Holding Nonprofit Hospitals Accountable Act

I 118TH CONGRESS 1ST SESSION H. R. 2859 To amend the Internal Revenue Code of 1986 to establish new community benefit standards for tax-exempt hospital organizations, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 25, 2023 Mrs. SPARTZ introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to establish new community benefit standards for tax-exempt hospital organizations, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Holding Nonprofit 4 Hospitals Accountable Act’’. 5 SEC. 2. ADDITIONAL REQUIREMENTS FOR CERTAIN HOS- 6 PITALS. 7 (a) IN GENERAL.—Section 501(r) of the Internal 8 Revenue Code of 1986 is amended— 9 VerDate Sep 11 2014 04:15 May 02, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2859.IH H2859 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 2859 IH (1) in paragraph (1), by striking ‘‘and’’ in sub- 1 paragraph (C), by striking the period at the end of 2 subparagraph (D) and inserting ‘‘, and’’, and by 3 adding at the end the following new subparagraph: 4 ‘‘(E) meets the community benefit stand- 5 ard described in paragraph (7).’’, 6 (2) by redesignating paragraph (7) as para- 7 graph (8), and 8 (3) by inserting after paragraph (6) the fol- 9 lowing new paragraph: 10 ‘‘(7) COMMUNITY BENEFIT STANDARD.— 11 ‘‘(A) IN GENERAL.—A hospital organiza- 12 tion meets the requirements of this paragraph 13 if such organization— 14 ‘‘(i) has a board of directors drawn 15 from the community in which such organi- 16 zation is located, 17 ‘‘(ii) both— 18 ‘‘(I) treats patients who pay their 19 bills through public programs, includ- 20 ing under the Medicare program 21 under title XVIII of the Social Secu- 22 rity Act or under the Medicaid pro- 23 gram under title XIX of such Act, 24 and 25 VerDate Sep 11 2014 04:15 May 02, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2859.IH H2859 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 2859 IH ‘‘(II) does not limit the number 1 of such patients served at any clinical 2 site owned or controlled by such orga- 3 nization, and 4 ‘‘(iii) spends an amount which meets 5 or exceeds the expenditure threshold for 6 the taxable year on any combination of— 7 ‘‘(I) training, education, or re- 8 search designed to improve patient 9 care, 10 ‘‘(II) improvements to facilities 11 and equipment except as provided in 12 subparagraph (C), and 13 ‘‘(III) free or discounted care 14 pursuant to a financial assistance pol- 15 icy. 16 ‘‘(B) EXPENDITURE THRESHOLD.—For 17 purposes of this paragraph, the term ‘expendi- 18 ture threshold’ means 100 percent of the value 19 of the Federal, State, and local tax exemptions 20 of the hospital organization for the taxable 21 year. 22 ‘‘(C) SPECIAL RULES FOR IMPROVEMENTS 23 TO FACILITIES AND EQUIPMENT.— 24 VerDate Sep 11 2014 04:15 May 02, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2859.IH H2859 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 2859 IH ‘‘(i) IN GENERAL.—For purposes of 1 clause (iii)(II) of subparagraph (A)— 2 ‘‘(I) expenditures under such 3 clause may not be used to account for 4 more than 50 percent of the minimum 5 spending requirement under such sub- 6 paragraph, and 7 ‘‘(II) expenditures for the acqui- 8 sition of a physician practice, hospital, 9 ambulatory surgical center, or any 10 other care delivery organization shall 11 not be taken into account as an im- 12 provement to facilities or equipment 13 under such clause. 14 ‘‘(ii) CARE DELIVERY ORGANIZA- 15 TION.—For purposes of clause (i), the 16 term ‘care delivery organization’ means an 17 organization of people, institutions, and re- 18 sources whose primary mission is to deliver 19 health care services to meet the health 20 needs of a target population.’’. 21 (b) EFFECTIVE DATE.—The amendments made by 22 this section shall apply to taxable years beginning after 23 December 31, 2024. 24 VerDate Sep 11 2014 04:15 May 02, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2859.IH H2859 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 2859 IH SEC. 3. HOSPITAL ORGANIZATION FINANCIAL ASSISTANCE 1 POLICY COMPLIANCE REQUIREMENTS. 2 (a) IN GENERAL.—Section 501(r) of the Internal 3 Revenue Code of 1986, as amended by the preceding pro- 4 vision of this Act, is further amended in paragraph (5)(A) 5 by inserting ‘‘according to Medicare rates with respect’’ 6 after ‘‘billed’’. 7 (b) EFFECTIVE DATE.—The amendment made by 8 this section shall apply to taxable years beginning after 9 December 31, 2024. 10 SEC. 4. FINANCIAL ASSISTANCE POLICY REVIEW AND RE- 11 PORT. 12 (a) REVIEW.—The Treasury Inspector General for 13 Tax Administration shall conduct a review of financial as- 14 sistance policies of hospital organizations under section 15 501(r)(4) of the Internal Revenue Code of 1986. 16 (b) REPORT.—Not later than 365 days after the date 17 of the enactment of this Act and annually thereafter, the 18 Treasury Inspector General for Tax Administration shall 19 submit to the Committee on Ways and Means of the 20 House of Representatives and the Committee on Finance 21 of the Senate a report on the results of the review con- 22 ducted under subsection (a), including— 23 (1) the content of financial assistance policies 24 of hospital organizations, 25 VerDate Sep 11 2014 04:15 May 02, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2859.IH H2859 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 2859 IH (2) compliance of hospital organizations with 1 the financial assistance policy requirements of sec- 2 tion 501(r)(4) of the Internal Revenue Code of 3 1986, and 4 (3) such other topics as are determined by the 5 Treasury Inspector General for Tax Administration 6 to be relevant to financial assistance policies. 7 SEC. 5. INTERNAL REVENUE SERVICE ENFORCEMENT RE- 8 VIEW AND REPORT. 9 (a) REVIEW.—The Comptroller General of the United 10 States shall conduct a review of the effectiveness of the 11 Internal Revenue Service in enforcing compliance with the 12 community benefit standard for hospital organizations 13 under section 501(r)(7) of the Internal Revenue Code of 14 1986. 15 (b) REPORT.—Not later than 365 days after the date 16 of the enactment of this Act and no later than every three 17 years thereafter, the Comptroller General of the United 18 States shall submit to the Committee on Ways and Means 19 of the House of Representatives and the Committee on 20 Finance of the Senate a report on the results of the review 21 conducted under subsection (a). 22 Æ VerDate Sep 11 2014 04:15 May 02, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H2859.IH H2859 kjohnson on DSK79L0C42PROD with BILLS