Lawmakers Move Forward on Overhaul of Tax Exempt Hospital Reporting Obligations

The House Ways and Means Committee approved the Tax Exempt Hospital Transparency Act on July 1, 2026 by a 25-15 party line vote, advancing legislation that would significantly expand the Form 990 reporting requirements for tax exempt hospitals (for prior coverage, see the alert published on June 23, 2026 (Expanded Information Reporting Proposed for Tax-Exempt Hospitals). Although it is unclear whether the bill will be enacted in 2026, sustained scrutiny of whether tax exempt hospitals provide sufficient community benefits to justify their tax exempt status is likely to continue. Healthcare organizations should anticipate continued attention to these issues regardless of the bill’s trajectory.

Overview of the Bill

The bill would impose new information reporting obligations on tax exempt hospitals described under Internal Revenue Code (IRC) Section 501(r)(2) that file returns under Section 6033(a). Section 6033 would be amended to substantially expand annual Form 990 disclosures for these organizations. In addition, the General Accounting Office would be directed to estimate incremental reporting costs associated with the bill, as well as the additional income tax that would arise if the 25 highest gross revenue tax exempt hospital organizations were taxable. 

Definitions of Large and High-Revenue Tax Exempt Hospital Organizations

The bill establishes two categories of hospital organizations subject to enhanced reporting: 

Large Tax Exempt Hospital Organization

A large tax exempt hospital organization is an organization that meets the following requirements for the taxable year:

• Is a tax exempt hospital organization under IRC Section 501(r) and files under IRC Section 6033(a);
• Is not a critical access hospital under Section 1861(mm)(1) of the Social Security Act;
• Is not a rural emergency hospital under Section 1861(kkk)(2) of the Social Security Act; and 
• Has more than 100 staffed in-patient beds reported on any cost report filed under Section 1815 of the Social Security Act for the current or prior three tax years.
  
  

High Revenue Tax Exempt Hospital Organization

A high revenue tax exempt hospital organization is an organization that meets the following requirements for the taxable year:

• Is a tax exempt hospital organization under IRC Section 501(r) and files under IRC Section 6033(a);
• Is not a critical access hospital under Section 1861(mm)(1) of the Social Security Act;
• Is not a rural emergency hospital under Section 1861(kkk)(2) of the Social Security Act; and 
• Has net patient revenues exceeding $100 million for the taxable year (indexed for inflation for tax years starting after 2028).

Proposed Additional Reporting Requirements

The bill would require tax exempt hospital organizations to report new categories of information on Form 990, both at the organization level and — if applicable — at the facility level.

Requirements Applicable to All Tax Exempt Hospital Organizations

• Community Health Needs Assessment (CHNA) reporting: Needs identified in the most recent CHNA, including unmet needs and explanations for unaddressed items.
• Audited financial statements: Organizational or consolidated audited financial statements.
• CMS (Centers for Medicare and Medicaid Services) certification numbers: For the organization and each hospital facility it operates.
• Financial assistance: Based on the requirements under IRC Section 501(r)(4), the value (at cost) of financial assistance provided during the taxable year; and 
• Financial assistance activity: Based on the requirements under IRC Section 501(r)(4), the number of financial assistance applications received, granted, and denied during the taxable year.

Additional Requirements for Large Tax Exempt Hospital Organizations

Each large tax exempt hospital organization would also be required to include the following information with respect to the organization and each hospital facility:

• CHNA priorities: Three highest-priority health needs, the amount spent on each, and a description of the actions taken and the impact on community health. 
• Detailed spending categories:Annual spend on: 
  • Quality improvements, which comprise any program, initiative, or department with the primary purpose of improving health outcomes for patients of the organization, including:
    • Education;
    • Training;
    • Compliance with quality improvement programs; and
    • Technical assistance.
  • Nonclinical programming, which includes any program, initiative, or department, with a purpose other than improving health outcomes for patients of the organization, and related to:
    • Administrative support and management;
    • Information technology, hospital administration, human resources, medical billing and coding, public affairs and communications, government affairs and lobbying, regulatory compliance, or financial planning and budgeting;
    • Operations and facility management;
    • Programming for patient experience, patient education, family support or financial counseling; or
    • Discharge planning and appointment scheduling.
  • Other community benefits prescribed by the Secretary.

Additional Requirements for High-Revenue Tax Exempt Hospital Organizations

Each high-revenue tax exempt hospital organization would also be required to include the following information with respect to the organization and each hospital facility:

• Specified advertising information: Allowable advertising costs as reported to CMS for purposes of cost reimbursement and any reported unallowable advertising costs. 
• Specified health service line information: Description of each specified health service line, including gross receipts and costs of each service line as reported to CMS. A health service line is a discrete clinical program, department, or care category operated by the organization that:
  • Serves a defined patient population group by disease category, organ system, care setting, or clinic specialty;
  • Delivers a distinct set of medical or health services through dedicated or allocated staff, facility, or equipment; and
  • Is separately tracked or identifiable in the organization’s internal cost accounting, service line management, or operational reporting system. 
    
    A health service line includes any service cost center that is separately identified on the organization’s most recently filed cost report under Section 1815 of the Social Security Act. 
• Specified Federal 340B drug discount program information:The following would be required to be reported by hospitals that are covered entities under Section 340B(a)(4) of the Public Health Service Act:
  • Number of individuals receiving Section 340B drugs, categorized by insurance type;
  • Aggregate net payment amounts above the ceiling price; and 
  • Aggregate program administration costs.

Standardized Health Service Line Taxonomy

Within two years of enactment, the Secretary of Health and Human Services, in coordination with the Treasury, would be required to publish and maintain a standardized health service line taxonomy. High-revenue tax exempt hospital organizations would be required to map internal health service lines to this taxonomy, which would be updated at least every five years. 

Effective Dates

If enacted, the bill would apply to taxable years beginning one year after the date of publication of the first standardized health service line taxonomy for large tax exempt hospital organizations and high revenue tax exempt hospital organizations. For all other tax-exempt hospital organizations, the bill would be applicable for taxable years beginning three years after enactment.