The National Tax Exempt Debate: Focusing on Hospitals

Transcription

1 The National Tax Exempt Debate: Focusing on Hospitals Information for Health Care Leaders Presented to the Healthcare Trustees of New York State Steven Kroll Healthcare Association of New York State

2 The Public Accountability Challenge Quality & Patient Safety Charges vs. Costs Billing and Collection Practices Charity Care Governance Accountability Tax-Exempt Status Executive Compensation

3 Driving the Debate Media stories Union campaigns Consumer groups Health savings accounts Federal and State lawsuits Congressional hearings and agency investigations

4 Media Scrutiny

5 Labor Unions

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7 Inferno An Investigative Report on Price Gouging and Aggressive Collection Activities Against the Uninsured by Hospitals in Chicago, Denver, Oklahoma City, and Orlando K.B. Forbes Consejo de Latinos Unidos East Los Angeles, California July 16, 2003

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9 Health Savings Accounts

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11 Federal and State Litigation 76 FEDERAL CASES 47 favorable court decisions/dismissals 22 voluntary dismissals by plaintiffs 4 remanded to state court 7 on appeal 3 cases remaining 112 STATE CASES 19 favorable court decisions/dismissals 1 class certified 2 settlements

12 FOR IMMEDIATE RELEASE December 1, 2004 Contact: Christine Shot (202) Santorum Comments on Lawsuits Against Not-For-Profit Hospitals Washington, DC U.S. Senator Rick Santorum (R-PA), Chairman of the Senate Republican Conference, made the following statement regarding lawsuits against not-for-profit hospitals: Recently, 61 lawsuits in 23 states have been filed alleging that not-for-profit hospitals have breeched their government obligation to provide charitable medical care to uninsured patients. These lawsuits include respected Pennsylvania medical institutions such as the University of Pittsburgh Medical Center, West Penn Allegheny Hospital, the Hospital of the University of Pennsylvania, Jefferson Health System, Albert Einstein Health Network, and Children s Hospital of Pennsylvania. This litigation is an assault by trial attorneys on America s not-for-profit hospitals and is threatening patients access to quality health care. These lawsuits are less about care for the poor, the sick, and the uninsured than about lining the pockets of wealthy trial attorneys. The lawsuits are wrong, and do a disservice to the hardworking and caring healthcare workers that deliver medical services to the citizens of Pennsylvania. I am concerned about excessive lawsuits brought against our healthcare system. These lawsuits are another example of a troubling trend in which frivolous lawsuits are driving physicians out of practice and hospitals to limit or cut services eroding access to care for many Pennsylvanians. Similarly, the lawsuits against not-for-profit community hospitals will reduce the resources that these hospitals have to treat the uninsured of limited means and others in the community. Faced with conditions such as severe nursing shortages and crippling malpractice expenses, Pennsylvania s not-for-profit hospitals struggle every day to carry out their charity care missions. The Pennsylvania Health Care Cost Containment Council, an independent state agency, reported that last year 70 percent of Pennsylvania hospitals lost money on patient care, and 48 percent lost money overall. The lawsuits will likely increase the cost of healthcare for our citizens at a time when policymakers and providers are working to lower these costs. That is the wrong prescription for Pennsylvanians.

13 Congressional Activity House Energy and Commerce Committee Senate Finance Committee UNITED STATES HOUSE OF REPRESENTATIVES Committee on Energy and Commerce Subcommittee on Oversight and Investigations April 25, 2005 Follow-up letter to prominent hospital corporations posing questions regarding uninsured and self-pay patients, as well as certain hospital billing and collection practices. The following letter was sent to: Dr. Anthony R. Tersigni, President and Chief Executive Officer, Ascension Health, Inc.; Robert V. Stanek, President and Chief Executive Officer, Catholic Health East; Dr. Herbert Pardes, President and Chief Executive Officer, New York-Presbyterian Healthcare System; Kevin E. Lofton, President and Chief Executive Officer, Catholic Health Initiatives; Trevor Fetter, President and Chief Executive Officer, Tenet Healthcare Corporation; Donald Ammon, President and Chief Executive Officer, Adventist Health; Van R. Johnson, President and Chief Executive Officer, Sutter Health; Jack O. Bovender, Jr., Chairman and Chief Executive Officer, HCA; Dr. Denis A. Cortese, President and Chief Executive Officer, Mayo Health System; Lloyd H. Dean, President and Chief Executive Officer, Catholic Healthcare West.

14 Independent Sector Panel on the Nonprofit Sector Presented 120 recommendations to Congress on improving accountability and transparency of not-for-profits Compensation includes new enforcement to tackle excessive compensation Governance includes call for independent board members Oversight includes increased IRS oversight and more detailed 990

15 Investigations House Ways and Means Committee Chairman Bill Thomas (R-CA)holding hearing on hospital s tax exempt status Government Accountability Office (GAO) looking at: Indigent care Executive compensation Hospital governance IRS auditing 2,000 charitable organizations to look at executive compensation IRS exempt organizations division work plan for 2006 emphasizes enforcement on community benefit and exec comp

16 WHY HOSPITALS? Hospitals are 60% of the tax-exempt sector Most lawmakers and policy experts agree that not-for-profit hospitals should continue to receive tax-exemption. But, are all hospitals the same? Current IRS criteria for tax-exemption are from 1969, with some changes in 1983 Many are asking: Are these criteria appropriate in 2005? What criteria should be used to determine exemption and how do we measure compliance?

17 Challenges Facing Hospitals and Their Boards CHANGE THE MINDSET REDUCE OUR VULNERABILITIES IMPROVE PUBLIC ACCOUNTABILITY

18 Change the Mindset What is Community Benefit? A planned, managed, organized, and measured approach to a health care organization s participation in meeting identified community health needs. It implies collaboration with a community to benefit its residents particularly underserved groups by improving health status and quality of life. Source: CHA/VHA

19 Change the Mindset Community Benefit Criteria? Generate a low or negative margin Respond to the needs of special populations, such as minorities, frail elderly, poor persons with disabilities, the chronically mentally ill, and persons with AIDS Supply services or programs that would likely be discontinued if the decision were made on a purely financial basis Source: CHA/VHA

20 Change the Mindset Community Benefit Criteria? Does the activity address an identified community need? Does the activity support an organization s community-based mission? Is the activity designed to improve health? Does the activity produce a measurable community benefit? Does the item pass the laugh test Does the activity require subsidization? Source: CHA/VHA

21 Community Benefit: Getting a Head Start Expect that not-for-profit hospitals will be required to publicly report on measures of community benefit Seize the initiative before someone defines the playing field for you? How does your facility measure community benefit? Narrative summary? Quantifiable inventory? How does your facility report the results to the community, opinion leaders, and lawmakers?

22 Change the Mindset Community Service Plans Is your board involved in reviewing and approving the community service planning process? How does your facility share all that you do with the community, opinion leaders, and lawmakers?

23 Change the Mindset Resources YOUR COMMUNITY SERVICE PLAN Community Benefit Reporting: Guidelines and Standard Definitions for the Community Benefit Inventory for Social Accountability by the Catholic Health Association of the United States and VHA, Inc.

24 Reduce Our Vulnerabilities Expect continued emphasis on hospital charity care Do you know if your financial aid/charity care policy complies with HANYS guidelines? Does your Board receive formal updates on implementation of the policy? Develop, review, and respond to actionable indicators and goals Is the Board involved in educating your community, opinion leaders, and lawmakers?

25 Reduce Our Vulnerabilities Helping patients with hospital payments Communicating effectively Helping patients qualify for coverage Ensuring policies are applied accurately and consistently Making care more affordable for patients of limited means Ensuring fair billing and collection practices

26 National Strategy

27 Improve Public Accountability Expect continued emphasis on governance and accountability Do you know if your institution has implemented the HTNYS Non- Profit Corporate Accountability Guidelines? Does your Board receive formal updates and develop, review, and respond to actionable indicators and goals

28 Improve Public Accountability

29 The charitable sector will not pull itself out of the current crisis by telling more success stories, complaining about negative media coverage, or fretting about legislative change. Rather, they need to embrace the call for reform, invest in core operating improvements, and police its poor performers. The sector does not need to invest its scarce resources in convincing Americans that charities make miracles every day Americans already believe it. Rather, philanthropies, donors, boards, and executive directors would be wise to invest in the core capacity needed to assure the highest level of organizational performance. Robert Wood Johnson Report on Non-Profit Health Care

30 The National Tax Exempt Debate: Focusing on Hospitals Information for Health Care Leaders Presented to the Healthcare Trustees of New York State Steven Kroll Healthcare Association of New York State