New measure would set charity levels for non-profit hospitals

Well, it may be that the threats, rebukes and investigations are finally over, and it's time for the showdown. Sen. Charles Grassley (R-IA) is apparently setting plans to file long-awaited legislation in 2009 that would require non-profits to spend a minimum amount per year on charity care.

Before he files, Grassley has said that he'd like to try and get the Treasury Department to reinstate charity care rules that the IRS rescinded back in 1969. If that doesn't work, however, he plans to file his measure in the first quarter of 2009. While it's not clear what the charity care requirements would be, Grassley has endorsed the notion that non-profits should spend at least 5 percent of their patient revenue on charity care.

According to the senator's aides, the new legislation would impose penalties on hospitals that don't meet the new requirements, which could range from taxes and fines to removal of the hospital's federal tax exemption outright if it doesn't get into line. One specific penalty being kicked around by Grassley's staff is a new excise tax on "private benefit" transactions that allegedly violate the non-commercial boundaries of non-profit facilities. For example, the tax could be levied on executive compensation ruled excessive.

Grassley is  doubtless in a better position to do so now that a more reform-minded administration is arriving. However, heaven knows the hospital industry will fight viciously to defeat such a measure.

To learn more about the proposed legislation:
- read this Wall Street Journal article

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