AHA Raises Flags Over New Tax Form for Non-profit Hospitals

Last week, the IRS proposed changes to a form used by non-profit hospitals to report their financial information to the tax agency.  Form 990 specifically quantifies the community involvement of hospitals and other non-profit organizations.  The American Hospital Association released a statement last Thursday outlining its position on the proposed changes.

The text of the statement follows:

Today, the IRS has taken an important step to attempt to make the Form 990 another tool that tax-exempt organizations, including hospitals, can use to share the many services and programs they provide for their communities.  

We commend the IRS for adopting portions of the Catholic Health Association and VHA framework for reporting community benefit endorsed by the AHA.  We also welcome the addition of a number of questions that will allow tax-exempt hospitals to better communicate the important community benefit work that they do.  This was a key recommendation in an Ernst & Young report commissioned by the AHA that examined the IRS’s compliance check questionnaire for tax-exempt hospitals.  Enabling hospitals to use the Form 990 to communicate the depth and breadth of their commitment to community service is a welcome improvement.

However, we are concerned that some of the questions in the hospital-specific schedule don’t appear to relate to hospitals’ tax-exempt activities, are likely to be confusing and may be burdensome.  Our goal is to ensure that the new hospital schedule communicates the most complete picture of community benefit that hospitals provide, including contributions that hospitals make to meet the burden of Medicare underpayments and patient bad debt, without requiring hospitals to incur unnecessary legal and accounting expenses.
 
The new hospital schedule is one of 15 released by the IRS today to increase reporting for all tax-exempt organizations. We will closely examine the other new Form 990 schedules that affect hospitals to determine whether requested information would be useful to the patients and families we serve weighed against the additional paperwork burden.  As we review the new form and schedules, we will continue to work closely with the IRS to share the views of the tax-exempt hospital field.

The women and men of America’s hospitals are committed to transparency at all levels – from the bedside to the billing office to the programs and services that improve health and enhance quality of life.  Finding effective ways to share what hospitals do for their communities in a consistent way that reflects their unique mission will benefit us all.