By: Ellis S.B. No. 1190
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the duty of nonprofit, tax-exempt hospitals to provide
1-2 charity care.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 311.031, Health and Safety Code, is
1-5 amended to read as follows:
1-6 Sec. 311.031. DEFINITIONS. In this subchapter:
1-7 (1) "Board" means the Texas Board of Health.
1-8 (2) "Charity care" means the unreimbursed cost to a
1-9 hospital of:
1-10 (A) providing, funding, or otherwise financially
1-11 supporting health care services on an inpatient or outpatient basis
1-12 to a person classified by the hospital as "financially indigent" or
1-13 "medically indigent"; and/or
1-14 (B) providing, funding, or otherwise financially
1-15 supporting health care services provided to financially or
1-16 medically indigent patients through other nonprofit or public
1-17 outpatient clinics, hospitals, <or> health care organizations, or
1-18 nonprofit or public schools.
1-19 (3) "Contractual allowances" means the difference
1-20 between revenue at established rates and amounts realizable from
1-21 third-party payors under contractual agreements.
1-22 (4) "Department" means the Texas Department of Health.
1-23 (5) "Donations" means the unreimbursed costs of
2-1 providing cash and in-kind services and gifts, including
2-2 facilities, equipment, personnel, and programs, to other nonprofit
2-3 or public outpatient clinics, hospitals, <or> health care
2-4 organizations, or nonprofit or public schools.
2-5 (6) "Education-related costs" means the unreimbursed
2-6 cost to a hospital of providing, funding, or otherwise financially
2-7 supporting educational benefits, services, and programs including:
2-8 (A) education of physicians, nurses,
2-9 technicians, and other medical professionals and health care
2-10 providers;
2-11 (B) provision of scholarships and funding to
2-12 medical schools, colleges, and universities for health professions
2-13 education;
2-14 (C) education of patients concerning diseases
2-15 and home care in response to community needs; and
2-16 (D) community health education through
2-17 informational programs, publications, and outreach activities in
2-18 response to community needs.
2-19 (7) "Financially indigent" means an uninsured or
2-20 underinsured person who is accepted for care with no obligation or
2-21 a discounted obligation to pay for the services rendered based on
2-22 the hospital's eligibility system.
2-23 (8) "Government-sponsored indigent health care" means
2-24 the unreimbursed cost to a hospital of providing health care
2-25 services to recipients of Medicaid and other federal, state, or
3-1 local indigent health care programs, eligibility for which is based
3-2 on financial need.
3-3 (9) "Health care organization" means a nonprofit or
3-4 public organization that provides, funds, or otherwise financially
3-5 supports health care services provided to financially or medically
3-6 indigent persons.
3-7 (10) "Hospital" means:
3-8 (A) a general or special hospital licensed under
3-9 Chapter 241;
3-10 (B) a private mental hospital licensed under
3-11 Chapter 577; and
3-12 (C) a treatment facility licensed under Chapter
3-13 464.
3-14 (11) <(10)> "Hospital eligibility system" means the
3-15 financial criteria and procedure used by a hospital to determine if
3-16 a patient is eligible for charity care. The system shall include
3-17 income levels and means testing indexed to the federal poverty
3-18 guidelines; provided, however, that a hospital may not establish an
3-19 eligibility system which sets the income level eligible for charity
3-20 care lower than that required by counties under Section 61.023 or
3-21 higher, in the case of the financially indigent, than 200 percent
3-22 of the federal poverty guidelines. A hospital may determine that a
3-23 person is financially or medically indigent pursuant to the
3-24 hospital's eligibility system after health care services are
3-25 provided.
4-1 (12) <(11)> "Medically indigent" means a person whose
4-2 medical or hospital bills after payment by third-party payors
4-3 exceed a specified percentage of the patient's annual gross income,
4-4 determined in accordance with the hospital's eligibility system,
4-5 and the person is financially unable to pay the remaining bill.
4-6 (13) <(12)> "Research-related costs" means the
4-7 unreimbursed cost to a hospital of providing, funding, or otherwise
4-8 financially supporting facilities, equipment, and personnel for
4-9 medical and clinical research conducted in response to community
4-10 needs.
4-11 (14) <(13)> "Subsidized health services" means those
4-12 services provided by a hospital in response to community needs for
4-13 which the reimbursement is less than the hospital's cost for
4-14 providing the services and which must be subsidized by other
4-15 hospital or nonprofit supporting entity revenue sources.
4-16 Subsidized health services may include but are not limited to:
4-17 (A) emergency and trauma care;
4-18 (B) neonatal intensive care;
4-19 (C) free-standing community clinics; and
4-20 (D) collaborative efforts with local government
4-21 or private agencies in preventive medicine, such as immunization
4-22 programs.
4-23 (15) <(14)> "Unreimbursed costs" means the costs a
4-24 hospital incurs for providing services after subtracting payments
4-25 received from any source for such services including but not
5-1 limited to the following: third-party insurance payments; Medicare
5-2 payments; Medicaid payments; Medicare education reimbursements;
5-3 state reimbursements for education; payments from drug companies to
5-4 pursue research; grant funds for research; and disproportionate
5-5 share payments. For purposes of this definition, the term "costs"
5-6 shall be calculated in accordance with generally accepted
5-7 accounting principles for hospitals <by applying the cost to charge
5-8 ratios derived from the hospital's Medicare cost report to billed
5-9 charges>. Prior to January 1, 1996, for purposes of this
5-10 definition, charitable contributions and grants to a hospital,
5-11 including transfers from endowment or other funds controlled by the
5-12 hospital or its nonprofit supporting entities, shall not be
5-13 subtracted from the costs of providing services for purposes of
5-14 determining unreimbursed costs. After January 1, 1996, for
5-15 purposes of this definition, charitable contributions and grants to
5-16 a hospital, including transfers from endowment or other funds
5-17 controlled by the hospital or its nonprofit supporting entities,
5-18 shall not be subtracted from the costs of providing services for
5-19 purposes of determining the unreimbursed costs of charity care and
5-20 government-sponsored indigent health care.
5-21 SECTION 2. Subsections (a), (b), and (c), Section 311.045,
5-22 Health and Safety Code, are amended to read as follows:
5-23 (a) A nonprofit hospital or system of nonprofit hospitals
5-24 under the common control of a single corporate parent shall
5-25 annually satisfy the requirements of this subchapter and of
6-1 Sections 11.18(d)(1), 151.310(a)(2) and (e), and 171.063(a)(1), Tax
6-2 Code, to provide community benefits which include charity care and
6-3 government-sponsored indigent health care by complying with one or
6-4 more of the standards set forth in Subsection (b). The hospital or
6-5 hospital system shall file a statement with the Bureau of State
6-6 Health Data and Policy Analysis at the department, with the chief
6-7 appraiser of the local appraisal district, and with the
6-8 comptroller's office no later than the 120th day after the
6-9 hospital's or system's fiscal year ends, stating which of the
6-10 standards in Subsection (b) have been satisfied, provided, however,
6-11 that the first report shall be filed no later than the 120th day
6-12 after the end of the hospital's or system's fiscal year ending in
6-13 <during> 1994. For hospitals under the common control of a single
6-14 corporate parent <corporation>, the corporate parent may elect to
6-15 satisfy the charity care requirements of this subchapter for each
6-16 of the hospitals under its control on a consolidated basis<;
6-17 however, each hospital controlled by the parent corporation shall
6-18 satisfy the requirements of Sections 11.18(d)(1), 151.310(a), (c),
6-19 (d), and (e), and 171.063(a)(1), Tax Code, and provide community
6-20 benefits which include charity care and government-sponsored
6-21 indigent health care>.
6-22 (b)(1) A nonprofit hospital or system of nonprofit hospitals
6-23 under the common control of a single corporate parent may elect to
6-24 provide community benefits, which include charity care and
6-25 government-sponsored indigent health care, according to any of the
7-1 following standards:
7-2 (A) charity care and government-sponsored
7-3 indigent health care are provided at a level which is reasonable in
7-4 relation to the community needs, as determined through the
7-5 community needs assessment, the available resources of the hospital
7-6 or hospital system, and the tax-exempt benefits received by the
7-7 hospital or hospital system;
7-8 (B) charity care and government-sponsored
7-9 indigent health care are provided in an amount equal to at least
7-10 four percent of the hospital's or hospital system's net patient
7-11 revenue;
7-12 (C) charity care and government-sponsored
7-13 indigent health care are provided in an amount equal to at least
7-14 100 percent of the hospital's or hospital system's tax-exempt
7-15 benefits, excluding federal income tax;
7-16 (D) prior to January 1, 1996, charity care and
7-17 community benefits are provided in a combined amount equal to at
7-18 least five percent of the hospital's or hospital system's net
7-19 patient revenue, provided that charity care and
7-20 government-sponsored indigent health care are provided in an amount
7-21 equal to at least three percent of the hospital's or hospital
7-22 system's net patient revenue; or
7-23 (E) beginning with the hospital's or hospital
7-24 system's fiscal year starting after December 31, 1995, charity care
7-25 and community benefits are provided in a combined amount equal to
8-1 at least five percent of the hospital's or hospital system's net
8-2 patient revenue, provided that charity care and
8-3 government-sponsored indigent health care are provided in an amount
8-4 equal to at least four percent of the hospital's or hospital
8-5 system's net patient revenue.
8-6 (2) A nonprofit hospital or system of nonprofit
8-7 hospitals under the common control of a single corporate parent
8-8 that has been designated as a disproportionate share hospital under
8-9 the state Medicaid program in the current fiscal year or in either
8-10 of the previous two fiscal years shall be considered to have
8-11 provided a reasonable amount of charity care and
8-12 government-sponsored indigent health care and shall be deemed in
8-13 compliance with the standards in this subsection.
8-14 (3) A nonprofit hospital that is located in a county
8-15 with a population under 100,000 which has a hospital district
8-16 created pursuant to Article IX, Section 5, of the Texas
8-17 Constitution and Chapter 136, Acts of the 55th Legislature, Regular
8-18 Session, 1957, shall not be required to comply with one or more of
8-19 the standards set forth in this subsection.
8-20 (c) The providing of charity care and government-sponsored
8-21 indigent health care in accordance with Subsection (b)(1)(A) shall
8-22 be guided by the prudent business judgment of the hospital which
8-23 will ultimately determine the appropriate level of charity care and
8-24 government-sponsored indigent health care based on the community
8-25 needs, the available resources of the hospital, the tax-exempt
9-1 benefits received by the hospital, and other factors that may be
9-2 unique to the hospital, such as the hospital's volume of Medicare
9-3 and Medicaid patients, community benefits provided to the
9-4 community, and the hospital's outstanding debt and other financial
9-5 obligations. These criteria shall not be determinative factors,
9-6 but shall be guidelines contributing to the hospital's decision,
9-7 along with other factors which may be unique to the hospital. The
9-8 standards set forth in Subsections (b)(1)(B), (b)(1)(C), (b)(1)(D),
9-9 and (b)(1)(E) shall also not be considered determinative of the
9-10 amount of charity care and government-sponsored indigent health
9-11 care that will be considered reasonable under Subsection (b)(1)(A).
9-12 SECTION 3. The importance of this legislation and the
9-13 crowded condition of the calendars in both houses create an
9-14 emergency and an imperative public necessity that the
9-15 constitutional rule requiring bills to be read on three several
9-16 days in each house be suspended, and this rule is hereby suspended,
9-17 and that this Act take effect and be in force from and after its
9-18 passage, and it is so enacted.