The Baucus Bill & Requirements for Tax Exempt Hospitals
The Facts
The Baucus Bill contains a specific section dedicated to tax exempt hospitals. The section "Additional Requirements for Section 501(c) (3) Hospitals" would establish a series of four new requirements for hospital tax exempt status, which are in addition to the core requirements for tax exempt status currently established under the controversial "Community Benefit Standard,” and include:
- Performance of a periodic community needs assessment
- The adoption, implementation and publicizing of written policies on financial assistance and providing emergency care
- Limitations on bills to patients who qualify for financial assistance
- Prohibition of "extraordinary collection actions" (even those permitted by law)
The Bill also provides for increased reporting and disclosure requirements with respect to Form 990, and for continuing governmental oversight of community benefit related indicators.
What's At Stake
This portion of the Baucus Bill serves as a supplement to, rather than a replacement of, the Community Benefit Standard for hospital tax exempt status under the Internal Revenue Code. It excludes the controversial excise tax and minimum patient charity care standards originally proposed by the Senate Finance Committee last May. In many respects, this may be perceived as a moderate alternative to other, more significant proposals to revise or replace the entire Standard. However, what presently remains unclear are the long-term implications of the proposals relating to mandated IRS review of the Schedule H information, financial statement disclosure and the ongoing Health and Human Services study and review of community benefit expenditures.
Steps to Consider
- Plan for the preparation of a community needs assessment as a tax exemption requirement
- Evaluate the sufficiency of existing policies and procedures on financial assistance, emergency room access and patient billings
- Anticipate clear internal policies prohibiting aggressive collection practices
