Measuring Nonprofit Hospitals' Provision of Charity Care Using IRS and CMS Data

Research output: Contribution to journalArticle

Abstract

We explore whether nonprofit hospitals report similar amounts of charity care to the Internal Revenue Service (IRS) and Centers for Medicare & Medicaid Services (CMS). We use nonprofit hospitals' financial reports to the IRS and the CMS Medicare costs report for 2011 and 2012. In 2012, hospitals reported spending 7.6% more in charity care to the IRS than to CMS: 2.54% of revenues ($5.74 million per hospital) to the IRS versus 2.36% ($5.16 million) to CMS. While the averages are close, there are wide discrepancies for individual hospitals. For example, despite efforts for standardization, 80% of hospitals reported charity care to the CMS that was 40% greater in absolute value than what they reported to the IRS, and only 10% of hospitals reported charity care to CMS that was within 20% of what they reported to the IRS. Our findings suggest that individual hospitals routinely report different amounts of charity care to the IRS and CMS, yet we find relatively few hospital or market characteristics that may explain these differences.

Original languageEnglish (US)
Pages (from-to)293-312
Number of pages20
JournalJournal of Healthcare Management
Volume64
Issue number5
DOIs
StatePublished - Sep 1 2019

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Charities
Medicare
Charity
Revenue
Medicaid
Costs and Cost Analysis

ASJC Scopus subject areas

  • Leadership and Management
  • Health Policy
  • Strategy and Management

Cite this

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title = "Measuring Nonprofit Hospitals' Provision of Charity Care Using IRS and CMS Data",
abstract = "We explore whether nonprofit hospitals report similar amounts of charity care to the Internal Revenue Service (IRS) and Centers for Medicare & Medicaid Services (CMS). We use nonprofit hospitals' financial reports to the IRS and the CMS Medicare costs report for 2011 and 2012. In 2012, hospitals reported spending 7.6{\%} more in charity care to the IRS than to CMS: 2.54{\%} of revenues ($5.74 million per hospital) to the IRS versus 2.36{\%} ($5.16 million) to CMS. While the averages are close, there are wide discrepancies for individual hospitals. For example, despite efforts for standardization, 80{\%} of hospitals reported charity care to the CMS that was 40{\%} greater in absolute value than what they reported to the IRS, and only 10{\%} of hospitals reported charity care to CMS that was within 20{\%} of what they reported to the IRS. Our findings suggest that individual hospitals routinely report different amounts of charity care to the IRS and CMS, yet we find relatively few hospital or market characteristics that may explain these differences.",
author = "Darrell Gaskin and Herring, {Bradley J} and Hossein Zare and Anderson, {Gerard F}",
year = "2019",
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