On January 21, 2025, Indiana Governor Mike Braun signed Executive Order 25-22, addressing the provision of charity care by nonprofit hospitals in the state. The order acknowledges that Indiana does not mandate specific amounts of charity care for hospitals to maintain their tax-exempt status. The order emphasizes the need to evaluate the relationship between tax exemptions and the level of charity care provided by the hospital.
Secretary of Health and Family Services Role
In order to evaluate the relationship, the Secretary of Health and Family Services (“HFS”) shall conduct an investigation and prepare a report containing the amount of charity care provided by each nonprofit hospital operating in Indiana compared to the tax-exempt benefits the hospital receives. Also, this investigation will explore any practices of nonprofit hospitals operating in Indiana that permit the hospitals to avoid providing charity care to the truly needy in the community.
After investigation, HFS will determine the Indiana Department of Health’s authority to enforce standards concerning requiring each nonprofit hospital operating in Indiana to verify that their hospital or hospital system provided more charity care in a given tax year than the value of tax exemptions they receive. The result may be that any nonprofit hospital that fails to provide such annual verification shall be prohibited from receiving state tax exemptions.
What Hospitals Can Do Now
- Enhance Community Benefit Programs: Review current programs and ensure the hospital is demonstrating a commitment to community health and ensure all community benefit is being tracked and reported.
- Review Internal Policies and Procedures: Revisit policies and procedures around community benefit and tracking.
- Increase Transparency and Reporting: Proactively disclosing community benefit contributions can showcase the hospital’s dedication its non-profit mission.
- Calculate Current Value of Tax-Exemption: Proactively calculate the value of tax-exemption to ensure community benefit offerings are more than current tax-exemption benefit
House Bill 1004: Nonprofit Status
In conjunction with this executive order, Indiana lawmakers have proposed House Bill 1004 where a hospital would forfeit its status as being nonprofit, if the charge for a service or item is in excess of 200% of the Medicare reimbursement rate at the time of the charge.
Some additional requirements proposed by this bill include:
- Before August 1st of each year, every nonprofit hospital must provide the health care cost oversight task force with the entirety of the Schedule H portion of the nonprofit hospital’s previous taxable year federal Form 990; and make available for publication on the general assembly’s website the entirety of the Schedule H portion of the nonprofit hospital’s previous taxable year federal Form 990.
- Also, before November 1st of each state fiscal year, nonprofit hospitals (that are not county hospitals) need to provide to the Indiana Department of Health a report including aggregate data on all billed services and items and a comparison of the charges for those services and items to their respective Medicare reimbursement rates.
Contact Blue & Co.
This bill was introduced in the 2025 legislative session. Blue & Co. will keep you apprised of any changes that may affect your hospital organization. Please reach out to your local Blue & Co. advisor if you have any questions or one of our experts listed below.
