Hospitals lobbying against IRS rule

WASHINGTON -- Nonprofit hospitals in Nevada are joining a campaign to persuade the Internal Revenue Service to back off a proposed rule that would broaden annual reporting by tax exempt medical centers.

If approved by the agency, the new rules would require the hospitals to outline more details on the benefits they provide to local communities as a way to ensuring their nonprofit standing.

The IRS said on its Web site the changes would "enhance transparency" to "more accurately reflect" the operations of groups claiming tax exemptions. Nonprofits file Form 990s, which provide information on their missions and finances.

A public comment period closed Sept. 14. An IRS spokesman said changes would be "unveiled in a matter of weeks."

But health officials said the new forms would not solicit meaningful data and would ask for information that is not relevant to how the hospitals serve their communities.

At least nine hospitals in Nevada would be affected, the Nevada Hospital Association said.

Andy North, director of communications for St. Rose Dominican Hospitals said the group would adapt in the spirit of openness but had concerns.

"We will be able to comply to the new form despite additional reporting and expenses associated with doing so," he said.

Maureen Mudron, legal counsel for the American Health Association, said the extra provisions would cost individual hospitals thousands of dollars to comply.

"Many hospitals would be starting from zero in looking at this particular issue," Mudron said. "A hospital would take between 20 and 22 days of staff time to collect and report the information."

Dwight Hansen, financial analyst for the Nevada Hospital Association, said that cost estimates for compliance were unavailable but that the changes would not help reduce health care costs.

"It's one of those nickel and dime issues where I don't think people realize how much administrative costs that they end up having to pay for," Hansen said. "There is a lot more reporting in health care than just about everywhere, which is fine. But only if that leads to better care or lower costs."

More than 300 members of Congress signed a letter to the IRS on Nov. 7 expressing concern with the proposed rules.

They said hospitals should be able to include their write-offs for bad debt as a way to quantify their nonprofit status and the costs they absorb between what it takes to treat elderly patients and what Medicare pays them.

"Approximately 63 to 67 percent of our revenues are reimbursed at less than cost," said David Welch, Nevada Hospital Association president.

"A significant part of the population is low-income," Mudron said. "If a patient is unable to pay, that is something that should be counted as a benefit for the community."

Reps. Jon Porter, R-Nev., Shelley Berkley, D-Nev., and Dean Heller, R-Nev., signed the letter.

"It is counterproductive to make tax reporting more arduous for those who serve our community," Porter said.

The Catholic Hospital Association, which counts four Nevada facilities among members, wants to be able to report nonmedical contributions, such as neighborhood improvements.

"Community building is one of the things that isn't health care but impacts health," said Julie Trocci, an association senior director.

"We tried to make a strong argument that when we improve the environment people live in, we improve their health," Trocci said.

Contact Stephens Washington Bureau reporter Jason C. Green at jgreen@stephensmedia.com or 202-783-1760