The Road Home for Health Care & Medical Benefit Solutions

Tax-exempt hospitals do not have to pay federal income taxes. The Congressional Joint Committee on Taxation estimates the value of these tax breaks at more than $6 billion a year.

Before 1969, the Internal Revenue Service required hospitalsto provide charity care to qualify for tax-exempt status. Since then,the agency has not specifically required charity care, but communitiesmust benefit in other ways.

Consumer groups and Patient Advocates can’t describe the benefits provided to their communities in consideration of the nonprofit tax exempt status because they are not visible. What is more visible, is that nonprofit hospitals have denied care to some uninsured patients and used aggressive tactics to collect bills owed by low-income people, they say.

The SenateFinance Committee is considering a bipartisan proposal that would require hospitals to provide a minimum annual level of charitable careas a condition forgetting or keeping the tax-exempt status available to charitable organizations.

Under the Amendment # 295, to to HR1, Senator Grassley proposes that hospitals could not refuse service because of a patient’s inability to pay, and they would have to follow certain procedures before taking collection actions against patients.If a hospital violated these standards, the government could revoke its tax-exempt status or impose excise taxes as a penalty.

Charles E. Grassley of Iowa proposed this amendment because he feels that many hospitals got a tremendous advantage from their tax-exempt status,but did not provide enough charity care to justify it.

Hospitals plan to begin a lobbying campaign this week to prevent Congress from including charity care requirements in legislation to overhaul the health care system.In a bulletin on Thursday, the American Hospital Association urged hospital leaders around the country to contact Congress to oppose this amendment.