Sen. Grassley Considers Proposing Legislation That Would Require Not-for-Profit Hospitals To Spend A Minimum Amount On Charity Care, More

Senate Finance Committee ranking member Chuck Grassley (R-Iowa) might propose legislation in the first quarter of 2009 that would attempt to hold not-for-profit hospitals accountable for the billions of dollars in tax exemptions they receive annually, according to members of Grassley’s staff, the Wall Street Journal reports. Grassley is working on the legislation with other Senate members, including Sen. Jeff Bingaman (D-N.M.). The aides noted that Grassley first plans to urge the Treasury Department to reinstate charity care requirements that the Internal Revenue Service eliminated in 1969 before proposing new legislation.

Under proposed new legislation, not-for-profit hospitals would be required to spend a certain amount on care for the indigent and to limit executive compensation and conflicts of interest, Grassley’s aides said. Previously, Grassley has suggested hospitals spend at least 5% of their patient revenue on charity care, but it is not clear if that is the amount being considered for the new legislation. The aides noted that if the hospitals failed to comply with the proposed legislation, charges, ranging from fines and taxes to losing federal-tax exemption status, could be levied.

According to the Journal, Grassley hopes to “capitalize on the momentum for health care change in Washington” but “is likely to run into stiff resistance from the hospital industry’s powerful lobby.”

Alicia Mitchell, a spokesperson for the American Hospital Association, said that not-for-profit hospitals have not had the opportunity to show compliance and goodwill under the reporting requirements set by IRS, adding, “Hospitals do more to assist the poor, the sick and the elderly than any other part of the health care system” (Carreyrou/Martinez, Wall Street Journal, 12/18).

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2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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