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A BILL TO BE ENTITLED
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AN ACT
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relating to charity care and unreimbursed costs of certain |
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hospitals. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subdivision (16), Section 311.031, Health and |
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Safety Code, is amended to read as follows: |
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(16) "Unreimbursed costs" means the costs a hospital |
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incurs for providing services after subtracting payments received |
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from any source for such services including but not limited to the |
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following: third-party insurance payments; Medicare payments; |
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Medicaid payments; Medicare education reimbursements; state |
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reimbursements for education; payments from drug companies to |
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pursue research; grant funds for research; and disproportionate |
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share payments. For purposes of this definition, the term "costs" |
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shall be calculated by applying the cost to charge ratios in the |
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hospital's most recently filed Medicare cost report [derived in
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accordance with generally accepted accounting principles for
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hospitals] to billed charges. [The calculation of the cost to
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charge ratios shall be based on the most recently completed and
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audited prior fiscal year of the hospital or hospital system.] |
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Prior to January 1, 1996, for purposes of this definition, |
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charitable contributions and grants to a hospital, including |
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transfers from endowment or other funds controlled by the hospital |
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or its nonprofit supporting entities, shall not be subtracted from |
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the costs of providing services for purposes of determining |
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unreimbursed costs. After January 1, 1996, for purposes of this |
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definition, charitable contributions and grants to a hospital, |
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including transfers from endowment or other funds controlled by the |
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hospital or its nonprofit supporting entities, shall not be |
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subtracted from the costs of providing services for purposes of |
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determining the unreimbursed costs of charity care and |
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government-sponsored indigent health care. |
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SECTION 2. Section 311.045, Health and Safety Code, is |
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amended to read as follows: |
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Sec. 311.045. COMMUNITY BENEFITS AND CHARITY CARE |
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REQUIREMENTS. (a) A nonprofit hospital or hospital system shall |
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annually satisfy the requirements of this subchapter and of |
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Sections 11.18(d)(1), 151.310(a)(2) and (e), and 171.063(a)(1), |
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Tax Code, to provide community benefits which include charity care |
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and government-sponsored indigent health care by complying with the |
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requirements of [one or more of the standards set forth in] |
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Subsection (b)(1) [(b)]. The hospital or hospital system shall |
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file a statement with the Bureau of State Health Data and Policy |
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Analysis at the department and the chief appraiser of the local |
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appraisal district no later than the 120th day after the hospital's |
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or hospital system's fiscal year ends, stating that the |
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requirements of [which of the standards in] Subsection (b)(1) [(b)] |
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have been satisfied, provided, however, that the first report shall |
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be filed no later than the 120th day after the end of the hospital's |
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or hospital system's fiscal year ending during 1994. For hospitals |
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in a hospital system, the corporate parent may elect to satisfy the |
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charity care requirements of this subchapter for each of the |
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hospitals within the system on a consolidated basis. |
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(b)(1) A nonprofit hospital or hospital system shall [may
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elect to] provide community benefits, which include charity care |
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and government-sponsored indigent health care, [according to any of
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the following standards:
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[(A) charity care and government-sponsored
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indigent health care are provided at a level which is reasonable in
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relation to the community needs, as determined through the
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community needs assessment, the available resources of the hospital
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or hospital system, and the tax-exempt benefits received by the
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hospital or hospital system;
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[(B) charity care and government-sponsored
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indigent health care are provided in an amount equal to at least 100
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percent of the hospital's or hospital system's tax-exempt benefits,
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excluding federal income tax; or
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[(C) charity care and community benefits are
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provided] in a combined amount equal to at least seven [five] |
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percent of the hospital's or hospital system's net patient revenue, |
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provided that charity care and government-sponsored indigent |
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health care are provided in an amount equal to at least six [four] |
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percent of net patient revenue. |
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(2) For purposes of satisfying the requirements of |
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Subdivision (1) [(1)(C)], a hospital or hospital system may not |
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change its existing fiscal year unless the hospital or hospital |
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system changes its ownership or corporate structure as a result of a |
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sale or merger. |
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(3) A nonprofit hospital that has been designated as a |
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disproportionate share hospital under the state Medicaid program in |
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the current fiscal year or in either of the previous two fiscal |
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years shall be [considered to have provided a reasonable amount of
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charity care and government-sponsored indigent health care and
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shall be] deemed in compliance with Subdivision (1) [the standards
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in this subsection]. |
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(c) A reduction in the amount of community benefits required |
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by Subsection (b)(1), including [The providing of] charity care and |
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government-sponsored indigent health care, may be deemed |
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reasonable under the following circumstances: |
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(1) when the financial reserves of the hospital are |
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reduced to such a level that the hospital would be in violation of |
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any applicable bond covenants; |
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(2) when necessary to prevent the hospital from |
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endangering its ability to continue operations; or |
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(3) if the hospital, as a result of a natural or other |
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disaster, is required to substantially curtail its operations [in
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accordance with Subsection (b)(1)(A) shall be guided by the prudent
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business judgment of the hospital which will ultimately determine
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the appropriate level of charity care and government-sponsored
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indigent health care based on the community needs, the available
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resources of the hospital, the tax-exempt benefits received by the
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hospital, and other factors that may be unique to the hospital, such
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as the hospital's volume of Medicare and Medicaid patients. These
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criteria shall not be determinative factors, but shall be
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guidelines contributing to the hospital's decision, along with
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other factors which may be unique to the hospital. The standards
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set forth in Subsections (b)(1)(B) and (b)(1)(C) shall also not be
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considered determinative of the amount of charity care and
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government-sponsored indigent health care that will be considered
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reasonable under Subsection (b)(1)(A)]. |
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(d) A hospital that reduces required community benefits |
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under Subsection (c) must file, along with the hospital's annual |
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statement of community benefits, a certification of noncompliance |
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that must include the following: |
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(1) a detailed statement of the reasons why the |
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hospital cannot comply with Subsection (b)(1); |
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(2) a report detailing the administrative and |
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financial support for the certification of noncompliance; and |
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(3) the notarized signatures of the hospital's |
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president and chief financial officer. |
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(e) A reduction in the amount of community benefits required |
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by this section, including reductions in charity care and |
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government-sponsored indigent health care, shall not exceed the |
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lesser of the following amounts for the fiscal year for which a |
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statement of noncompliance is filed: |
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(1) two percent of the hospital's net patient revenue; |
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or |
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(2) the amount of the hospital's or hospital system's |
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tax-exempt benefits, excluding federal income tax. |
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(f) For purposes of this section, a hospital that satisfies |
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Subsection [(b)(1)(A) or] (b)(3) shall be excluded in determining a |
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hospital system's compliance with [the standards provided by] |
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Subsection (b)(1) [(b)(1)(B) or (b)(1)(C)]. |
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(g) [(e)] In any fiscal year that a hospital or hospital |
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system, through unintended miscalculation, fails to comply with |
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[meet any of the standards in] Subsection (b)(1) [(b)], the |
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hospital or hospital system shall not lose its tax-exempt status |
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without the opportunity to cure the miscalculation in the fiscal |
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year following the fiscal year the failure is discovered by both |
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complying with Subsection (b)(1) [meeting one of the standards] and |
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providing an additional amount of charity care and |
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government-sponsored indigent health care that is equal to the |
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shortfall from the previous fiscal year. A hospital or hospital |
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system may apply this provision only once every five years. |
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(h) [(f)] A nonprofit hospital or hospital system under |
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contract with a local county to provide indigent health care |
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services under Chapter 61 may credit unreimbursed costs from direct |
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care provided to an eligible county resident toward meeting the |
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nonprofit hospital's or system's charity care and |
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government-sponsored indigent health care requirement. |
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SECTION 3. Subsection (b), Section 311.0455, Health and |
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Safety Code, is amended to read as follows: |
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(b) The department shall submit to the attorney general and |
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the comptroller not later than November 1 of each year a report |
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containing the following information for each nonprofit hospital or |
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hospital system during the preceding fiscal year: |
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(1) the amount of charity care, as defined by Section |
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311.031, provided; |
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(2) the amount of government-sponsored indigent |
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health care, as defined by Section 311.031, provided; |
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(3) the amount of community benefits, as defined by |
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Section 311.042, provided; |
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(4) the amount of net patient revenue, as defined by |
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Section 311.042, and the amount constituting four percent of net |
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patient revenue; |
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(5) the dollar amount of the hospital's or hospital |
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system's charity care and community benefits requirements met; |
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(6) a computation of the percentage by which the |
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amount described by Subdivision (5) is above or below the dollar |
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amount of the hospital's or hospital system's charity care and |
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community benefits requirements; |
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(7) the amount of tax-exempt benefits, as defined by |
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Section 311.042, provided, if the hospital is required to report |
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tax-exempt benefits under Section 311.045(e) [311.045(b)(1)(A) or
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(b)(1)(B)]; and |
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(8) the amount of charity care expenses reported in |
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the hospital's or hospital system's audited financial statement. |
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SECTION 4. Subsection (a), Section 311.046, Health and |
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Safety Code, is amended to read as follows: |
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(a) A nonprofit hospital shall prepare an annual report of |
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the community benefits plan and shall include in the report at least |
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the following information: |
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(1) the hospital's mission statement; |
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(2) a disclosure of the health care needs of the |
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community that were considered in developing the hospital's |
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community benefits plan pursuant to Section 311.044(b); |
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(3) a disclosure of the amount and types of community |
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benefits, including charity care, actually provided. Charity care |
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shall be reported as a separate item from other community benefits; |
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(4) a statement of its total operating expenses |
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computed in accordance with generally accepted accounting |
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principles for hospitals from the most recent completed and audited |
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prior fiscal year of the hospital; [and] |
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(5) a completed worksheet that computes the ratio of |
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cost to charge for the fiscal year referred to in Subdivision (4) |
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and that includes the same requirements as Worksheet 1-A adopted by |
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the department in August 1994 for the 1994 "Annual Statement of |
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Community Benefits Standards"; and |
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(6) if applicable, the certificate of noncompliance |
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required by Section 311.045(d). |
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SECTION 5. Subsection (c), Section 311.043, Health and |
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Safety Code, is repealed. |
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SECTION 6. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2007. |