Texas senator wants to guarantee hospitals do their share of charity care

09/29/2009

Texas senator wants to guarantee hospitals do their share of charity care

Posted Tuesday, Sep. 29, 2009, Fort-Worth Star-Telegram

By DARREN BARBEE

dbarbee@star-telegram.com

A state senator, concerned that there are flaws in the law governing Texas nonprofit hospitals’ charity-care quotas, has asked the attorney general whether the office has enough power to make sure the hospitals do their share.

"Currently there is no enforcement language in the statute, aside from a penalty for late reporting," Sen. Rodney Ellis, D-Houston, recently wrote to the attorney general. "There is a lack of uniformity, transparency, and enforcement in the way in which non-profit hospitals account for their charity care."

The law, which Ellis wrote, offers nonprofit hospitals three options for providing charity care:

Nonprofit hospitals can provide charity care equal to their tax-exempt benefits, which can total millions of dollars a year.

They can devote at least 4 percent of their net patient revenue, including shortfalls for other government programs such as Medicaid. Another 1 percent must be spent in ways that benefit the community, such as blood pressure screenings or health clinics.

Hospitals can also meet the law by providing for the reasonable needs of the community they serve based on a community assessment.

The law hasn’t been updated since it was passed in 1993, according to the Texas Hospital Association.

"We ought to tighten that bill up so we have an enforcement mechanism," Ellis told the Star-Telegram. . The attorney general’s lack of . . "Right now, the bill lacks that.  authority to do anything if their charitable trust division finds a hospital in noncompliance is a big problem in my judgment."

State law requires that the attorney general receive reports on the hospitals’ charity care, including those that do not meet the charity requirements during the preceding fiscal year.

The hospital association, a policy and advocacy group for hospitals, is generally in favor of more transparency but isn’t sure how much more authority the attorney general needs to enforce the law.

Charles Bailey, the association’s general counsel, points out that the attorney general’s office routinely audits nonprofit hospitals.

"That may not be the best enforcement mechanism, but it certainly has not suggested there’s been a lack of enforcement," Bailey said. "While I think there’s probably some changes in the law that could be made, our position and our response will be that we don’t believe there is a lack of uniformity or transparency or enforcement of the charity care law."

The association is considering making recommendations to the attorney general for changes that would be similar to the Internal Revenue Service’s ability to impose intermediate sanctions against nonprofits.

For instance, the Internal Revenue Code says excise taxes shall be imposed on transactions between a tax-exempt organization and a person who financially benefits from his influence over its affairs if the benefit exceeds the value of what the organization received.

"It’s kind of an alternative way to penalize a hospital if they have not met the requirements," Bailey said.

While explicit language regarding the attorney general’s enforcement powers isn’t included in the law, the office’s Charitable Trusts Section can investigate and initiate legal action against all charitable organizations.

It has taken action against charity hospitals in the past.

In 2005, the office settled with Zale Lipshy University Hospital in Dallas after the trusts section examined the level of charity care provided by nonprofit hospitals to needy residents in their surrounding communities.

Zale Lipshy agreed to create a $3.5 million endowment specifically for indigent healthcare.

"Charitable hospitals are held to a higher standard because they are expected to follow not just the letter of the law, but also the spirit of the law," Attorney General Greg Abbott said during a speech this year. "It’s that spirit that motivated their founders in the first place. I think we could agree that some in the charitable nonprofit hospital industry have drifted somewhat from their moorings."

Charity care

Nonprofit hospitals may meet their charity-care requirement by spending at least 4 percent of their net patient revenue on unreimbursed care, including shortfalls for government programs such as Medicaid that serve indigents. A look at selected hospitals’ 2007 charity care:

Source: Texas Department of State Health Services

DARREN BARBEE, 817-390-7126

Articles

Op-Ed

Press Releases