Senator Tells Hospitals To Stop Protesting Form 990 Changes

Sen. Charles E. Grassley is using tough talk to try to get nonprofit hospitals to scale back their opposition to proposed changes to the Form 990 informational tax form.

Mr. Grassley, the ranking Republican on the Senate Finance Committee, oversaw a hearing Tuesday to discuss possible regulatory changes aimed at nonprofit hospitals.

During the discussion, the Iowa Senator said he hopes to be able to persuade nonprofit hospitals to make changes without the need for new federal regulations.

But he said that if nonprofit hospitals continue to push for what he calls a “watered down” version of the proposed Schedule H that would accompany the new 990, he will consider legislation that would create stringent rules for hospitals.

“While everyone talks about the need for sunshine, there are a few tax-exempt hospitals in the shadows that are bent on pulling the blinds and closing the drapes,” Mr. Grassley said. “It is disgraceful that they are misleading Congress in efforts to get the Schedule H watered down and delayed. If these hospitals continue to press for keeping the public in the dark about how they justify $50-billion in tax breaks a year, that will greatly color my views about the need for legislation.”

Mr. Grassley and his aides have been concerned that some nonprofit hospitals do not provide enough services to benefit the areas in which they operate to justify their tax-exempt status.

His staff this summer released a document outlining possible reforms — the most stringent of which would require tax-exempt hospitals to allocate at least 5 percent of their annual revenues or expenses for charity care.

Tuesday’s discussion featured a lengthy debate over whether such changes are needed.

Many of those who participated in the discussion said that they believe there will be much more information available about the financial operations of nonprofit hospitals with the adoption of Schedule H in 2009.

But many in the nonprofit-hospital world have been lobbying against some of the reporting requirements on Schedule H, saying that the form asks for too much information and does not provide an accurate measure of hospital finances.