Holding Nonprofit Hospitals Accountable Act

Bill Number

H.R. 3019

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-04-24: Referred to the House Committee on Ways and Means.

Last Updated

2025-05-28T15:52:06Z

AI-Generated Summary

Purpose of the Legislation

The "Holding Nonprofit Hospitals Accountable Act" (H.R. 3019) aims to strengthen accountability for tax-exempt hospitals by requiring them to meet enhanced community benefit standards. This ensures that hospitals provide meaningful services to their local communities in exchange for federal, state, and local tax exemptions, addressing concerns about limited public benefits from these organizations.

Key Provisions

• New Community Benefit Standard (Section 2): Tax-exempt hospitals must:
• Have a board of directors primarily from the local community where the hospital operates.
• Provide care to patients covered by public programs like Medicare (federal health insurance for seniors and disabled) or Medicaid (joint federal-state program for low-income individuals) without restricting the number of such patients at any owned or controlled site.
• Spend at least 100% of the value of their tax exemptions on a combination of:
• Training, education, or research to improve patient care.
• Improvements to facilities and equipment (limited to no more than 50% of the required spending; excludes costs for acquiring physician practices, other hospitals, surgical centers, or similar health care delivery organizations).
• Free or discounted care under a financial assistance policy.
• Financial Assistance Policy Update (Section 3): Hospitals must bill patients eligible for financial aid at rates comparable to Medicare reimbursement levels, making care more affordable.
• Oversight and Reporting (Sections 4 and 5):
• The Treasury Inspector General for Tax Administration (TIGTA) must review hospitals' financial assistance policies and report annually to congressional committees on policy content, compliance, and related issues.
• The Comptroller General (head of the Government Accountability Office, or GAO) must review the Internal Revenue Service's (IRS) enforcement of the new community benefit standard and report every three years to congressional committees on its effectiveness.

These provisions apply to taxable years beginning after December 31, 2025.

Significant Changes to Existing Law

• Amends Section 501(r) of the Internal Revenue Code of 1986, which already requires tax-exempt hospitals to conduct community health needs assessments and maintain financial assistance policies.
• Adds a new mandatory "community benefit standard" as a fifth core requirement for tax-exempt status (previously, there were four: community needs assessment, financial aid policy, billing limits, and emergency care).
• Modifies the financial assistance billing rules to tie charges explicitly to Medicare rates, enhancing protections against excessive billing.
• Introduces independent reviews and reporting by TIGTA and GAO, which were not previously required for these specific hospital accountability measures.

Potential Impacts

• On Government Agencies: Increases workload for the IRS in verifying compliance, potentially requiring new guidance or audits. TIGTA and GAO will need resources for ongoing reviews and reports, aiding congressional oversight.
• On Citizens: Could improve access to affordable care for low-income and publicly insured patients by mandating unrestricted treatment and subsidized services. May lead to better community health through required investments in education, research, and facilities.
• On International Relations: No direct impacts, as the bill focuses on domestic tax policy for U.S. hospitals.
• Overall, it may pressure hospitals to redirect funds from profits to community services, potentially reducing health care costs for vulnerable populations but risking higher operational costs for hospitals.

Main Stakeholders Affected

• Tax-Exempt Hospitals: Primary targets, as they must comply with new spending and governance rules to retain tax-exempt status under Section 501(c)(3); non-compliance could lead to loss of exemptions and back taxes.
• Patients and Communities: Especially low-income individuals relying on Medicare/Medicaid, who gain from mandated care access and financial aid.
• Government Entities: IRS (enforcement), TIGTA and GAO (reviews), and congressional committees (Ways and Means in the House, Finance in the Senate) for oversight.
• Broader Health Sector: Physician practices and other care providers, indirectly affected by restrictions on acquisition spending.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens IRS authority to revoke tax-exempt status for non-compliance, potentially leading to more litigation over what qualifies as "community benefits." The bill's spending threshold (tied to tax exemptions) creates a clear, quantifiable test, reducing ambiguity in prior law.
• Constitutional: Could raise questions about federal overreach into private nonprofit operations, but aligns with existing tax code conditions on exemptions (e.g., public benefit requirements), likely withstandable under the Taxing and Spending Clause.
• Political: Promotes transparency and equity in nonprofit health care, appealing to advocates for public accountability; may face opposition from hospital associations concerned about added burdens. The annual and triennial reports enable ongoing congressional monitoring, influencing future health policy debates.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Spartz, Victoria [R-IN-5]

Recent Actions

• 2025-04-24: Referred to the House Committee on Ways and Means.
• 2025-04-24: Introduced in House
• 2025-04-24: Introduced in House

Bill Versions

• Holding Nonprofit Hospitals Accountable Act — issued 2025-04-24 — PDF (6 pages)