Boston, MA, September 27, 2007.  Consumer groups nationwide joined Community Catalyst, a national consumer health advocacy organization, in an appeal to Congressional leaders to take action in setting better community benefit standards for nonprofit hospitals.

In comments issued to the office of Senator Chuck Grassley (R-IA), ranking member of the Senate Finance Committee, the groups assert that the legal obligations that nonprofit hospitals must meet to obtain federal tax exemption are vague and have no connection to the reality of today’s health care system.  As a result, many hospitals are failing to adequately serve millions of consumers in the U.S. who depend upon full or partial free care for their health needs. 

Comments were submitted in response to a Discussion Draft on Tax-Exempt Hospitals, which was released by Grassley’s office.  The groups’ comments come on the heels of those provided to the IRS on its proposed re-design of Form 990 and introduction of Schedule H, which seeks additional reporting of tax-exempt hospitals’ community benefit activity.

“The reality today is that more and more people need assistance when faced with a health care crisis or even a just a doctor’s appointment.  A study released this week indicates that over half of low-income families make too much money for Medicaid assistance, yet don’t have other health insurance options,” said Susan T. Sherry, Deputy Director of Community Catalyst.  “Nonprofit hospitals that seek and gain tax-exempt status need to be accountable for helping to serve the needs of the uninsured and underinsured in their communities.”

Supporting many of the proposals in Sen. Grassley’s Discussion Draft, consumer groups particularly praised the attention to the full breadth of concerns related to free care and community benefit standards, from setting a minimum level of free care that each hospital must provide to addressing egregious hospital billing and collection practices.

Community Catalyst and 24 other national and state-based organizations supported and recommended the following points related to free care and community benefit standards for nonprofit hospitals:

  • Set minimum free care requirements at five percent of revenues or operating expenses, whichever is greater;
  • Limit the amount that self-payers (uninsured and underinsured) can be billed for hospital services;
  • Require clearly defined and publicized free care policies;
  • Provide free care for all patients up to 200% of the Federal Poverty Level (FPL) and partial free care for all patients between 200% and 400% of the FPL;
  • Regulate collection practices, ban the selling of accounts to third parties, require publicly available debt collection policies and greater hospital administration approval of those policies;
  • Conduct community needs assessments at least once every three years;
  • Improve transparency and better reporting of community benefits and free care policies;
  • Establish sanctions for failing to meet obligations based on clear standards and with appropriate penalties.

The groups also emphasized the fact that many nonprofit hospitals already provide meaningful community benefits for the people they serve.  “There are many exemplary hospitals out there.  But without firm standards, too many hospitals are shirking their responsibilities to their communities.  It’s clear the system needs changing,” added Sherry.

View the complete comments submitted to Sen. Grassley’s office.

About Community Catalyst
Community Catalyst is a national non-profit advocacy organization dedicated to quality affordable health care for all.  Since 1997, Community Catalyst has been working to build the consumer and community leadership required to transform the American health system.  With the belief that this transformation will happen when consumers are fully engaged and have an organized voice, Community Catalyst works in partnership with national, state and local consumer organizations, policymakers, and foundations, providing leadership and support to change the health care system so it serves everyone—especially vulnerable members of society.  For more information, visit