December 02,2020

Grassley to Colleagues: Rules for Non-Profit Hospitals Need Scrutiny

Washington Following a year of inquiry, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) wrote in a letter today to every member of the Senate Finance and Judiciary Committees about the need for new attention to the tax laws governing non-profit hospitals.
Prompted by troubling public reports about the practices of two hospitals, Grassley wrote to University of Virginia (UVA) Medical Center and Methodist Le Bonheur Healthcare in Tennessee seeking information about their legal obligations to provide charity care and financial assistance as tax-exempt, non-profit hospitals.
In his letter to colleagues, Grassley outlines his correspondence with both hospitals from both before and after the beginning of the COVID-19 pandemic and highlights the need to address the problems of billing, debt-collection and price transparency for patients.
“...the issue of how the Internal Revenue Code should deal with non-profit hospitals is likely to remain an important question.  Since the enactment of Section 501(r) into law ten years ago, I have heard from the healthcare industry that Section 501(r)’s requirements are overly strenuous for non-profit hospitals.  This inquiry unfortunately has shown that, if anything, the requirements of 501(r) need to be strengthened rather than softened.  Stories about non-profit hospitals engaging in billing and debt-collection practices that defy the spirit of Section 501(r), at least, are not limited to the two hospitals discussed above,” Grassley wrote.
Grassley concluded his letter by writing, “It’s time for Americans to have more financial information available to them when going to the hospital and working with their insurance companies.  It’s time for Congress to empower Americans to shop for healthcare in a competitive, functional market so as to reduce the costs of care and coverage, and save individuals and businesses hundreds of billions of dollars.”
In early 2019, Grassley announced he was renewing his probe of non-profit, tax-exempt hospitals. Grassley has been a leader in Congress in the effort to lower health care costs, recently introducing sweeping, bipartisan legislation to lower prescription drug prices.
In 2015, Grassley conducted an investigation into the Mosaic Life Care hospital system, which was suing low-income patients to force them to pay their hospital bills even when those patients were eligible for financial assistance and discounted treatments. As a result of that investigation, Mosaic Life Care established a three-month debt forgiveness period in which patients could apply or re-apply for financial assistance, forgave the debt of 3,342 patients totaling $16.9 million in debt relief, and hired more employees to help low-income patients apply for financial assistance.
Full text of Grassley’s letter to colleagues can be found HERE attachments to the letter can be found HERE.