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For Immediate Release
July 10, 2012

Grassley asks for information about IRS meetings with tax-exempt hospital representatives

WASHINGTON – Senator Chuck Grassley is asking the Treasury Secretary for information about how the Internal Revenue Service (IRS) responded to concerns of the American Hospital Association while putting together regulations to implement reforms Grassley authored for tax-exempt hospitals.

In a letter to Secretary Timothy Geithner, Grassley said recent comments by the American Hospital Association seem to indicate that the Treasury Department did not accept or otherwise consider any of the association’s suggestions.  Grassley said the legislative reforms were written after years of oversight and included extensive input from hospitals.

“The reforms are intended to establish meaningful measurements for charity care and community benefit to make clear what’s expected from those with tax-exempt status as a matter of accountability,” Grassley said.  “For decades, neither the law nor the IRS gave tax-exempt hospitals much direction, so they’ve defined standards for themselves.  Sometimes that’s resulted in providing little charitable patient care or other community benefits.”

The changes will require hospitals to complete community needs assessments once every three years and adopt and publicize financial assistance policies; prohibit billing those who qualify for financial assistance the top rates; prohibit a hospital from taking extraordinary collection actions if the hospital has not made reasonable efforts to notify patients of its financial assistance policy; require the IRS to review the tax-exempt status of each hospital every three years; require Treasury and Health and Human Services to submit an annual report to Congress on the level of charity care, bad debt expenses and the unreimbursed costs of means-tested and non-means-tested government programs; and require Treasury and HHS to provide a report in five years on the trends on the items reported on an annual basis.

In a letter sent last month, Grassley urged the American Hospital Association to focus on advising tax-exempt-member hospitals on how to meet the charity requirements and help strengthen the valuable tax-exempt sector as a result.  Regulations from the IRS were proposed at the end of June for the reforms that were enacted as part of the 2010 Affordable Care Act.

Below is the text of Grassley’s July 9 letter to Geithner.

July 9, 2012

The Honorable Timothy F. Geithner
U.S. Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, DC  20220    
Dear Secretary Geithner:
Recent public statements by the staff of the American Hospital Association (AHA) seem to indicate that the Department of Treasury (Treasury) has been unresponsive to the AHA’s concerns about regulations needed to implement Internal Revenue Code section 501(r).  Senator Baucus and I authored this provision when we were Chairman and Ranking Member of the Senate Finance Committee.   This provision, which takes only baby steps to hold charitable hospitals accountable for their tax-exempt status, was written after years of oversight.  More importantly, it was written with significant input from the AHA, the Catholic Health Association (CHA) and various other stakeholders.
Since the provision was enacted, all but the AHA have remained in contact with my staff.  I understand that Treasury and Internal Revenue Service (IRS) staff developing section 501(r) regulations also have not been in contact with my staff.

As a result, I ask that Treasury and IRS staff meet with my staff as soon as possible and request the following information.

1)    The dates of all meetings, phone conferences or other discussions held with the AHA, the CHA, and all other stakeholders, including patient advocate groups such as Community Catalyst.
2)    For each such discussion, provide a summary of the topics discussed.
3)    A summary of the major issues that were discussed, especially the AHA’s concerns, and an explanation of whether and how AHA’s concerns were addressed in the recently released regulations.
Thank you for your attention to this matter.  Please contact my staff with any questions.


Chuck Grassley
U.S. Senator