A former Montana health department staffer who described himself as the lead author of legislation to scrutinize nonprofit hospitals’ charitable acts said new rules implementing the bill amounted to a hospital 鈥渨ish list鈥 and that the state needs to go back to the drawing board.
The Montana Department of Public Health and Human Services recently outlining how the state will collect data on nonprofit hospitals鈥 charitable acts with the goal of eventually creating giving standards. That could include benchmarks, such as how much financial aid hospitals must provide patients.
The state鈥檚 rules come more than four years after found shortcomings in the health department鈥檚 oversight and more than a year after Republican Gov. Greg Gianforte signed the law.
The aim is to fill in national oversight gaps that make it hard to weigh whether hospitals do enough for patients and their communities to earn their tax-exempt status as charitable organizations.
Brenton Craggs, a former regulatory affairs coordinator for the health department who said he was the initial architect of the 2023 oversight law, said the state鈥檚 plan caters to the Montana Hospital Association.
鈥淭his is basically a wish list of demands from the hospital association,鈥 Craggs said. 鈥淭hey wanted us to be bound to federal standards.鈥
The biggest red flag, Craggs said, is that the state鈥檚 rules allow hospitals with operating losses an exemption from Montana鈥檚 eventual community benefit and financial assistance standards.
鈥淎lmost every, if not every, single nonprofit hospital in the state will have operating losses during their fiscal years,鈥 Craggs said.
He also said the state should ensure hospitals can鈥檛 count unpaid bills they submitted to debt collectors as part of uncompensated care they list as a benefit. As is, Craggs said, a hospital can claim that loss 鈥渨hile simultaneously financially ruining the patient.鈥
Katy Mack, a spokesperson for the Montana Hospital Association, said parts of the oversight as proposed in the law and rulemaking process weren鈥檛 workable with federal law, accounting practices, or the sustainability of rural hospitals.
鈥淗ospitals are not opposed to reasonable and informed oversight,鈥 Mack said. 鈥淗ospitals are opposed to one-size-fits-all rules that force them to divert resources from priorities identified by their community.鈥
Craggs’ rebuke reflects a nationwide tension between states鈥 seeking to put checks on nonprofit hospitals and pushback from those hospitals. The debate centers on whether nonprofit hospitals give back their fair share.
Nonprofit hospitals must report 鈥渃ommunity benefits鈥 they provide, such as services offered at a loss or free health screenings. But what qualifies or how much to give. Hospitals report their giving inconsistently and, in some cases, count something that鈥檚 good for business as a benefit.
Montana is among the latest states trying to define what should count as a benefit. Hospitals lobbied against cumbersome oversight from the start.
In the health department鈥檚 the rules in September, state officials said the 2023 law ultimately restricted the reports it could require nonprofits to submit.
The law also required the state鈥檚 definitions of, and standards for, community benefits to align with federal standards 鈥渨herever possible.” The agency鈥檚 adoption notice said that, while it would try to stick to those standards, the department recognized that it 鈥渕ay not always be possible.鈥
Health policy analysts have said stopping at federal standards would be meaningless.
鈥淭he whole point of the state-level policy is to improve upon what the federal government has not done,鈥 said , a health economist at Brown University who studies the business of health care. 鈥淚f a state is saying we have to follow what the federal government does, then they鈥檙e just going to end up in the same exact place.鈥
Craggs, who now works as an attorney for the Montana Office of Public Instruction, filed a letter opposing the state鈥檚 rules during the public comment period before they were adopted. 杨贵妃传媒視頻 Health News obtained that letter through a records request for the public comments regarding the rulemaking.
In an interview, Craggs said he was the health department鈥檚 lead on the oversight legislation and that he was removed from that work after he publicly pushed back against changes the association had proposed during a Jan. 25, 2023, legislative hearing.
Jon Ebelt, a health department spokesperson, said the agency didn鈥檛 want to comment. He said the state鈥檚 notice of its adoption of the rules stands on its own.
According to state lobbying reports, the oversight bill was among the association鈥檚 watched legislation for the 2023 session. The organization ultimately supported the bill after lawmakers made amendments.
Republican Rep. Bob Keenan, the bill鈥檚 sponsor, said some of the changes were 鈥渄raconian.鈥 But Keenan said he ultimately supported the policy as amended because he knew it was the result of long negotiations with the association. Lawmakers could make future changes, he said.
Craggs said the state鈥檚 oversight goal was to create standards that worked across hospitals, big and small. Instead, he said, the state鈥檚 exemptions give hospitals an easy out and the agency is kicking the can down the road on creating standards.
Montana missed the law鈥檚 July deadline to set standards and the health department has been vague about what shape those standards could take. Officials have said they need to compile years of data to set fair benchmarks and that they鈥檒l begin establishing standards in 2026.
Craggs said past reports of hospital data are already available for officials to begin setting those standards. But he added the data the state plans to collect from hospitals has too many gaps to offer meaningful oversight.
In the adoption notice, the state said it must balance interests. It said the department will also take action if it appears any hospitals abuse their exemption from giving standards.
鈥淢any critical access hospitals and rural emergency hospitals operate on very thin margins in remote, rural, and/or frontier areas,鈥 the notice said.
The agency said hospitals with losses still must meet federal rules.
