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Grassley Seeks Update on Nonprofit Hospital Accountability Measures

This news story was published on April 8, 2014.
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WASHINGTON – Sen. Chuck Grassley of Iowa is asking the IRS to account for the status of several important oversight measures for nonprofit hospitals enacted in 2010.  Grassley co-authored the provisions imposing standards for the tax exemption of nonprofit hospitals for the first time.

“These reforms were the culmination of a review of nonprofit hospitals I began in 2005 that revealed that the practices of many nonprofit hospitals were virtually indistinguishable from their for-profit counterparts,” Grassley writes in a letter to IRS Commissioner John Koskinen. “While these new provisions were intended to provide more oversight of nonprofit hospitals, it appears that not all of the requirements have been implemented.”

To date, key legal guidance needed to ensure compliance with the law does not appear to be finalized.  The law also requires the IRS and the Department of Health and Human Services to collect information on nonprofit hospitals and report to Congress every year.  An annual report should have been issued to Congress for Fiscal Year 2012, but Congress never received any report.  Congress has also yet to receive the report for Fiscal Year 2013.

“As a result, Congress still does not have access to the information that was required to be reported by law,” Grassley writes.  “This raises serious concerns both about the oversight of nonprofit hospitals and the government’s ability to faithfully execute laws passed by Congress.”

Grassley’s reforms came after oversight and investigative reviews of nonprofit hospitals revealed troubling practices among some nonprofit hospitals, including providing very little charitable patient care or other community benefits; failing to publicize charitable care to patients; charging indigent, uninsured patients more than insured patients; and using very aggressive collection practices.  The Government Accountability Office and others, including the former IRS commissioner, have said for a long time that there is often no discernible difference between the operations of taxable and tax-exempt hospitals.  Grassley modeled the new accountability measures after principles and polices that the Catholic Health Association has had in place for years.

The text of Grassley’s April 4 letter to the IRS commissioner is available here.

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