Internal Revenue Service (IRS) reporting requirements imposed in recent years on hospitals' charitable community benefits are revealing for the first time just how much hospitals and medical centers are giving back, The New York Times reports. In addition, the Affordable Care Act includes provisions requiring a review of a hospital's tax-exempt status every three years. As designated nonprofits, hospitals are "exempt from federal and state taxes, local property taxes and sales taxes," while the IRS allows these entities to "use broad definitions of community service, including the value of traditional charity" and the losses incurred due to low Medicare reimbursements.
Because hospitals are often large landowners in their respective communities, some city officials and tax experts are calling for more stringent reporting requirements to provide transparency regarding the true value of the benefits that the hospitals are providing to their communities. In one such case, the City of Pittsburgh this year "filed suit challenging the University of Pittsburgh Medical Center's tax-exempt status, saying that the medical center should pay some payroll taxes and more property taxes, estimated to total about $20 million annually," according the The New York Times article.
The institution does not dispute the city's claim that it spent "only about two percent of its net patient revenues on charity care," but claims that it provided another $150 million to the community through Medicaid reimbursement shortfalls, "financing college scholarships for public school students" and absorbing the cost of patients who could not pay their bills, the article said. For more, read the full story.