Wednesday, September 9, 2009

Baucus Health Care Proposal Includes New Nonprofit Hospital Requirements

In the "Revenue Provisions" at the end of a leaked copy of Senator Max Baucus' (D-Mont.) proposed health care reform package made available by Fox News, there are two sentences relating specifically to nonprofit hospitals:

Non-profit Hospitals Requirements. This proposal would establish new requirements applicable to nonprofit hospitals. The requirements would include a periodic community needs assessment.

While relatively uninformative, it is reasonable to assume that this placeholder provision is a reference to the list of possible new requirements included  in a Senate Finance Committee report issued last May on "Financing Comprehensive Health Care Reform: Proposed Health System Savings and Revenue Options."  The revenue raisers section of that report included modifying the requirements for tax-exempt hospitals along these lines:

The Committee could consider a policy option that would codify organizational and operational requirements for determining whether a hospital is a charitable organization for purposes of section 501(c)(3) tax-exempt status.  Such requirements include, among other things, that section 501(c)(3) hospitals regularly conduct a community needs analysis, provide a minimum annual level of charitable patient care, not refuse service based on a patient's inability to pay, and follow certain procedures before instituting collection actions against patients.  Certain hospitals that are critical to the communities they serve or which have an independent basis for tax exemption (e.g., as an educational or scientific research organization) are excluded f

rom the minimum charity care requirement. The proposal includes provisions designed to ensure proper reporting and transparency of operations. In addition, the proposal provides for excise taxes, or “intermediate sanctions,” designed to encourage compliance with the operational requirements. These intermediate sanctions could be imposed, for example, in situations where revocation of tax-exempt status is viewed as inappropriate.


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