In a
letter to the IRS, Congressional leaders questioned the number of non-profit
hospitals delivering on community health requirements.
By Sara Heath
February 27,
2019 - The Senate Finance Committee is seeking answers about
non-profit hospitals and their adherence to community health programming
requirements as a part of their tax-exempt status.
In a letter penned by committee chairman
Senator Chuck Grassley (R-IA), the committee issued questions for the Internal
Revenue Service (IRS) about the processing and vetting for the non-profit
status of hospitals across the country.
Specifically,
Grassley and colleagues aimed to learn more about whether these hospitals are
delivering on their requirements to assess community health needs and carry out
community health programming.
Among numerous other
provisions, non-profit hospitals are required to conduct a community health needs assessment (CHNA)
every three years. Hospitals must submit their own unique reports, although
they are welcome to partner with other area hospitals and community groups to
conduct the CHNA.
From there,
non-profit hospitals are required to publicly post the data gleaned and create
and carry out community health programming. Hospitals are also required to make
certain financial investments in public and community health.
This all comes as a
part of non-profit hospitals’ obligations to serving their communities,
Grassley wrote.
“As you know,
non-profit hospitals are integral to their communities,” he said. “They provide
care to patients most in need, and because of their key role they do not pay
the same taxes as for‑profit hospitals. Congress determined that to qualify for
this tax-exempt status, non‑profit hospitals must meet a statutory community
benefit standard requiring them to make contributions to their surrounding
communities.”
However, Grassley and
his colleagues have reason to believe not all non-profit hospitals are
delivering on these requirements.
“According to
reports, it appears that at least some of these tax-exempt hospitals have cut
charity care, despite increased revenue, calling into question their compliance
with the standards set by Congress,” he reported.
Grassley cited a
2017 article from Politico’s
Dan Diamond calling into question the number of hospitals actually carrying
through on their promises for better community health.
Currently, the IRS
reviews about one-third of non-profit hospitals by looking at their Forms 990,
hospital websites, and other areas where they may detect a hospitals
non-compliance with non-profit mandates, the agency told Grassley in a previous
letter. From there, the IRS assigns compliance checks to the most relevant hospitals.
The Finance Committee
aimed to reinforce those efforts while finding out more about the compliance
check process. Their questions for the IRS centered on seven key themes,
including:
- Since April 2018, how many additional hospitals have
been investigated for non-profit non-compliance?
- How many of those examinations have been closed? What
were the results?
- How many of those hospitals investigated by IRS
participated in debt-collections activities for patients eligible for
certain financial protections, including financial assistance policies?
- What is the process by which the hospital identified
patients eligible for financial assistance policies?
- Is unreimbursed Medicare expense still a common issue?
What explains that trend?
- Is
there a status report on this year’s IRS Report to Congress about
tax-exempt hospitals?
Better oversight of
healthcare organizations claiming non-profit status is a key issue for ensuring
vulnerable patients have access to care, Grassley
concluded. These hospitals receive tax-exempt status so they can better serve
their communities and must deliver on that promise.
“Making sure that
tax-exempt hospitals abide by their community benefit standards is a very
important issue for me,” he wrote. “As chairman of the Senate Judiciary
Committee, I oversaw an investigation into the billing practices of the Mosaic
Life Care hospital. That investigation resulted in debt relief of almost
$17 million for thousands of low-income patients. This issue is still just
as important to me now that I am chairman of the Senate Finance Committee.”
The IRS revoked a hospital’s non-profit
status for the first time in February 2017. The unnamed hospital explained to
the IRS that it did not have the means to keep up with the demands of the
non-profit status.
The hospital told the
IRS that as a small rural organization, it “had neither the financial
wherewithal nor the staffing to devote to the specific requirements of Treasury
Regulation 501(r)-3 for conducting a proper Community Health Needs Assessment
every three years.”
Although, the
hospital also stated that it “really did not need, actually have any use for,
or want their tax-exempt status.”
Grassley and
colleagues aim to strengthen the IRS to continue to uncover other hospitals
that may be neglecting their community health duties. This will ideally ensure
that hospitals are using the money saved from their non-profit status to
benefit their communities.
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