AMA supports additional oversight for nonprofit hospital charity care

Author(s):

Austin Littrell

Key Takeaways

The AMA aims to standardize charity care policies to ensure nonprofit hospitals fulfill their charitable missions and provide adequate patient assistance.
Nonprofit hospitals receive significant tax exemptions but often contribute less to communities than the value of these savings.
Current laws allow nonprofits to define their own charity care criteria, leading to inconsistencies and burdensome application processes for patients.
The AMA supports increased government oversight and potential penalties for hospitals that fail to provide adequate community benefits.

In a recent announcement, the AMA announced its support of more standardization and regulation of nonprofit hospitals.

At its Interim Meeting of House of Delegates in Orlando, Florida, the American Medical Association (AMA) voted in favor of heightened oversight of nonprofit hospitals and standardization of charity care policies, thereby ensuring that the institutions fulfill their charitable missions. The decision underscores growing concerns regarding the many shortcomings of nonprofit hospitals when it comes to providing adequate assistance to patients, despite receiving substantial tax exemptions meant to support community benefits.

“Failing to standardize the financial assistance process across all nonprofit hospitals makes the benefit inaccessible to many eligible people. A patient may quality for aid at one hospital, but not at a hospital across town,” Bruce A. Scott, MD, president of the AMA, said in an organizational 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.”

The new policy directs the AMA to advocate in favor of the development of publicly accessible minimum eligibility standards for nonprofit hospital financial assistance programs, in addition to newly required charity care eligibility screenings of patients prior to billing and a standardized definition of what is considered a ‘community benefit’ during the valuation of community health improvement activities.

Nonprofit hospitals are the recipients of significant tax breaks, offering exceptions from income, property and sales taxes. The hospitals save billions of dollars on taxes, annually, on the condition that they provide charity care and other community-based health services. However, according to a report by the Lown Institute, 80% of these hospitals contribute less to their communities than the value of tax savings they receive.

Under current laws—the Affordable Care Act, Internal Revenue Code and state laws—nonprofits are allowed to define their own criteria for charity care, leading to inconsistencies across hospitals. This can result in confusing and burdensome application processes which often deter eligible patients from accessing assistance. To enforce accountability, the AMA also announced their support of increased government oversight and potential penalties, including the revocation of tax-exempt status for hospitals that provide little or no community benefit.

These new AMA initiatives continue to build on existing policies that encourage hospitals to adopt, implement, monitor and publicize policies on discounts, charity care and fair billing and collection practices, ultimately ensuring that financial assistance is made available to those that need it the most.