The IRS inquiry into the tax-exempt status of not-for-profit hospitals continues (i.e., do such hospitals provide community benefits, including charity care, sufficient to justify their tax-exempt status?), and hospital associations and their advisors continue to react to the IRS questionnaire that was sent out to hospitals a while back (see earlier post).
The AHA wrote a letter to the IRS about ten days ago, pointing out problems with the questionnaire.
PriceWaterhouseCoopers released a report last month entitled My Brother’s Keeper: Growing expectations confront hospitals on community benefits and charity care (available here; registration may be required). It’s a good read, and is based in part on roundtable discussions with some hospital executives.
The key recommendations in the PwC report are very pragmatic:
• Review community needs not only at the hospital level, but over larger geographic areas, by teaming with business, community and political leaders.
• Conduct an economic impact study to quantify in dollars additional community benefits generated by the hospital.
• Publicize community benefit results to inform the public about progress to improve the overall health of the community.
• Adopt the CHA/VHA Community Benefit guidelines for both community reporting and on IRS Form 990. Commit to adopting the CHA/VHA guidelines regarding bad debt and Medicare shortfalls by 2010.
• Report charity care at cost, not charges.
• Enhance board involvement in setting charity care policies, with periodic evaluations of performance.
• Educate and distribute the charity care policy to all hospital employees.
• Clarify policies to clearly identify charity care, as distinguished from bad debt.
• Simplify the charity care application process by integrating technology at the front-end of the qualification process.
In September, per a CHA press release, Senator Charles Grassley, who has been spearheading the inquiry into tax-exempt status of hospitals, praised the CHA’s efforts, and noted:
The IRS is creating a supplemental report to the Form 990 to include additional information from non-profit hospitals and their charity care and community benefit. I hope the IRS will give strong consideration to having that new information requirement conform with CHA guidelines.