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Nonprofit Hospitals and their Tax Exempt (Charitable) Status s - - PowerPoint PPT Presentation
Nonprofit Hospitals and their Tax Exempt (Charitable) Status s - - PowerPoint PPT Presentation
Nonprofit Hospitals and their Tax Exempt (Charitable) Status s Majority of U.S. Hospitals are Tax Exempt Majority of CA Hospitals are Tax Exempt Value of Tax Exemption Federal, state, and local tax exemptions = $24.6 billion a year
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Majority of CA Hospitals are Tax Exempt
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Value of Tax Exemption
Federal, state, and local tax exemptions
=
$24.6 billion a year
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Federal Community Benefit Standards
Direct Benefit to Patients (85%) Benefit to Community (15%) Free or discounted care (“Charity Care”) Community health improvement services (direct spending on community health) Subsidized health services (net loss to hospital) Contribution to community groups Unreimbursed costs for means- tested government programs (Medicaid) Health professions education Research
Bad debt and Medicare shortfalls cannot be used to meet IRS’ community benefit standards
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Community Benefit Investments after ACA
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Hospital Tax Exemption: Key Issues
ü Inadequate community benefits in exchange for tax exemption ü Investment in for-profit business ventures ü Aggressive billing and debt collection ü High executive compensation Ø Lack explicit criteria: community benefit activities and management practices
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Two State Level Trends
ü Establish minimum standards for hospitals to retain tax-exempt status (Illinois, Nevada, Pennsylvania, Utah, Texas) ü Expand reporting of community benefit activities to government agencies and to public
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Recent Developments
v Hatch & Grassley Letter to IRS (2/15/2018) v CA Hospitals asked for charity care reductions:
§ USC Verdugo Hills Hospital (Glendale) à$1.7M § PIH Health Hospital (Downey) -> withdrew § Mission Community Hospital (Panorama City) à $1.7M § Emanuel Medical Center (Turlock) à $1.9M
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Future Outlook
§ Increasing accountability à Develop clear, well-defined criteria for tax exemption § Focus on population health à Hospitals contribute to communities by promoting health § Increasing transparency à CA makes all data publicly available online www.oshpd.ca.gov/HID/SubmitData/Communit yBenefit
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