January 14, 2010

Hospital Association Objects to Provisions in Health-Care Legislation

The American Hospital Association is asking Congress to drop provisions that would affect nonprofit hospitals from a final version of the health-care legislation under consideration.

The House of Representatives and Senate are beginning negotiations to merge bills they passed separately that would overhaul the health-care system.

The House bill did not include provisions for nonprofit hospitals, but the Senate measure did.

“The AHA does not believe that the new requirements for charitable hospitals and their ability to maintain tax exemption in the Senate bill are necessary and we urge the [House and Senate] conferees to remove these provisions from the final health-reform conference report,” the hospital association said in a January 7 letter to leaders of Congress.

The American Hospital Association particularly objected to two requirements in the Senate bill. It urged Congress to drop the pair of requirements even if it retained the others.

One Senate provision would require the Treasury Department to review information about each tax-exempt hospital’s “community benefit” activities (such as offering full-time emergency care to all patients regardless of ability to pay) every three years to determine whether the institution remains eligible for a tax exemption.

“Such a review is unnecessary, expensive for the hospital, and would effectively empower the Internal Revenue Service to establish requirements for tax exemption based on a flawed reporting mechanism and absent input from communities served by the hospital and those who represent them,” the hospital association said.

The association noted that nonprofit hospitals in 2010 will file a new Schedule H, as part of the Form 990 informational tax return, that asks for information about charity care and community benefits.

The new Schedule H is “seriously flawed,” the American Hospital Association said. “Hospital systems will be particularly disadvantaged because the schedule does not provide most systems with the opportunity to report the full range of community benefits they provide,” the association said.

The other Senate provision that especially troubles the American Hospital Association would require the Treasury Department to make an annual report to Congress on the levels of charity care provided by nonprofit and other hospitals and on related topics.

“This report is unnecessary and redundant, given other work being performed by the Congressional Budget Office and General Accountability Office,” said the letter from the hospital association.

“The report will also be expensive for hospitals and most likely would report inaccurate information,” the association said.

The American Hospital Association added: “There are serious and pervasive flaws in recent IRS hospital surveys and the schedule for tax-exempt hospitals to report community benefits. Until the IRS understands and corrects those flaws, a study of this type could not be expected to provide reliable information to policymakers.”