Congress eyes tax-exemptions

Congress is likely to continue pressuring not-for-profit healthcare organizations to show that they merit their tax exemptions.

In addition, not-for-profits may have to add more information to the tax forms they submit to the Internal Revenue Service to substantiate their tax status.

Last month, 10 select healthcare organizations provided extensive responses to questions raised by Sen. Chuck Grassley (R-Iowa), following his inquiries about charity care and other issues.

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Overall, Grassley said he wasn't impressed with the answers he received.

"In the responses from the 10 non-profit hospitals, it was surprising to get such enormous differences in answers to the same questions," he said. "It was rare to get the same answer from even two hospitals. These differences in responses were at the core of many questions, including how charity care is determined and valued, who is eligible for charity care, and what constitutes community benefit and how that's measured."

He also took issue with hospitals charging higher amounts to the poor and uninsured, compared with patients covered by health insurance.

Grassley hinted at the need for better parameters to judge whether hospitals are meriting their tax-exempt status. He lauded a recent initiative by the Catholic Health Association to standardize the measurement of community benefit.

"The CHA recently established common rules and guidance for reporting and measuring key parts of community benefit for its member hospitals; hundreds of hospitals already have agreed to comply with CHA guidelines," Grassley said. "I'm concerned that the best practices of non-profit hospitals are not common practices for all."

Grassley said a response to the charity care questions from the Federation of American Hospitals, which represents for-profit hospitals, noted that some investor-owned facilities provide as much charity care as not-for-profit facilities do.

He called on the IRS to keep the pressure on not-for-profits in quantifying their community benefit. He noted that the IRS is creating a supplemental report to Form 990 to include additional information from not-for-profit hospitals and their charity care and community benefit.

"I hope the IRS will give strong consideration to having that new information requirement conform with CHA guidelines," Grassley said. "We need to see IRS action on this front. We also need to see all non-profit hospitals agree to common reporting."