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Stiffer charity rules may be a stretch, study suggests


By Joe Carlson
Posted: July 23, 2009 - 12:15 am ET
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As the Senate Finance Committee debates whether to include stricter rules on charity care provided by not-for-profit hospitals in a healthcare reform law, a new study finds that 95% of hospitals in one state would have failed similar requirements proposed by the committee two years ago.

The study of Maryland hospitals' provision of charity care, published in the journal Health Affairs, finds that only two of the state's 45 hospitals provided charity care that was equivalent to 5% of their annual expenditures. In 2007, Republican Senate Finance Committee staff members proposed establishing a “bright line” test under which not-for-profit hospitals would have to earn their tax-exempt status by providing free care equivalent to 5% of either expenditures or net revenue. Insiders say the proposal is still an item of active negotiation in the committee, which has yet to release its version of a reform bill.

The Health Affairs article stands in contrast to other published reports that found most not-for-profit hospitals would easily meet the 5% bright line test. The new journal article says the senators are considering a narrow definition of charity care that would exclude uncollected debt and shortfalls in government reimbursements from the definition of charity care.

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