More than a dozen states have considered or passed legislation to better define what charity care means, increasing the scrutiny on nonprofit hospitals and health systems, according to a July 11 KFF Health News report.
Nonprofit status in healthcare provides hospitals with tax breaks and exemptions with health systems obligated in return to offer uncompensated care for those who have difficulty paying for services. Policy analysts at KFF estimated a total of $28 billion in such exemptions in 2020 versus $16 billion in free or discounted care, for example.
The growing interest of many states in how tax-exempt hospitals operate has coincided with well-documented cases of what some see as aggressive policies on the part of some health systems in collecting medical debt, or even refusing nonemergency care to those with more hefty debt, according to the report.
Dale Folwell, North Carolina treasurer and a candidate for governor, for example, has been vocal in his criticisms of nonprofit hospitals.
"They're not doing the job," he said. "It should be patients over profits. It's always now profits over patients."
Hospitals are fighting back, especially in a time of financial difficulties when just keeping their doors open provides a community benefit, said Melinda Reid Hatton, general counsel for the American Hospital Association.
"You can't focus entirely on charity care" as a measure of community benefit, she said. Hospitals deliver nine times the community benefit for every dollar of federal tax avoided, Ms. Reid Hatton added.
The debate is likely to rumble on for the foreseeable future, said Ge Bai, PhD, a health policy expert at Baltimore-based Johns Hopkins University.
"I don't think hospitals will lose tax exemptions in the short run," she said. "[But] there will likely be more pressure from the public and policymakers for hospitals to provide more community benefit."