Health Care Providers Responsibility to the Community Act of 1989

Health Care Providers Responsibility to the Community Act of 1989 - Amends the Internal Revenue Code to remove the Federal income tax exemption for interest on any inpatient health care facility bond (a 501(c)(3) bond) with respect to any facility that at the time of bond issuance does not have in effect a provider agreement under the relevant State's Medicaid plan.

Subjects to the tax on unrelated business income of charitable organizations the owner of any inpatient health care facility that was financed from proceeds of any tax-exempt bond and that does not have a provider agreement under a State Medicaid plan. Denies an income tax deduction for interest on financing to these same entities.

Amends title XVIII (Medicare) of the Social Security Act to require hospitals and skilled nursing facilities to have in effect a provider agreement under the relevant State Medicaid program as a condition of eligibility to participate in the Medicare program.

 
HR 157 IH
101st CONGRESS
1st Session
 H. R. 157
To amend the Internal Revenue Code of 1986 to provide that tax-exempt bonds
may be used to provide a hospital or other inpatient health care facility
only if the facility accepts medicaid patients and to amend title XVIII of
the Social Security Act to require hospitals, as a condition of receipt
of certain medicare funding, to accept medicaid patients and to require
skilled nursing facilities, as a condition of medicare participation, to
accept medicaid patients.
IN THE HOUSE OF REPRESENTATIVES
January 3, 1989
Mr. DONNELLY (for himself and Mr. STARK) introduced the following bill;
which was referred jointly to the Committees on Ways and Means and Energy
and Commerce
A BILL
To amend the Internal Revenue Code of 1986 to provide that tax-exempt bonds
may be used to provide a hospital or other inpatient health care facility
only if the facility accepts medicaid patients and to amend title XVIII of
the Social Security Act to require hospitals, as a condition of receipt
of certain medicare funding, to accept medicaid patients and to require
skilled nursing facilities, as a condition of medicare participation, to
accept medicaid patients.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `Health Care Providers Responsibility to the
  Community Act of 1989'.
SEC. 2. BOND-FINANCED HEALTH CARE FACILITIES REQUIRED TO ACCEPT MEDICAID
PATIENTS.
  (a) IN GENERAL- Section 149 of the Internal Revenue Code of 1986 (relating to
  bonds must be registered to be tax exempt; other requirements) is amended
  by adding at the end thereof the following new subsection:
  `(g) PRIVATE ACTIVITY BONDS USED TO PROVIDE HEALTH CARE FACILITIES-
  `(1) IN GENERAL- Nothing in section 103(a) or any other provision of law
  shall be construed to provide an exemption from Federal income tax for
  interest on any inpatient health care facility bond unless, at the time of
  issuance of any State or local bond issued with respect to the facility,
  the facility has in effect a provider agreement under title XIX of the
  Social Security Act with the State (under the State plan approved under
  such title) in which the facility is located.
  `(2) INPATIENT HEALTH CARE FACILITY BOND- For purposes of paragraph (1),
  the term `inpatient health care facility bond' means any private activity
  bond issued as part of an issue any portion of the proceeds of which are
  to be used to provide any inpatient health care facility.'
  (b) TREATMENT AS UNRELATED TRADE OR BUSINESS WHERE REASONABLE EXPECTATIONS
  NOT MET OR WHERE BOND IS NOT A PRIVATE ACTIVITY BOND- Subsection (b)
  of section 150 of such Code (relating to definitions and special rules)
  is amended by adding at the end thereof the following new paragraph:
  `(7) INPATIENT HEALTH CARE FACILITIES WHICH DO NOT ACCEPT MEDICAID PATIENTS-
  `(A) IN GENERAL- If--
  `(i) financing is provided with respect to any inpatient health care
  facility from the proceeds of any bond which, when issued, purported to
  be a tax-exempt bond, and
  `(ii)(I) such facility does not have in effect a provider agreement under
  title XIX of the Social Security Act with the State (under the State plan
  approved under such title) in which the facility is located, or
  `(II) at any time after the issuance of such bond, the provider agreement
  described in subclause (I) of clause (ii) is terminated by such inpatient
  health care facility or other party,
then the owner of such facility shall be treated (for the taxable year during
which the circumstance described in subclause (I) or (II) of clause (ii)
occurs) for purposes of this title as engaged in an unrelated trade or business
(as defined in section 513) with respect to such facility and as described in
section 511(a)(2)(A) (if not otherwise subject to tax under section 511). The
amount of gross income attributable to such facility for any period shall
not be less than the fair rental value of such facility for such period.
  `(B) DENIAL OF DEDUCTION FOR INTEREST- No deduction shall be allowed
  under this chapter for interest on financing described in subparagraph
  (A)(i) which accrues during the period the treatment under subparagraph
  (A) applies to the owner of such facility.'
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  bonds issued after December 31, 1989.
SEC. 3. REQUIRING MEDICAID PARTICIPATION AS A CONDITION FOR HOSPITALS TO
RECEIVE PAYMENT FOR ALL EXPENSES UNDER THE MEDICARE PROGRAM AND AS A CONDITION
OF PARTICIPATION FOR SKILLED NURSING FACILITIES UNDER THE MEDICARE PROGRAM.
  (a) HOSPITALS- Title XVIII of the Social Security Act is amended by
  inserting after section 1888 the following new section:
`DENIAL OF PAYMENT FOR SOME SERVICES FOR HOSPITALS NOT HAVING IN EFFECT
MEDICAID PROVIDER AGREEMENTS
  `SEC. 1889. Notwithstanding any other provision of this title, no payment
  may be made--
  `(1) under part B, or
  `(2) under part A, with respect to--
  `(A) direct or indirect costs of medical education (including payment
  under subsections (d)(5)(B) and (h) of section 1886), or
  `(B) capital-related costs of inpatient hospital services (including
  payment under section 1886(g)),
with respect to services of a hospital if the hospital does not have in
effect a provider agreement under title XIX with the State in which the
hospital is located.'.
  (b) SKILLED NURSING FACILITIES- Section 1866(a)(1) of such Act (42
  U.S.C. 1395cc(a)(1)) is amended--
  (1) in subparagraph (N), by striking `and' at the end,
  (2) in subparagraph (O), by striking the period at the end and inserting
  `, and', and
  (3) by inserting after subparagraph (O), the following new subparagraph:
  `(P) in the case of skilled nursing facilities, to have in effect a provider
  agreement under title XIX with the State in which the facility is located.'.
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  hospitals and skilled nursing facilities effective for cost reporting
  periods beginning on or after September 15, 1989.