A new bill in the House of Representatives would require most non-profit hospitals to provide more detailed financial information to the federal government to justify their continued tax-exempt status.
The Tax Exempt Hospital Transparency Act, currently working its way through the House Ways and Means Committee, would apply, in general, to non-profit hospitals and hospital organizations with more than 100 staffed beds and more than $100 million in patient revenue.
Affected tax-exempt hospitals would be required to report annually on how they have addressed the needs identified in their required community needs assessment – and explain why they are not addressing any such identified needs; how much financial assistance they provide under their patient financial assistance policy; and report how many people applied for and received such assistance in a given year.
Larger tax-exempt hospital organizations, as defined by the IRS, also would need to identify their top three priorities among the problems identified by their community needs assessment, explain what they are doing to address those priorities, and explain if, and why, they are not addressing any of them. They also would need to document their spending on quality improvement and non-clinical programs.
IRS-defined high-revenue non-profit hospital organizations also would be required to describe each of their service lines, how much revenue they generate, their costs, and how they allocate shared costs across multiple service lines; describe their 340B activity, if any, and document how many of their patients receive 340B-subsidized drugs, who insures those patients, the net value of those payments, and their costs for participating in the 340B program; and report their advertising costs.
The Tax Exempt Hospital Transparency Act advanced through a markup by the House Ways and Means Committee and continues to be actively debated in Congress as lawmakers seek to compel non-profit hospitals and health systems to demonstrate that they provide sufficient charity care and community benefit to justify the federal tax breaks they receive.
Members of Congress hope to pass health care legislation this year, either before or after the mid-term elections in November. Their objectives: foster greater affordability and enhance transparency. Track the full text and amendments of the Tax Exempt Hospital Transparency Act via Congress.gov and learn more about the bill from this Ways and Means Committee summary of the measure.