The House Ways and Means Committee passed the “Tax Exempt Hospital Transparency Act” on July 1, advancing legislation that would require nonprofit hospitals to disclose more details on their IRS Form 990.
The bill, known as HR 9504, has drawn criticism from both the American Hospital Association and the Association of American Medical Colleges.
Nine things to know:
1. The committee wrote that the bill promotes greater transparency by updating the Form 990 to require tax-exempt hospitals to share more information, according to a July 1 post on X.
2. The bill, introduced in the House and referred to the committee on June 29, is sponsored by Rep. Gregory Murphy, MD, R-N.C., alongside Rep. Lloyd Smucker, R-Pa. It aims to amend the Internal Revenue Code of 1986 to establish additional reporting requirements for hospitals.
3. Under the act, all tax-exempt hospital organizations would have to include more information on their returns, including a description of how the organization is addressing needs identified in its most recent community health needs assessment, its audited financial statements, its CMS certification number, the value of financial assistance provided during the taxable year and the number of financial assistance applications received, granted and denied.
4. Large tax-exempt hospital organizations, defined as those with more than 100 staffed inpatient beds that are not critical access or rural emergency hospitals, would face additional reporting, including their three highest-priority community health needs, spending on programs addressing each need, and spending on quality improvement and “nonclinical programming,” a category covering administrative and operational functions.
5. A third tier — “high revenue” organizations with more than $100 million in net patient revenue — would face the most extensive requirements: advertising costs, and a breakdown of each health service line’s description, revenue and costs, mapped to a standardized taxonomy HHS must publish within two years of enactment.
6. On the 340B drug program, high-revenue organizations that participate would have to report the number of individuals who received 340B-covered drugs, the aggregate “net 340B payment amount” — the excess of what a hospital was paid over the 340B ceiling price or its acquisition cost, if lower — and the aggregate costs of complying with the program.
7. The American Hospital Association wrote in a June 30 statement submitted ahead of the markup that while the bill has improved from the original discussion draft, it “does not yet strike the right balance.” The AHA said the bill’s focus on financial assistance ignores tax-exempt hospitals’ current extensive reporting process, and argued using IRS documents to collect 340B data is inappropriate because the program “is not a federal tax issue and has no bearing on 501(c)(3) or 501(r) status.”
8. Rep. Richard Neal, D-Mass., the committee’s ranking member, opposed the bill in his opening statement at the markup, arguing it “piles on duplicative reporting requirements” without lowering hospital costs or drug prices. Mr. Neal also argued the bill would undermine the 340B program by shaping reporting requirements in a way that could make it appear hospitals are misusing the program, without collecting data on how facilities actually use 340B savings.
9. The Association of American Medical Colleges wrote in a July 1 statement that the bill disproportionately affects academic medical centers and teaching hospitals, imposing reporting requirements that disregard “the unique, complex financial structures and mission-related costs inherent to academic medicine.”
The AAMC also pointed to “misguided 340B reporting requirements” that it said overstate the program’s financial value to participating hospitals without yielding meaningful data on how hospitals use it to benefit patients.
The bill next heads to the full House for a vote. No Senate companion bill has been introduced, so the legislation would still need to pass the Senate before going to the president to be signed into law.
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