Hospitals in the United States that qualify for nonprofit status enjoy significant tax exemptions, including relief from income, property, and sales taxes. These benefits are granted on the premise that hospitals will provide charity care and community services. However, a report by the Lown Institute indicates that 80 percent of nonprofit hospitals contribute less to their communities than they receive in tax breaks.
The Affordable Care Act, Internal Revenue Code, and state laws currently allow nonprofit hospitals considerable leeway in setting eligibility criteria for financial assistance. Consequently, these criteria can differ significantly from one hospital to another.
"Failing to standardize the financial assistance process across all nonprofit hospitals makes the benefit inaccessible to many eligible people. A patient may qualify for aid at one hospital but not at a hospital across town," said AMA President Bruce A. Scott, M.D. "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 American Medical Association (AMA) has adopted a policy aimed at advocating for publicly accessible minimum eligibility standards for nonprofit hospital financial assistance programs. This includes mandatory screening of patients for charity care eligibility before billing them and standardizing what qualifies as a community benefit when assessing community health improvement activities.
In addition, AMA policy-makers have addressed the issue of enforcement concerning nonprofit hospitals that provide minimal or no community benefits. The new AMA policy calls for increased government oversight of these institutions and stricter enforcement of federal and state guidelines regarding community benefit requirements. This includes potential penalties or revocation of tax-exempt status.
These measures by the House of Delegates reinforce existing AMA policies urging hospitals to establish transparent policies on discounts, charity care, and fair billing practices to ensure eligible patients can access these programs.