According to a recent government report, nonprofit hospitals have wide latitude in determining the services and activities they provide as community benefit under the Internal Revenue Service's (IRS) community benefit standard. The Government Accountability Office report "makes clear that tax-exempt hospitals are free to define community benefit as they see fit," according to Sen. Charles Grassley, R-Iowa. The report was prepared at Senator Grassley's request.

Nonprofit hospitals have not defined community benefit in a consistent manner, according to studies cited in the report, which hinders the government from determining whether they are providing an appropriate level of benefit to justify their tax-exempt status. The report found a consensus for defining certain items, such as charity care, but found a lack of consensus for other items, such as bad debt and the unreimbursed cost of Medicare. Differences in the definitions of these items result in differences in the amount of community benefits reported, according to the report. Requirements for community benefit at the state level also vary considerably. Sen. Grassley argues that the IRS should have "a bright line test to be able to determine whether hospitals are meeting the standard necessary to maintain their tax exemption." The full report, Nonprofit Hospitals: Variation in Standards and Guidance Limits Comparison of How Hospitals Meet Community Benefit Requirements, may be accessed here.