Senator Grassley Targets Hospitals

Senator Chuck Grassley, chairman of the Senate Committee on Finance, is continuing his effort to review the non-profit sector in advance of legislation he will introduce to prevent various abuses and improve charities' accountability to taxpayers and potential donors. He is targeting some of the nation's largest non-profit hospitals, asking them to account for their charitable activities and justify their tax-exempt status. Sen. Grassley stated, "Tax-exempt status is a privilege. By gathering information from non-profit hospitals, I hope to learn whether the benefits they provide to the needy justify the tax breaks they receive."

Grassley recently sent a 6-page letter to 10 hospitals and hospital systems asking for information regarding charitable activities, patient billing, and ventures with for-profit companies and other hospitals. The letter not only poses questions but requests supporting documentation and detailed responses. The following are sample questions from the letter:

• How does your organization define charity care? What types of programs does your organization include in its definition or determination of charity care? Which of these activities or programs would your organization not incur, at all or to the same extent, if you were organized and operated as a for-profit hospital? Does your organization maintain a charity policy? If so, please describe the policy or provide a copy of such policy. Does this policy require that certain types and amounts of charity care be provided?
• Has your hospital or other members of your hospital system group entered into joint ventures with physicians or other for-profit companies or investors to conduct unrelated trade or business activities? If so, please describe the nature of such joint ventures.
• Please identify how many lawsuits you have filed against uninsured patients for the current year and the preceding five calendar years and please identify whether or not you are compelled by law to file such lawsuits in order to collect from these individuals. Please identify the amount of debt that was at issue in each suit. Please identify any times you have sold debt owed to the hospital from uninsured patients to other companies for collection. Please state the amount the debt(s) was sold for, and the terms under which such private collection accounts were sold. In particular, please estimate the volume and value of accounts sold to private companies in the past five years... Please explain how the sale of private accounts for recovery, and an concomitant claim to Medicare for payments on the same debts, is not "double dipping."
• Please provide for the last three years a detailed breakdown of travel of your five top salaried employees: for trips over $1,000 please provide receipts for hotel; meals; airfare and all other reimbursed items as well as the purpose of the trip. Please provide all salaries and other benefits provided to these five individuals for the last three years from any organization identified in the question B18 (organizational chart). Finally, please detail any payments or reimbursements made to employees for country clubs.

Sen. Grassley requested responses by July 11, 2005, and states that information will assist the Congress in reviewing and determining actual practices of tax exempt hospitals. Grassley continues to consult with the non-profit sector to ensure that his reforms are "effective yet not unduly onerous" for tax-exempt organizations.

If you would like additional information, please contact Eddie Phillips, Debbie Ernsberger, or Amy DeLong at (800) 270-9629.

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