Community Benefit

Provider Taxes

Please Take Note: The information provided does not constitute legal or tax advice. The material is provided for informational/educational purposes only. Please consult with counsel regarding your organization's particular circumstances.

Question: Can provider taxes that go to an uncompensated care pool be counted as community benefit?

Recommendation: The recommendation is to count provider taxes and assessments that are deposited into uncompensated care pools as community benefit, but then also offset the payments with any receipts from the pool (after the funds are matched typically with Federal Medicaid DSH resources).

Ohio operates the HCAP (Hospital Care Assurance Program) program, for example — and there are many hospitals that are "net beneficiaries" of these funds — they get more back than they put in. So a portion of their charity care is paid for by the HCAP program. In other states, these pools are designed to offset Medicaid losses (low payment rates), so any "gains" coming from the provider tax system are booked as net Medicaid revenue.

(April 2009)