The American Medical Association has voted to support greater oversight of nonprofit hospitals and standardization of charity care policies to ensure such hospitals adhere to their charitable mission and justify their tax-exempt status.
"Failing to standardize the financial assistance process across all nonprofit hospitals makes the benefit inaccessible to many eligible people. A patient may qualify for aid at one hospital, but not at a hospital across town," AMA President Bruce Scott, MD, said in a Nov. 11 news release. "Often the application process is not clear and requires patients to complete onerous paperwork requests, discouraging patients from completing financial aid applications. In some cases, patients are not screened for eligibility to ensure financial assistance reaches those in need."
Five things to know:
1. Nonprofit hospitals are exempt from income, property and sales taxes in exchange for providing charity care and community services. Currently, the Affordable Care Act, the Internal Revenue Code, and state laws allow nonprofit hospitals significant flexibility in setting financial aid eligibility criteria, leading to inconsistencies across hospitals, according to the AMA.
2. A Lown Institute report published in March found that 80% of nonprofit hospitals give back less than they receive in tax breaks. More than 1,900 hospitals pay less than their "fair share" — meaning the value of their meaningful community contribution falls short of the value of their tax breaks, according to the report. The combined fair share deficits totaled $25.7 billion.
3. The American Hospital Association argued that the report oversimplified complicated policy, payment and demographic realities that hospitals face, making it seem as if they have a choice to provide financial assistance while not suffering from Medicaid shortcomings. "The report cherry-picks categories of community benefit and ignores other areas of great importance by omitting the very real underpayments from Medicaid and Medicare that hospitals must absorb," AHA President and CEO Rick Pollack said in a March 25 statement.
4. The AMA's newly adopted policy directs its members to advocate for minimum eligibility standards, required charity care screenings before billing, and clearer definitions of community benefit in community health initiatives.
5. At its Nov. 12 interim meeting, AMA policymakers also discussed increasing oversight of nonprofit hospitals that provide minimal community benefit. Under the new policy, the AMA will push for stronger government enforcement of community benefit requirements, including penalties or loss of tax-exempt status for noncompliance.