Montana is poised to become the latest state to increase scrutiny of how its nonprofit hospitals deliver community benefits in exchange for their tax-exempt status.<\/p>\n

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States with set giving standards take different approaches. In recent years, California adopted new reporting requirements for hospitals to show how they serve vulnerable populations. Oregon created new rules for when and how hospitals must provide patients discounted care. And five states \u2014 Illinois, Nevada, Pennsylvania, Texas, and Utah \u2014 have set minimums that hospitals must spend toward community benefits.<\/p>\n
Just over half of the hospitals in the U.S. are nonprofits. While each must report the \u201ccommunity benefits\u201d they provide, federal law doesn\u2019t specify<\/a> which services qualify or how much to give. Inconsistent hospital reports make it difficult to distinguish between low and high givers.<\/p>\n
Montana\u2019s 2020 state audit found that hospitals report benefits vaguely and inconsistently. The following year, a KFF Health News investigation<\/a> found that, even by hospitals\u2019 own reports, some of Montana\u2019s richest facilities fell behind the national average in community benefit spending.<\/p>\n
A Montana law passed in 2023<\/a> requires the state health department to track hospitals\u2019 giving and to define standards. The department\u2019s proposed rules spell out some requirements, such as calling on hospitals to post financial assistance policies prominently online. But mostly, the list of requirements sets the stage for more to come.<\/p>\n
Holly Matkin, a health department spokesperson, said the agency will establish standards that are \u201cfair to all nonprofit hospitals.\u201d The state plans to collect data over a three-year period to begin establishing standards in 2026.<\/p>\n
The state\u2019s proposed rules have some differences from federal requirements, such as mandating hospital-level reports as opposed to systemwide information that covers numerous hospital locations. They also leave room for the state to seek more details about how hospitals provide care at reduced prices, such as the number of people who receive financial aid or the average amount given per person.<\/p>\n
But the Montana Hospital Association lobbied<\/a> legislators against including too many reporting rules, arguing it would increase hospitals\u2019 administrative burden. State lawmakers then narrowed the data the state can collect to largely the information hospitals already provide to the federal government. The association supports the state\u2019s rules as proposed but has said any state standards need flexibility.<\/p>\n
\u201cThe truth is that most communities have more health needs than they can effectively address,\u201d said Bob Olsen, president and CEO of the Montana Hospital Association<\/a>. \u201cModels that apply a one-size-fits-all standard on communities take decision-making out of local communities, and have the potential to do more harm than good.\u201d<\/p>\n
Adam Zarrin, director of state government affairs with the Leukemia & Lymphoma Society<\/a>, supported Montana\u2019s proposal during a June 18 public hearing. But he testified that Montana could do more, such as mandating screening for financial assistance and requiring that hospitals provide it to patients at particular income levels.<\/p>\n
\u201cThese rules could go even further to provide greater access and protections for Montanans who need and apply for financial assistance,\u201d Zarrin said.<\/p>\n
Health department officials said they plan to create numerical or narrative standards for judging how hospitals say they\u2019ve responded to people\u2019s needs \u2014 or a combination of the two. Officials are still vague on what either standard could entail. But they have said the benchmarks would be set each year based on each hospital\u2019s size and patient revenue. Hospitals with operating losses wouldn\u2019t have to meet the forthcoming rules.<\/p>\n
Ge Bai<\/a>, a health policy professor at Johns Hopkins University who has long studied hospitals\u2019 community benefits, said such standards come with trade-offs. For example, standards that can be met through words rather than numbers might allow large hospitals to pay consultants to window-dress the story of their benefits while smaller systems struggle to show their worth. She said numerical rules, such as spending minimums, could cause some hospitals to slow efforts once they meet the state\u2019s requirement.<\/p>\n
\u201cIt\u2019s not perfect,\u201d Bai said. \u201cBut If we don\u2019t do anything, well, that\u2019s the status quo.\u201d<\/p>\n
In 2020, Oregon set minimums for the free or discounted care hospitals must provide, but even with those rules, the state\u2019s overall charity care spending didn\u2019t increase, Bai said. Last summer, lawmakers there added a new set of rules, including that hospitals must screen patients with large hospital bills to see if they qualify for financial assistance.<\/p>\n
California also has implemented a combination of standards. In recent years, the state expanded reporting requirements, mandating that nonprofit hospitals explain the math behind their community benefits tally and detail how they\u2019re serving vulnerable populations such as people who are homeless. The state also mandated that hospitals offer discounted care to uninsured patients or some people with costly medical bills.<\/p>\n
Even in states like California, it can be hard to see how those policies affect patients who struggle to access care, said Barnett of the Public Health Institute. He said he\u2019d like to see states require hospitals to reduce health disparities with specific outcomes, such as lowering preventable emergency room visits by people from especially poor neighborhoods.<\/p>\n
In 2025, California will start requiring hospitals to submit annual reports that include an analysis of access to care and a plan to address disparities. The state is still defining<\/a> those reporting rules.<\/p>\n
Whatever standard states employ, health policy researchers said promoting transparency is key, such as by standardizing reporting rules to provide a clear picture across systems. Bai said Montana\u2019s rules are a good first step.<\/p>\n
Matkin, from the state health department, said whatever giving benchmarks Montana sets won\u2019t be a copy-and-paste of what others have tried. The department plans to create standards unique to Montana.<\/p>\n
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