Indiana Gov. Evan Bayh has signed legislation requiring most of the state's hospitals to begin reporting their charity care to the state in 1996.
The Indiana Legislature had debated, but rejected, the idea of mandating levels of charity care or revoking hospitals' tax-exempt status.
"This was an effort to further clarify the status of the not-for-profit," said Myra Selby, Mr. Bayh's director for health policy. "I certainly think that as we start looking at reforming the healthcare system, we will need to know how much charity care they are doing, and we don't know that."
Mr. Bayh signed the bill into law earlier this month. It was intended to help the state gather information as it prepares for sweeping healthcare reform. Such a measure is expected to be introduced when the next legislative session convenes next January.
The bill requires community-owned, church-owned not-for-profit and investor-owned hospitals to report annually the amount of their charity care, the financial value of community education they provide and the value of their community benefit activities, such as free blood pressure or cholesterol screenings.
The bill doesn't require reports from government-owned hospitals and the eight not-for-profit hospitals that are getting Medicaid disproportionate-share payments because they treat large numbers of poor people.
Of Indiana's 113 acute-care hospitals, 56 are not-for-profit, 49 are owned by state and local governments, and eight are investor-owned for-profit facilities. A total of 56 hospitals will be required to report charity-care levels under the new measure.
"The Legislature stopped short of any tax," said Robert Morr, vice president of the Indiana Hospital Association. "It became a reporting bill rather than a tax-exempt status bill."
The new law is an amendment to Indiana's existing Hospital Financial Disclosure Act, which requires facilities to report average charge and utilization data.
Last year, Texas became the first state to approve a bill setting minimum requirements for charity care. It's law requires hospitals to provide charity care or Medicaid shortfalls equal to 4% of net revenue. A similar bill also is pending in the Florida Legislature-it would require not-for-profit hospitals to spend 3.7% of their patient revenues on charity care and bad debt. The bill was approved by the state's Senate Finance Committee and was awaiting approval by the full Senate (Feb. 28, p. 18).
