The American Hospital Association said it would not support proposed legislation that would have tax-exempt hospitals dedicate a minimum of 5% of their annual operating expenses or revenue to charity care.
Sen. Chuck Grassley (R-Iowa), ranking member of the Senate Finance Committee, had been seeking comment on a draft proposal, which also specifies how the value of charity care should be calculated, and when care could be classified as charity. The staff is concerned that many nonprofit hospitals receive substantial federal income tax benefits and subsidies without providing commensurate benefits to society, the draft stated.
Earlier this past summer, the Internal Revenue Service released an interim report indicating that 22% of tax-exempt hospitals spend less than 1% of total revenue on uncompensated care, and more than 21% spend less than 2% on community benefit as a percentage of total revenue.
But according to the AHA, the draft singles out hospitals for unfair criticism and recommends punitive measures that are unwarranted.
The group took particular issue with Grassleys suggestion to replace the current community benefit standard for tax exemption with a percentage test related only to charity care. The courts and Congress in the 1960s had already rejected the use of a percentage test as outdated. The wisdom of that decades-old decision remains fully intact today, the AHA wrote in a letter to Grassley. -- by Jennifer Lubell
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