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Summary

One of the major health care bills, America's Healthy Future Act (S. 1796, § 6007), includes a provision that would impose requirements on hospitals with § 501(c)(3) tax-exempt status. Under the act, hospitals would be required to regularly conduct "community health needs assessments" and adopt implementation strategies to meet those needs. They would also be required to have written financial assistance and emergency medical care policies that were consistent with standards imposed by the act. Furthermore, hospitals would not be able to charge eligible uninsured individuals more than the lowest amounts charged to insured individuals for emergency and other medically necessary care, and they would be required to make reasonable efforts to determine an individual's eligibility for financial assistance before beginning extraordinary collection actions. The act's requirements appear to reflect concerns that have arisen in recent years about whether non-profit hospitals are providing adequate public benefits to justify their tax-exempt status. Non-profit hospitals are eligible for federal tax-exempt status as charitable organizations described in § 501(c)(3) of the Internal Revenue Code (IRC). Under the "community benefit" standard developed by the IRS, charitable hospitals are judged on whether they provide sufficient health benefits to the community. The IRS has recently developed a new annual reporting requirement (Schedule H of the Form 990) for hospitals to report information regarding their activities. This report examines the standard under which hospitals qualify for tax-exempt charitable status under federal law, recent inquiries made by Congress and the IRS into whether hospitals are conducting sufficient activities to justify their exemption, and section 6007 of S. 1796. The Appendix to the report discusses the new Schedule H in detail.

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