Illinois court to weigh how much charity nonprofit hospitals must perform

Sep 21 2009

Illinois' highest court on Wednesday will consider how much charity care a nonprofit hospital must provide to earn its property tax exemption, the Chicago Tribune reports. Nonprofit hospitals provide charity care in the form of unreimbursed services to low-income people and the uninsured, and in exchange, receive tax benefits. The court's ruling would have broad impacts on hospitals, government tax policies and consumers who could suffer if new taxes on hospitals are passed along to patients. Provena Covenant, a Catholic Hospital, is facing off with the state's Department of Revenue in a case many in the industry are closely watching: "[The] decision could provide political fodder for state and federal lawmakers across the country looking for dollars to fund health programs. The implications also could seep into the national debate over health reform."

"'It's an extremely important case," said Larry Singer, professor and director of the Beazley Institute for Health Law Policy at Loyola University Chicago School of Law. 'There is a real fear [among hospitals] that if we have 95 percent or more of the American public with health insurance after reform, what do hospitals do to justify their tax-exempt status?'" (Jaspen, 9/21)

One cross-over issue is the definition of charitable hospitals. There's not strict requirement for them to provide public service, the Tribune reports in a related story. A bill in the Senate Finance Committee would partially address that issue. It would "'improve the community service, transparency and billing practices of nonprofit hospitals.' The legislation also would require hospitals to adopt and 'widely publicize' written financial assistance policies, which are now largely voluntary." Although it doesn't currently suggest a mandatory minimum of charity care nonprofit hospitals must provide to maintain their tax status, one senior Republican on the panel said it remains a possibility (Jaspen, 9/21).

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