Indiana Lawmakers Stiffen on Hospital Charity Care and Community Benefit

Old St. Mary’s Hospital, Evansville Indiana, 1956

I told you last month that nonprofit hospital hunting season had begun in earnest, with Indiana leading the pack.  On the same day that legislators introduced a bill to strip state nonprofit status for hospitals that charged more than 200% of the Medicare reimbursement amount, the Governor signed Indiana Executive Order 25-22 directing the Secretary of Health and Family Services to investigate whether nonprofit hospitals are pulling their weight in charity care.  The nonprofit hospital sector responded to the bill by pointing out that twice the Medicare reimbursement rate just won’t pay the bills.  

Proponents must have heard that much because a House committee passed an amended version raising the amount beyond which the revocation would apply to 300%.  But the Committee also added some things the nonprofit hospitals probably won’t like.  First, the bill limits the definition of  “community benefit” to charity care.  That’s it.  And charity care can be asserted only when a hospital charge remains outstanding for more than six months and the hospital collects from a patient less than the Medicare reimbursement amount.  Second, it imposes a 100% excise tax for charges in excess of 265% of Medicare fees.  In 2026, the excise tax is 33% and in 2027 it is 66%.  Starting in 2028, the state will take all of the excess.  

Indiana is definitely not playing around anymore with nonprofit hospitals.

darryll k. jones