Senate Chairman's Health Care Mark Lists Provisions for Nonprofit Hospitals

Exempt Organizations Alert

Senator Baucus released the details of the proposed Senate healthcare plan on September 16, 2009, which is scheduled for markup by the Senate Committee on Finance on September 22, 2009. This Plan has been negotiated for months amid speculation within the nonprofit healthcare community regarding whether the community benefit standard would be codified. The Senate Bill contains provisions in the Revenue Section imposing fines on nonprofit hospitals if they do not comply with a "community health needs assessment" requirement. Every hospital recognized as a nonprofit hospital described in section 501(c)(3) of the Internal Revenue Code, would be required to conduct a community health needs assessment at least once every three years, and then adopt an implementation strategy to ensure that the nonprofit hospital will meet the needs so identified. The assessment is to be publicly disclosed on the nonprofit hospital's Form 990 and related schedules. Failure to complete the study in any three year period would result in a penalty on the nonprofit hospital of up to $50,000. Failure to disclose the implementation strategy would subject the nonprofit hospital to penalties for filing an incomplete Form 990.

Nonprofit hospitals would also be required to adopt a financial assistance policy to be widely publicized, ensuring prevention of discrimination in the provision of emergency medical treatment against those eligible for financial assistance. In addition, each hospital facility would be required to bill patients who qualify for financial assistance no more than the amount generally billed to insured patients. Also, the collection process utilized by the nonprofit hospital on bad debts would be limited to practices under current Medicare law. Accordingly, the hospital would be prohibited from certain extraordinary collection actions without first informing the patient of the hospital's financial assistance policy. Finally, the Senate Bill includes a new requirement that the IRS review the community benefit activities reported by each nonprofit hospital on its Form 990, Schedule H, at least once every three years. The IRS and HHS would be required to report annually to Congress their findings with regard to the levels of charity care, bad debt expenses, unreimbursed costs of Medicare and Medicaid, as well as other costs of community benefit activities incurred by private tax-exempt hospitals. In addition, the IRS and HHS must conduct a study of the trends in these expenses to be presented to Congress five years from the date of enactment.

The full text of the America's Healthy Future Act is available at:

Please contact Nancy Ortmeyer Kuhn at 202-862-8856 or if you have any questions.

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