-profit hospitals to provide charity care to maintain their tax-exempt status, although they must provide some benefit to the community, Everson said (Pear, New York Times, 3/19).