ORLANDO, Fla. — To ensure nonprofit hospitals adhere to their charitable mission and justify their tax-exempt status, physicians and medical students at the Interim Meeting of the American Medical Association (AMA) voted to support greater oversight of nonprofit hospitals and standardization of charity care policies so financial assistance reaches patients in need.

Hospitals are eligible for nonprofit status, which exempts them from income, property, and sales taxes. This results in billions of dollars of tax savings annually on the condition hospitals provide charity care and other community services. According to a report by the Lown Institute, 80 percent of nonprofit hospitals give back less to their communities than they receive in tax breaks.

Under the current legal and regulatory requirements in the Affordable Care Act, Internal Revenue Code, and state laws, nonprofit hospitals have broad flexibility in defining their own eligibility criteria for patients to qualify for financial assistance, as a result criteria vary across hospitals.

“Failing to standardize the financial assistance process across all nonprofit hospitals makes the benefit inaccessible to many eligible people. A patient may qualify for aid at one hospital, but not at a hospital across town,” said AMA President Bruce A. Scott, M.D. “Often the application process is not clear and requires patients to complete onerous paperwork requests, discouraging patients from completing financial aid applications. In some cases, patients are not screened for eligibility to ensure financial assistance reaches those in need.”

The newly adopted policy directs the AMA to advocate for the development of publicly accessible minimum eligibility standards for nonprofit hospital financial assistance programs, required screening of patients for charity care eligibility prior to billing, and standardizing the definition of what is considered a community benefit when evaluating community health improvement activities.

AMA policy-makers also discussed increased enforcement on nonprofit hospitals that provide little or no community benefit. Under the new AMA policy, the association will advocate for expanded government oversight of nonprofit hospitals and enforcement of federal and state guidelines and standards for community benefit requirements, including the ability to enact penalties or revoke a tax-exempt status.

The actions of the House of Delegates strengthen existing AMA policy encouraging hospitals to adopt, implement, monitor, and publicize policies on discounts, charity care and fair billing and collection practices to ensure those programs are available to eligible patients.