December 01, 2013

The Impact of Obamacare on Financial Disclosure Laws for Nonprofit Hospitals: Some Say They Don’t Go Far Enough

Jeffrey C. Grass

The Patient Protection and Affordable Care Act (PPACA),1 otherwise known as the Affordable Care Act (ACA) and Obamacare, now requires nonprofit hospitals to disclose more essential information about their finances.2 This requirement by the ACA coupled with changes in the Internal Revenue Code (IRC) are intended to bring about greater transparency and accountability in a growing sector of the health care industry providing medical services to an increasing number of patients.3 However, many community members and physicians believe that the current financial disclosure laws under the ACA, the IRC, and state law do not go far enough to ensure hospital funds are allocated appropriately to meet their community’s health care needs. These groups are frustrated by hospitals refusing to produce financial records by claiming the material is either confidential, privileged, or falling within an exception under state reporting laws. Consequently, battles are currently being waged in the state courts and legislatures around the country that are defining the parameters of the ACA and redefining the application of state law in the wake of the ACA. One such case in Texas, Jeffrey Grass vs. Knapp Medical Center, promises to (1) set a national trend requiring nonprofit hospitals to allow greater public access to their financial dealings; (2) utilize systems of self-governance by local communities and their medical staffs; and, (3) eliminate financial disclosure exceptions employed by nonprofit hospitals through their use of private foundations. These important issues could signal a fundamental shift in operation and management of nonprofit hospitals in America today.

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