- 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.