Democratic and Republican Senators Seek Action on Community Benefit Standard

We blogged some time ago about a congressional hearing regarding health care tax exemption and community benefit.  Now 4 senators, 2 each from both sides, have written to the IRS with a list of information requests, and to the Inspector General with a request for an investigation.  All about the insufficiency of the community benefit standard and its enforcement.  It seems all friendly, though.  Both letters are written in terms of “tell us what you need to do better” terms.  The Senators are most concerned with community benefit as it relates to charity care, along the way relating a few horror stories about patients getting sucked dry by nonprofit hospitals. 

I tell ya, the wheels grind real slow — like waiting on the rapture, I guess — if I were AHA or some other group I would be concerned.  Here is the information requested from the IRS:

Provide a list of the most commonly reported community benefit activities that qualified a nonprofit hospital for tax exemptions in FY2021 and FY2022. Please categorize by charity care, unreimbursed costs of Medicaid, community health improvement activities, professional development, other.

2.Describe the updates the IRS has made since September 2020 to the instructions to Form 990 Schedule H to modify how community benefit information is identified and provided.

a. Describe the rationale for these updates to Form 990 Schedule H.

b. Describe how these updates to Form 990 Schedule H have improved clarity in reviewing community benefit information

c. What additional updates did IRS consider in its review of Form 990?

3.How many hospitals did IRS identify as “at risk” for noncompliance with the community benefit standard since Spring 2021 when IRS implemented several of GAO’s recommendations related to establishing a well-documented process to identify hospitals “at risk” for noncompliance?

a. Describe how these changes impacted the effectiveness of reviewing hospitals’ community benefit activities.

4. Provide a list of the nonprofit hospitals that the IRS referred to its audit division for potential Patient Protection and Affordable Care Act (ACA) violations from FY2019 to FY2022.

a. How many of these hospitals were referred because of noncompliance issues related to the community benefit standard?

b. How many nonprofit hospitals reported no spending on community benefits in 2022?

5. Provide a list of nonprofit hospitals that lost their tax-exemption due to noncompliance with the community benefit standard since the full implementation of the ACA on January 1, 2014.

6. Provide a list of nonprofit hospitals that had their IRS Form 990 rejected for failing to meet requirements related to community benefit reporting. 35 Internal Revenue Service, “Priority Guidance Plan” December 2010 through July 2015, https://www.irs.gov/privacy-disclosure/priority-guidance-plan 5

7. Provide a list of nonprofit hospitals that failed to file an annual Form 990 with the IRS between FY2019 to FY2022.

a. How many of these nonprofit hospitals were issued penalties for this failure?

b. How many of these nonprofit hospitals had their tax-exempt status revoked?

8. What other challenges does IRS faces in its ability to oversee tax-exempt hospitals?