Sponsor
Victoria Spartz
Representative · R-IN
Representative · R-IN
The bill pushes tax-exempt hospitals to deliver substantially more community benefits and strengthens oversight—benefiting low-income patients and taxpayers—but does so by imposing large costs, administrative burdens, and investment limits that could pressure hospitals (especially small or rural providers) and risk reduced services or higher prices.
Patients and low-income community members: hospitals would be required to spend at least 100% of the value of their federal tax exemptions on community benefits, increasing charity care, patient-care improvements, and community health programs.
Medicare and Medicaid beneficiaries: hospitals could no longer limit access at specific sites, preventing site-level denials of care to publicly insured patients.
Taxpayers, policymakers, and communities: increased oversight, GAO/TIGTA reviews, and regular reporting would give federal and congressional overseers better data to hold tax-exempt hospitals accountable and encourage enforcement of community-benefit obligations.
Hospitals and patients/taxpayers: requiring hospitals to effectively spend the value of their tax exemptions (plus heightened enforcement) could impose very large new costs on health systems, which may be passed on as higher prices, reduced services, or tighter hospital finances.
Small and rural hospitals: increased enforcement and compliance requirements could strain already thin financial margins, risking cutbacks or closures for safety-net providers in rural and underserved areas.
Hospitals and patients: limits that cap facility spending at 50% and disallow counting acquisitions toward community benefit could discourage strategic mergers, facility investments, or acquisitions that might otherwise expand access or efficiency.
Based on analysis of 5 sections of legislative text.
Conditions nonprofit hospitals' tax-exempt status on meeting a new annual community benefit test tied to the value of their tax exemptions, governance rules, and patient-access requirements.
Official title: To amend the Internal Revenue Code of 1986 to establish new community benefit standards for tax-exempt hospital organizations, and for other purposes.
Introduced April 24, 2025 by Victoria Spartz · Last progress April 24, 2025
Requires nonprofit hospital organizations to meet a new, stricter "community benefit" test to keep tax-exempt status: hospitals must have community-drawn boards, accept Medicare and Medicaid patients without site-level limits, and spend at least the value of their federal/state/local tax exemptions each year on a mix of training/research, facility/equipment improvements (limited to half), and free/discounted care (with some acquisition exclusions). It also orders audits and recurring reports by TIGTA and the GAO on hospital financial assistance policies and IRS enforcement of the new standard. Changes to the Internal Revenue Code take effect for taxable years beginning after December 31, 2025.