The hospital industry is starting to push back against a move in Congress to create stricter rules for how much charity care nonprofit hospitals have to provide to earn their tax exemption. “Ask your senators to oppose charity care proposal,” the American Hospital Association wrote in a recent bulletin to its members, the New York Times reports . This is an issue that’s been bubbling for a while. Last year, the WSJ ran a series of stories on the way many nonprofit hospitals have become big businesses, with execs drawing multi-million-dollar salaries. Under the current rules, nonprofit hospitals are supposed to provide “community benefit,” but that term is loosely defined. One hospital’s Web site it provided more than $1.8 billion in benefits to various communities, but most of that figure was the hospital’s payroll (including its CEO’s $1.8 million compensation), while while charity care represented $35 million. For a while now, Sen. Chuck Grassley has been questioning

whether non-profit hospitals do enough to earn their tax-free status. And a report the Senate Finance Committee issued a few weeks ago listing options for financing health reform included an option that would tighten the rules on nonprofit hospitals. As we wrote at the time, “hospitals that don’t maintain a minimum level of charitable activity, limit charges to the uninsured, indigent patients and limit aggressive collection actions would be subject to an excise tax.” The hospital association bulletin laid out the industry’s response to the proposal. “A formulaic, one-size-fits-all charity care standard will hamstring hospitals’ efforts to respond to the unique needs of their communities,” the bulletin said, according to the NYT. “It would penalize children’s, teaching and research hospitals and those in rural areas because they provide community benefit in a variety of forms other than just charity care.” Photo: Associated Press

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Hospitals Fight to Keep Tax-Exemption Rules