HR3019-119

What This Bill Does

The Holding Nonprofit Hospitals Accountable Act tightens Internal Revenue Code section 501(r) rules for tax-exempt hospital organizations. Beginning with taxable years after December 31, 2025, a hospital organization must satisfy a new community benefit standard: its board must be drawn from the community, it must treat Medicare and Medicaid patients without limiting their numbers at any owned or controlled clinical site, and it must spend at least the full value of its federal, state, and local tax exemptions on patient-care training, education, research, qualifying facility or equipment improvements, and free or discounted care under a financial assistance policy. Facility and equipment spending can count for no more than half of the required amount, and acquisitions of physician practices, hospitals, ambulatory surgical centers, or other care delivery organizations do not count. The bill also requires financial assistance policy billing to use Medicare rates, directs TIGTA to report annually on hospital financial assistance policies and compliance, and directs GAO to report within 365 days and every three years on IRS enforcement of the community benefit standard.

Who Benefits and How

Medicare patients at nonprofit hospitals benefit because covered hospitals could not cap their numbers at owned or controlled clinical sites. Medicaid patients at nonprofit hospitals benefit from the same anti-cap rule and community benefit condition. Uninsured patients seeking financial assistance benefit if hospitals increase free or discounted care to meet the tax-exemption-value spending threshold. Community members benefit from hospital boards that must be drawn from the community served by the organization. Congressional tax committees benefit from recurring TIGTA and GAO reports on financial assistance and IRS enforcement.

Who Bears the Burden and How

Tax-exempt nonprofit hospitals must meet a spending threshold equal to the value of their federal, state, and local tax exemptions. Hospital board administrators must maintain community-drawn governance and track Medicare, Medicaid, and financial-assistance compliance. Hospital acquisition strategies are constrained because buying physician practices, hospitals, ambulatory surgical centers, or care delivery organizations cannot count as facility improvement spending. TIGTA and GAO must conduct recurring oversight reviews and report to congressional tax committees. The IRS must enforce a more detailed community benefit standard for section 501(r) hospital organizations.

Key Provisions

• Amends section 501(r) to add a community benefit standard for tax-exempt hospital organizations.
• Requires spending at least the value of federal, state, and local tax exemptions on defined community-benefit uses.
• Limits facility and equipment spending to half of the required amount and excludes care-delivery acquisitions.
• Requires Medicare-rate billing under hospital financial assistance policy compliance rules.
• Directs TIGTA annual reports and GAO recurring reports on hospital assistance policies and IRS enforcement.