Congress requires that hospitals Justify Tax-Exempt Status

Congress seeks to justify exempt hospitals: What, other measures should help to identify free, reduced care James Drew The Baltimore Sun McClatchy-Tribune Regional News
February 23 - Proposals in Maryland, the General Assembly to define patients who are eligible for financial assistance in hospitals receive unexpected thrust of the Congress, which may soon consider legislation to make non-profit hospitals justify their tax exemption.

The pressure comes on the heels of a February 12 Internal Revenue Service, which indicates that a small percentage of America non-profit hospitals provide nearly two-thirds of the nation, free or at reduced prices, the care for the poor.

"I am very disappointed," Senator Charles E. Grassley of Iowa, who has pushed for years to examine the practices of various nonprofit organizations, said in an interview. "Charity is practiced differently care from hospital to hospital and community to community, and there should be a uniform definition. If the IRS does not, I will do so by law. "

The initiatives are in the midst of a deteriorating economy, which should swell the ranks of people seeking help to pay hospital bills, and a growing debate about how many non-profit charity profit care hospitals have to offer in exchange for their tax exemptions.

In response to a series of investigation in the Baltimore Sun on hospital debt collection practices, Governor Martin O'Malley encouraged the legislature to replace the voluntary guidelines developed by the Hospital Association of Maryland with a minimum standard that is eligible for free health care, commonly known as charity care.

"These reforms mean quality of hospital care should not add difficulties to an overwhelming uninsured patients or their families," said John M. Colmers, secretary of the state Department of Health and Mental Hygiene.

The body of the State of Maryland, which establishes the rates of hospital requested a review of the formula it uses to compensate hospitals for the costs of charity care and unpaid bills. A report of health services by the Commission for review of costs has stated recently that the current formula, perhaps unwittingly create financial incentives for hospitals to classify some patients on low incomes, as "doubtful" of cases where they can pursue through collections or legal action, instead of providing charity care. Executive Director said Robert B. Murray Financial incentives could be added to encourage more charity care.

Grassley told The Sun that the Centers for Medicare and Medicaid Services should also consider whether patients with low incomes have been affected. A spokesman for CMS declined to comment.

Four decades ago, after the Medicare and Medicaid programs were created, the federal government abolished the requirement that hospitals provide free and reduced-price care for the poor to receive exempt.

Since then, the IRS has used a "community benefit" standard, requiring hospitals to report how much they spend on items such as medical research, emergency care, physician training and health fairs .

Grassley, a Republican, the ranking on the Finance Committee of the Senate, said that the standard is vague.

If the IRS does not restore the requirement to provide non-profit hospitals for charity care, Grassley said he and Senator Jeff Bingaman, a Democrat of New Mexico, the legislative push to do. A proposal calls for non-profit hospitals to devote at least 5 percent of their annual revenues to charity care. States may set higher standards, Grassley said.

In 2007, the amount of charity care by hospitals in Maryland has been slightly above 2 percent of gross patient revenue, according to state data.

The IRS has acknowledged that it was difficult to manage "community benefit" rules, calling them "the vagueness of legal norms" in its recent report. The report found that 14 percent of hospitals but non-profit is made with 63 percent of all charity care and unpaid bills written off, although the agency did not recommend policy changes and did not identify the 489 hospitals surveyed.

The American Hospital Association argued that the non-profit hospitals do more to help the poor than any other part of the health care sector, and he said the IRS under-the amount of charity care and other benefits.

In Maryland, legislation introduced by Peter A. Del Hammen and state Sen. George W. Della, a Baltimore Democrat, would require hospitals to provide care to all Maryland residents whose income is less than 1.5 times the federal poverty guideline, which would equal $ 33,075 for a family of four.

State regulators, backed by O'Malley, recommended the eligibility of a family of four with an income of $ 44,100.

A leader of a consumer group said at the national level the proposals "a long way towards creating a more just, clear and transparent for consumers."

"It is long overdue, and the need is clearly based on the Baltimore Sun of the investigation," said Renee Markus Hodin, project director of Community Catalyst, a nonprofit group based in Boston.

The series of inquiry found that Maryland, unlike some other states, lack of uniform standards and practices for determining who is eligible for free or discounted care in hospitals. As hospitals have different policies, which consider the assets and household income, some people are facing court decisions or to obtain liens on their homes, even if they have little means to pay their bills . Hospitals are required to post notices on the availability of financial assistance, but not necessarily to inform each patient about this, or provide applications for charity care in a proactive manner.

Under the Maryland single system in which the state sets rates for hospitals, hospitals received nearly $ 1 billion last year - thanks to a marking on the bills that all patients pay - to cover costs of charity care and unpaid bills. All, except one, Maryland, 47 non-profit hospitals.

In 2005, a bill to require hospitals to devote at least half of the amount of their tax exemption to freedom and a reduced price, care died in committee in the General Assembly.

Maryland Hospital Association argues that its members, to justify their tax exemption through annual deposits to the IRS and touts Maryland law requiring hospitals also file annual reports with regulators on how they benefit their communities .

"Charity care and financial assistance is critical, but the benefit that our hospitals provide to communities is much wider than that," the chairman of the group, Carmela Coyle, said in a recent interview.

O'Malley has ordered regulators last December to make a "thorough and immediate review" of the hospital practices of debt collection. The report, published on 13 February noted the benefits of the system state rate-setting , but acknowledged that the voluntary guidelines for the definition of charity care have led to overly aggressive collection practices by debt hospitals.

The Sun reported that the hospital debt collection trials increased significantly between 2003 and 2006 before falling slightly in 2007. In general, hospitals, trained over 132,000 of these suits in the past five years, winning at least $ 100 million in judgments and liens placed on more than 8,000 homes.