The Illinois House approved new legislation today (PDF) that attempts to better define what makes a not-for-profit hospital eligible for a property-tax exemption.

The legislation, introduced today, is an amendment to a larger tax bill brought to the state Senate in February. The bill also includes provisions for the $1 per pack of cigarette tax first floated last month by Gov. Patrick Quinn as a solution to generate $700 million for the state's sputtering Medicaid program. Quinn, in April, said the Medicaid program was on the brink of collapse, and proposed $2.7 billion in cuts to the program.

Today's bill is expected to make it to the Senate floor next week.

The Illinois Hospital Association promptly issued a statement supporting the legislation, which is part of Senate Bill 2194 and also covers sale-tax exemptions. Today's addition also includes details on an enhanced hospital assessment program, which IHA officials say would bring in $190 million in federal Medicaid funds for hospital care, as well as $100 million for the state Medicaid program.

IHA officials sent a letter to Quinn late last year asking for clarification on property tax exemptions after the state revenue department pulled exemption statuses from three hospitals in Illinois. The IHA and state officials were working on a compromise, but failed to reach one by a March deadline set by Quinn.

The IHA is supportive of the bill that states that care of indigents, subsidizing doctors who treat low-income patients, and disease management and prevention for the low-income population count as charitable activities. Actions that reduce the burden on the government in terms of caring of low-income patients also count as charitable activities that could lead to tax-exemption status.