The Center for American Progress said policymakers should "question whether giving hospitals carte blanche for community benefits in exchange for tax breaks is the optimal way to allocate resources for public health problems and pay for care for those who cannot afford it," in an Oct. 18 report.
"Some hospitals' excess revenues come at least in part from overcharging patients; in other words, hospitals' coffers for charity care and community benefits are effectively filled by taxing the sick," the report stated. "Stronger federal regulation and oversight are needed to ensure that all nonprofit hospitals properly fulfill their charitable mission."
The report outlines several policies lawmakers should consider to increase nonprofit hospital accountability:
1. Set standards for charity care eligibility and obligations: Center for American Progress said one example could be limiting the value of tax exclusions to the amount a hospital provides in charity care.
2. Tighten the definition of community benefit: The IRS currently requires hospitals to submit evidence of a relationship between certain forms of "community building" investments and health improvements but does not require evidence for community health improvement activities, according to the report. Requiring hospitals to set outcome goals for initiatives such as community gardens may more directly link community benefit spending to programs that are proven to have a positive impact on health outcomes.
3. Require hospitals to engage the community in needs assessments and implementation plans: Center for American Progress said nonprofit hospitals could be proactively required to engage communities in their community health needs assessments and include these needs in their plans.
4. Require nonprofit hospitals to participate in public health programs: States could make some or all of the benefits of nonprofit status conditional on hospitals' participation in publicly funded insurance networks or in public health programs, according to the report.
5. Limit extraordinary debt collection practices: Center for American Progress pointed to California, which limits the circumstances in which a hospital can garnish wages or place liens on a patient's primary residence.
6. Empower the Federal Trade Commission to regulate nonprofit hospital conduct: Current law prohibits the FTC from monitoring hospitals' conduct and bringing related enforcement challenges, which hamstrings its ability to protect consumers, according to the report.