RLV C.S.S.B. 788 75(R)BILL ANALYSIS PUBLIC HEALTH C.S.S.B. 788 By: Ellis (Maxey) 5-2-97 Committee Report (Substituted) BACKGROUND In the 73rd session, legislation was passed requiring that non-profit hospitals devote a specified amount of their net patient revenues to charity care and government-sponsored indigent health care. In the 74th session, non-profit hospitals approached the Legislature about streamlining the annual reporting of their community benefits plan by using generally accepted accounting principles in their calculation of costs, in place of the Medicare cost reports (SB 1190/Ellis). With the initial results of this accounting switch, concerns have been raised that under the new system, non-profit hospitals may be able to overstate the amount of charity care provided. If true, this could lead to a decrease in the actual charity care delivered from the 4 percent minimum required by law. Non-profit hospitals are not required to adhere to a certain fiscal year reporting period for their community benefits plan. Based on 1995 information, hospitals used 10 different fiscal years as a basis for submitting their reports. As a result, the administration of the law is a continuous process. Public hospitals and Medicaid disproportionate share hospital are not required to meet the community benefits/charity care standard due to the large amount of uncompensated care they provide. At the same time, if these hospitals simply reported these expenses, the state would have a fuller picture of the amount of charity care delivered. PURPOSE C.S.S.B. 788 would require hospitals to include in the submission of their annual report of community benefits plan to the Texas Department of Health (TDH) a statement of total operating expenses computed in accordance with generally accepted accounting principles, as well as, total operating expenses from the Medicare cost report. This bill also sets April 30th of each year as the standard date by which all annual reports of community benefit plans must be filed with TDH. C.S.S.B. 788 requires public hospitals and Medicaid disproportionate share hospitals to report the amount of charity care and community benefits provided. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 311.045(b)-(d), Health and Safety Code, as follows: Subsection (b)(1)(B) deletes the standard of a nonprofit hospital or hospital system to provide its community benefits in an amount equal to at least four percent of the hospital's or hospital system's net patient revenue. Makes conforming changes. Subsection (b)(1)(D), regarding the standard of a nonprofit hospital or hospital system to provide its community benefits in a combined amount equal to at least five percent of the hospital's or hospital system's net patient revenue, provided that charity care and government sponsored indigent health care are provided in an amount equal to at least three percent of the net patient revenue, is deleted. Makes conforming changes. Subsection (b)(1)(E) deletes language referring to the hospital's or hospital system's fiscal year after December 31, 1995. Subsection (b)(1)(C)(2) makes conforming changes. Subsection (c) makes conforming changes. Subsection (d) makes conforming changes. SECTION 2. Amends Subchapter D, Chapter 311, Health and Safety Code, by adding Section 311.0455 as follows: Sec. 311.0455. ANNUAL REPORT BY THE DEPARTMENT. Requires TDH to submit to the attorney general and comptroller by July 1 of each year a report listing each non-profit hospital or hospital system that did not meet its community benefit requirement s during the preceding fiscal year. Subsection (b) requires TDH to submit to the attorney general and comptroller not later than November 1 of each year a report containing the following information for each nonprofit hospital or hospital system during the preceding fiscal year: the amount of community benefits provided; the amount of net patient revenue and the amount constituting four percent of net patient revenue; the dollar amount of the hospital's or hospital system's charity care and community benefits requirement; the amount of tax-exempt benefits, provided the hospital is required to report these benefits; the amount of charity care expenses reported in the hospital's or hospital system's audited financial statement. Subsection (c) requires the department to make the aforementioned report available to the public and to issue a press release regarding the report. Subsection (d) defines "nonprofit hospital" for the purposes of Subsection (b) to include a Medicaid disproportionate share hospital or a public hospital. Excludes Medicaid disproportionate share hospitals and public hospitals that are located in a county with a population of 50,000 or less which has been designated as a Health Professional Shortage Area. SECTION 3. Amends Sections 311.046, Health and Safety Code, as follows: Subsection (a)(4) is added and requires a non-profit hospital in preparing its annual report of its community benefits plan to submit a statement of its total operating expenses in accordance with generally accepted accounting principles from the most recent completed and audited, prior fiscal year of the hospital. Subsection (5) is added and requires a nonprofit hospital to submit in the same report, a completed worksheet that computes the cost to charge ratio for the fiscal year referred to in Subdivision (4) and that includes the same requirements as Worksheet 1-A for the 1994 "Annual Statement of Community Benefits Standards." Subsection (b) establishes April 30th of each year as the deadline for the filing of annual reports of community benefits plans. Deletes language relating to the original deadline of 120 days after the end of the hospital's fiscal year. Establishes that in addition to the annual report, a completed worksheet, as required by Subsection (a)(5) must be filed by 10 working days after the date the hospital files it Medicare cost report. Subsection (e) defines "non-profit hospital" for the purposes of Section 3 to include a Medicaid disproportionate share hospital or a public hospital. Excludes Medicaid disproportionate share hospitals and public hospitals that are located in a county with a population of 50,000 or less which has been designated as a Health Professional Shortage Area. SECTION 4. Establishes the effective date of the Act as January 1, 1998, and provides that it is applicable only to reports filed for fiscal years ending on or after January 1, 1998. Declares that the filing date of a report for fiscal years ending January 1, 1998, is governed by the current law which is continued in effect for that purpose. SECTION 5. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 788 incorporates HB 2930 into the SB 788. Both bills amend Chapter 311, Health and Safety Code. SB 788 establishes a single due date for the submission of the annual reports of community benefit plans to TDH. The incorporated bill requires non-profit hospital to report operating expenses relating to generally accepted accounting principles and relating to Medicare cost reports within the submitted community benefit plans. It also requires public hospitals and Medicaid disproportionate share hospitals to file an annual report of community benefit plans with TDH.