United States Government Accountability Office

GAO Testimony 

Before the Committee on Ways and 

Means, House of Representatives

NONPROFIT, FOR-PROFIT, 

AND GOVERNMENT 

HOSPITALS 

Uncompensated Care and 

Other Community Benefits 

Statement of David M. Walker 

Comptroller General of the United States 

For Release on Delivery

Expected at 10:00 a.m. EDT 

Thursday, May 26, 2005

GAO-05-743T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

May 26, 2005

NONPROFIT, FOR-PROFIT, AND 

GOVERNMENT HOSPITALS 

Uncompensated Care and Other 

Community Benefits 

Highlights of GAO-05-743T, a testimony 

before the Committee on Ways and 

Means, House of Representatives 

Before 1969, IRS required hospitals 

to provide charity care to qualify

for tax-exempt status. Since then,

however, IRS has not specifically 

required such care, as long as the 

hospital provides benefits to the 

community in other ways. Seeking 

a better understanding of the 

benefits provided by nonprofit

hospitals, this Committee 

requested that GAO examine 

whether nonprofit hospitals

provide levels of uncompensated

care and other community benefits 

that are different from other 

hospitals. This statement focuses 

on, by ownership group, hospitals’ 

(1) provision of uncompensated

care, which consists of charity care

and bad debt, and (2) reporting of 

other community benefits. The

hospital ownership groups were

(nonfederal) government, 

nonprofit, and for-profit. 

To compare the three hospital

ownership groups, GAO obtained

2003 data from five geographically

diverse states with substantial 

representation of the three 

ownership groups in each state. 

GAO analyzed cost data from two 

perspectives—each hospital 

group’s percentage of (1) total 

uncompensated care costs in a 

state and (2) patient operating

expenses devoted to 

uncompensated care. 

Government hospitals generally devoted substantially larger shares of their 

patient operating expenses to uncompensated care than did nonprofit and 

for-profit hospitals. The nonprofit groups’ share was higher than that of the 

for-profit groups in four of the five states, but the difference was small 

relative to the difference found when making comparisons with the 

government hospital group. Further, within each group, the burden of 

uncompensated care costs was not evenly distributed among hospitals but 

instead was concentrated in a small number of hospitals. This meant that a 

small number of nonprofit hospitals accounted for substantially more of the 

uncompensated care burden than did others receiving the same tax 

preference. 

Figure: Average Percent of Patient Operating Expenses Devoted to Uncompensated Care, 

by Hospital Ownership Type, 2003 

Hospitals in the five states—nonprofit, for-profit, and government 

hospitals—reported providing a variety of services and activities, which the 

hospitals themselves defined as community benefits. Community benefits 

include such services as the provision of health education and screening 

services to specific vulnerable populations within a community, as well as 

activities that benefit the greater public good, such as education for medical 

professionals and medical research. GAO was unable to assess the value of 

these benefits or make systematic comparisons between hospitals or across 

states. 

These observations illustrate a larger point—namely, that current tax policy 

lacks specific criteria with respect to tax exemptions for charitable entities 

and detail on how that tax exemption is conferred. If these criteria are 

articulated in accordance with desired goals, standards could be established 

that would allow nonprofit hospitals to be held accountable for providing 

services and benefits to the public commensurate with their favored tax 

status. 

www.gao.gov/cgi-bin/getrpt?GAO-05-743T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact A. Bruce 

Steinwald at (202) 512-7101. 
Mr. Chairman and Members of the Committee: 

I am pleased to be here today as you discuss issues regarding tax 

exemptions for nonprofit hospitals. At this Committee’s recent hearing on

the tax-exempt sector as a whole, I emphasized the importance of 

reviewing this sector, drawing parallels to our agency’s call to reexamine

all major federal policies and programs in light of 21st century challenges.1,2

 

Provisions granting federally recognized tax-exempt status and associated

policies have been layered on one another to respond to challenges at the 

time, but they need to be reviewed and revised to reflect 21st century 

changes and challenges. On a broad scale, a comprehensive 

reexamination could help address whether exempt entities are providing 

services and benefits to the public commensurate with their favored tax

status, whether the current number and nature of exemptions continue to

make sense, whether the conditions and restrictions on the activities of 

tax-exempt entities remain relevant, and whether the framework for 

ensuring that exempt entities adhere to the requirements attendant to their 

status is satisfactory. 

There are a number of issues that merit reexamination, including whether 

nonprofit hospitals perform sufficiently different services of benefit to the 

public to justify their tax exemption. To examine these hospitals’ taxexempt status, we must look back several decades. Before 1969, the 

Internal Revenue Service (IRS) required hospitals to provide charity care 

to qualify for tax-exempt status. Since then, however, IRS has not 

specifically required such care for a hospital to be exempt from federal 

taxation and have access to tax-exempt bond financing and charitable 

donations, as long as the hospital provides benefits to the community in 

other ways. Community benefits include such services as the provision of 

health education and screening services to specific vulnerable populations

within a community, as well as activities that benefit the greater public 

good, such as education for medical professionals and medical research. 

Nonprofit hospitals may also be exempt under state law from state and 

local taxes. 

 1

GAO, Tax-Exempt Sector: Governance, Transparency, and Oversight Are Critical for 

Maintaining Public Trust, GAO-05-561T (Washington, D.C.: Apr. 20, 2005). 

2

GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, 

GAO-05-325SP (Washington, D.C.: February 2005). 

Page 1 GAO-05-743T 
Seeking a better understanding of the benefits provided by nonprofit 

hospitals, this Committee requested that we examine whether nonprofit 

hospitals provide levels of uncompensated care—care provided to a 

patient that a hospital is not reimbursed for—and other community 

benefits that are different from other hospitals. My remarks today will 

focus on our examination, for selected states, of (1) the provision of 

uncompensated care by state and local government-owned, nonprofit, and 

for-profit hospitals and (2) hospitals’ reporting of other community 

benefits. 

To examine the provision of uncompensated care by the three hospital 

ownership groups,3

 we analyzed cost data from two perspectives, namely

each hospital group’s percentage of (1) total uncompensated care costs in 

a state and (2) patient operating expenses devoted to uncompensated 

care. We obtained 2003 data from five states—California, Florida, Georgia,

Indiana, and Texas. Hospitals in these states include 46 percent of the 

nation’s for-profit hospitals and more than a quarter of all hospitals in the 

three ownership groups. We selected these states because they 

represented geographically diverse areas; had a number of hospitals in 

each ownership group sufficient to make comparisons; and collected 

hospital-specific uncompensated care data, which not all states maintain.4

We compared each hospital ownership group’s provision of 

uncompensated care by examining each group’s uncompensated care 

costs5

 as a percentage of its total patient operating expenses.6 Our measure 

of uncompensated care includes the cost of charity care as well as bad 

debt and deducts any payments made by or on behalf of individual 

 3

The state and local government-owned hospitals in this statement refer to state-owned 

hospitals, such as those at state universities, and locally owned hospitals, such as county

and city hospitals. In this statement we will refer to these as government hospitals. Federal 

hospitals, such as those operated by the Department of Veterans Affairs, are not included 

in this definition. 

4

Reliable, hospital-specific data were not available nationwide. In addition, some states do 

not have sufficient diversity in hospital ownership to make comparisons for the purpose of

this analysis; in particular, some states have very few for-profit hospitals. 

5

To obtain uncompensated care costs, we multiplied hospitals’ uncompensated care

charges reported in the state data by hospital-specific, cost-to-charge ratios from Medicare

hospital cost reports. These cost-to-charge ratios are specific to hospital costs and charges

as a whole, not to Medicare costs and charges. 

6

Patient operating expenses include those expenses incurred for patient care. They exclude 

such expenses as those incurred for operating a parking garage, gift shop, and certain other 

nonmedical expenses. 

Page 2 GAO-05-743T 
patients. We limited our analysis of uncompensated care to nonfederal, 

short-term, acute care general hospitals.7

 In doing our work, we tested the 

reliability of the state data and determined they were adequate for our 

purposes.8

 To examine hospitals’ provision of community benefits other 

than uncompensated care, we reviewed 21 hospital or hospital systems’ 

reports and Web sites for information about such benefits. These reports 

and Web sites covered nonprofit, for-profit, and government hospitals in 

the five states. We also examined laws in the five states regarding 

community benefit requirements for nonprofit hospitals, reviewed the 

literature, and interviewed state officials and state hospital association 

representatives. In addition, we interviewed officials from the Centers for 

Medicare & Medicaid Services (CMS), the American Hospital Association, 

and the Federation of American Hospitals. We conducted our work from

February 2005 through May 2005 in accordance with generally accepted 

government auditing standards. (See app. I for more detail on our scope 

and methodology.) 

In summary, the cost burden of providing uncompensated care varied 

among the three hospital groups, but the burden was generally

concentrated in a small number of hospitals. In four of the five states, 

government hospitals, as a group, devoted substantially larger shares of 

their patient operating expenses to uncompensated care than did 

nonprofit and for-profit hospitals. The nonprofit hospitals’ uncompensated 

care costs, as a percentage of patient operating expenses, were higher on 

average than those of the for-profit hospitals in four of the five states, but 

the differences were generally not as great as the differences between the 

government hospitals and both these groups. Further, the burden of 

uncompensated care costs was not evenly distributed within each hospital 

group but instead was concentrated in a small number of hospitals. For 

example, in California’s nonprofit hospital group, the top quarter of 

hospitals, ranked by uncompensated care as a percentage of patient 

operating expenses, averaged 7.2 percent devoted to uncompensated care

compared with an average of 1.4 percent for hospitals in the bottom 

quarter. 

 7

Cost, charge, and other data obtained from the states and other sources are for individual

hospitals, even if a hospital is part of a larger hospital system. 

8

We excluded 8 percent of the hospitals in the five states because certain key information, 

such as total patient operating expenses, was not available. 

Page 3 GAO-05-743T 
Regardless of ownership status, the hospitals we reviewed reported 

providing a wide range of other community benefits, from health 

education to clinic services specifically for the community’s indigent 

population. Variations in the types of community benefits hospitals in the 

five states reported providing could be explained by differences in the 

services hospitals chose to provide as well as by variation in the 

applicability, specificity, and breadth of state requirements. 

In 2003, of the roughly 3,900 nonfederal, short-term, acute care general 

hospitals in the United States,9

 the majority—about 62 percent—were 

nonprofit. The rest included government hospitals (20 percent) and forprofit hospitals (18 percent). States varied—generally by region of the 

country—in their percentages of nonprofit hospitals (see fig. 1). For 

example, states in the Northeast and Midwest had relatively high 

concentrations of nonprofit hospitals, whereas in the South the 

concentration was relatively low. 

Background 

 9

This total does not include critical access hospitals that provide general acute care. 

Critical access hospitals are small, rural hospitals that receive payment for their reasonable

costs of providing inpatient and outpatient services to Medicare beneficiaries, rather than

being paid fixed amounts under Medicare’s prospective payment systems. By excluding 

critical access hospitals, which are numerous and small, we removed the effect that they 

would have on the distribution of hospitals by ownership group. 

Page 4 GAO-05-743T 
Figure 1: Geographic Distribution of Nonprofit Hospitals in 2003 

Note: Hospitals include nonfederal, short-term, acute care general hospitals, but not critical access 

hospitals that provide general acute care. 

The five states we reviewed varied in number and ownership composition 

of hospitals (see table 1). For example, in California and Indiana, nonprofit 

hospitals accounted for over half of each state’s hospitals. In Texas, 

government hospitals made up the state’s largest percentage, although the 

distribution between nonprofit, for-profit, and government hospitals was 

Page 5 GAO-05-743T 
similar; in Florida, most hospitals were either nonprofit or for-profit, while 

11 percent were government. 

Table 1: Distribution of Hospitals Reviewed, by Ownership Type, 2003 

Total number 

of hospitals

Percent 

nonprofit

Percent 

for-profit 

Percent state and

local government

California 331 51 27 22

Florida 169 43 46 11

Georgia 133 43 21 36

Indiana 97 56 9 35

Texas 332 33 32 35

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general hospitals. 

The average size of hospitals in our study, as measured by patient 

operating expenses, varied across the three ownership groups. (See table 

2.) On average, nonprofit hospitals were larger than for-profit hospitals. 

The pattern held in all five states but the magnitude of the difference 

varied. For example, in California, nonprofit hospitals were twice as large 

as for-profit hospitals, whereas in Texas, this difference was smaller. 

Table 2: Average Hospital Size as Measured by Patient Operating Expenses, 2003 

Average patient operating expenses (in millions) 

For-profit Nonprofit 

State and local 

government

California $71.7 $143.4 $141.2

Florida $90.8 $181.8 $229.3

Georgia $52.7 $91.8 $72.4

Indiana $62.1 $116.1 $47.6

Texas $73.9 $112.9 $43.0

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general hospitals. 

Page 6 GAO-05-743T 
Hospitals may be extended a federal tax exemption by IRS if they meet the 

Internal Revenue Code’s qualifications for charitable organizations under 

section 501(c)(3).10 Hospitals that qualify for nonprofit status are exempt 

from federal income taxes and typically receive other advantages, 

including access to charitable donations—which are tax deductible for the 

individual or corporate donor—and tax-exempt bond financing. To qualify 

for federal tax-exempt status, a hospital must demonstrate that it is 

organized and operated for a “charitable purpose,” that no part of its net 

earnings inure to the benefit of any private shareholder or individual, and 

that it does not participate in political campaigns on behalf of any 

candidate or conduct substantial lobbying activities.11

Hospitals’ Qualifications 

for Federal and State Taxexempt Status 

Before 1969, IRS required hospitals to provide charity care to qualify for 

tax-exempt status.12 Since then, however, IRS has not specifically required

such care, as long as the hospital provides benefits to the community in 

other ways. This “community benefit” standard came into existence with 

an IRS ruling, which concluded that a hospital’s operation of an 

emergency room open to all members of the community without regard to

ability to pay promoted health in a way consistent with other activities—

such as advancement of education and religion—that qualify other 

organizations as charitable.13 In addition, the 1969 ruling identified other 

factors that might support a hospital’s tax-exempt status, such as having a 

governance board composed of community members and using surplus 

revenue to improve facilities, patient care, medical training, education, and 

research. 

Nonprofit hospitals may also receive exemptions from state and local 

income, property, and sales taxes, which, in some cases, are of greater 

value than the federal income tax exemption. Some states have defined 

community benefits for nonprofit hospitals, but their statutes vary 

considerably in their specificity and scope. Appendix II provides more 

 10Section 501(c) specifies 28 types of entities that are eligible for tax-exempt status. Over 

1.5 million entities have been recognized as exempt by IRS.

11Charitable activities may include those that relieve the poor, distressed, or 

underprivileged; those that lessen the burdens of government; and those that promote 

social welfare. 

12See, for example, IRS Rev. Rul. 56-185, 1956-1 C.B. 202. 

13See IRS Rev. Rul. 69-545, 1969-2 C.B. 117. A revenue ruling is a formally published 

interpretation of tax law by the IRS upon which taxpayers are entitled to rely. 

Page 7 GAO-05-743T 
information on statutory definitions of community benefits in the states 

we reviewed. 

Hospitals may receive direct payments from different government sources 

to help cover their unreimbursed costs, including those for charity care,

bad debt, and low-income patients. For example, Medicare and Medicaid 

make payments to hospitals that serve a disproportionate share of lowincome patients under their respective disproportionate share hospital 

(DSH) programs. Medicare bad debt reimbursement partially reimburses 

hospitals for bad debt incurred for Medicare patients. Other state 

payments may also be available to hospitals, although their specific types

vary widely. For example, hospitals may receive payments from special 

revenues such as tobacco settlement funds, uncompensated care pools 

that are funded by provider contributions, and payment programs targeted 

at certain services such as emergency services. (See app. III for more 

information on payments for uncompensated care and other costs.) 

In our review of hospitals’ provision of uncompensated care in five states,

we analyzed cost data from two perspectives—namely, each hospital 

group’s percentage of (1) total uncompensated care costs in a state and (2)

patient operating expenses devoted to uncompensated care. The former 

relationship showed hospitals’ uncompensated care costs in dollars, 

aggregated by groups; whereas the latter relationship showed hospitals’ 

uncompensated care costs as a proportion of their operating expenses, 

thereby accounting for differences in hospital number and size among the 

hospital groups. In general, government hospitals, as a group, accounted 

for the largest percentage of total uncompensated care costs and devoted

the largest share of patient operating expenses to uncompensated care 

costs. The uncompensated care cost burden was not evenly distributed 

within each hospital group but instead was concentrated in a small 

number of hospitals. 

Government Payments for 

Uncompensated Care and 

Other Costs 

Burden of Providing 

Uncompensated Care 

Varied among 

Hospital Groups, but 

Burden Was Generally 

Concentrated in a 

Small Number of 

Hospitals 

Government Hospitals 

Generally Accounted for 

the Largest Percentage of 

the Uncompensated Care 

Costs in States Reviewed 

Government hospitals, as a group, accounted for the largest percentage of

the total uncompensated care costs in three of the five states—California, 

Georgia, and Texas. Nonprofit hospitals, as a group, accounted for the 

largest percentage of the uncompensated care costs in Florida and 

Indiana. For-profit hospitals, as a group, provided 20 percent or less of 

total uncompensated care costs in each state we reviewed. (See table 3).

Page 8 GAO-05-743T 
Table 3: Total Uncompensated Care Costs Incurred by Hospitals Reviewed, by

State, 2003 

 

Total

uncompensated

care costs 

(in millions)

Nonprofit

(percent of total)

For-profit

(percent of total)

State and local 

government

(percent of total)

California $2,307 34 9 57

Florida $1,561 46 20 34

Georgia $830 43 10 47

Indiana $342 79 3 17

Texas $2,101 39 18 43

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general hospitals. 

In each of the five states, the nonprofit hospital groups accounted for a 

larger percentage of total uncompensated costs compared with the forprofit hospital groups. This difference was due, in part, to the larger 

number of nonprofit hospitals and their larger size relative to the for-profit 

hospitals. For example, in California, the nonprofit group’s percentage of

total uncompensated care costs was almost four times higher than that of 

the for-profit group, but this is not surprising, as nonprofit hospitals 

outnumbered for-profit hospitals almost 2 to 1 and were twice the size in

patient operating expenses. 

Page 9 GAO-05-743T 
In four of the five states reviewed, government hospitals devoted 

substantially larger shares, on average, of their patient operating expenses

to uncompensated care than did nonprofit and for-profit hospitals.14 (See 

fig. 2.) In those four states, the differences in average percentages between 

the government hospital groups and the nonprofit hospital groups ranged 

from about 4.3 percentage points in Georgia to 11.3 percentage points in 

Texas. In contrast, in the fifth state, Indiana, the nonprofit hospital group 

devoted the largest share, on average, of patient operating expenses to 

uncompensated care. Between the nonprofit and for-profit hospital 

groups, the nonprofit hospitals’ average percentages were greater in four

of the five states—ranging from 1.2 percentage points greater in Florida to

2.3 percentage points greater in Indiana. In contrast, in the fifth state, 

California, the nonprofit group’s average percentage was similar to that of

the for-profit group. 

Government Hospital 

Groups Generally Devoted 

Largest Share of Patient 

Operating Expenses to 

Uncompensated Care, but 

Shares Varied across 

States 

 14These results are consistent with studies showing a similar relationship. See L. Fishman,

“What Types of Hospitals Form the Safety Net?” Health Affairs, vol. 16, no. 4 (July/August 

1997); J. Mann, et al., “A Profile of Uncompensated Hospital Care, 1983-1995,” Health

Affairs, vol. 16, no. 4 (July/August 1997); and S. Zuckerman, et al., “How Did Safety-Net

Hospitals Cope in the 1990s?” Health Affairs, vol. 20, no. 4 (July/August 2001). 

Page 10 GAO-05-743T 
Figure 2: Average Percent of Patient Operating Expenses Devoted to Uncompensated Care, by Hospital Ownership Type, 

2003 

Notes: The average percent of patient operating expenses devoted to uncompensated care for a 

hospital ownership group is calculated by dividing the sum of uncompensated care costs for hospitals 

in that group by the sum of the group’s total patient operating expenses. Hospitals include nonfederal, 

short-term, acute care general hospitals. 

The five states varied in their hospitals’ shares of patient operating 

expenses devoted to uncompensated care, ranging from an average 4.1 

percent for all Indiana hospitals to an average 8.3 percent for Texas 

hospitals. (See table 4.) Similar state-to-state variation found in other 

studies was due, in part, to differences in states’ proportions of uninsured 

populations, variation in Medicaid eligibility or payment levels, and the 

presence of state programs that provide health insurance to low-income 

Page 11 GAO-05-743T 
uninsured individuals.15 Specifically, prior research showed that hospitals 

located in states with more uninsured individuals and hospitals in states 

with relatively more eligibility-restricted Medicaid programs may have 

higher levels of uncompensated care. Our data are consistent with these 

studies’ findings on the uninsured. For example, in our five-state review, 

Texas had the highest percentage of uninsured—25 percent—and the 

highest share, on average, of patient operating expenses devoted to 

uncompensated care, whereas Indiana had the lowest percentage of 

uninsured—13 percent—and the lowest average share. 

Table 4: Average Percentage of Patient Operating Expenses Devoted to

Uncompensated Care, by State, 2003 

 

Average percentage of patient operating expenses 

devoted to uncompensated care

California 5.6

Florida 6.4

Georgia 8.2

Indiana 4.1

Texas 8.3

Source: GAO analysis of state and CMS data.

Notes: We calculated the average percent of patient operating expenses devoted to uncompensated 

care for each state by dividing the sum of uncompensated care costs for hospitals in the state by the 

sum of the hospitals’ total patient operating expenses in the state. Hospitals include nonfederal, shortterm, acute care general hospitals. 

For Each Hospital Group, 

Uncompensated Care 

Costs Were Concentrated 

in a Small Number of 

Hospitals 

For each group, uncompensated care costs were concentrated in a small 

number of hospitals. We observed this pattern when examining the 

percentages of patient operating expenses devoted to uncompensated care 

costs as well as hospitals’ shares of total uncompensated care costs in a 

state. For the three hospital ownership groups, we ranked hospitals 

according to their share of patient operating expenses devoted to 

uncompensated care. 

 15See G. Atkinson, W. Helms, and J. Needleman, “State Trends in Hospital Uncompensated 

Care,” Health Affairs, vol. 16, no. 4 (July/August 1997); L. Fishman, “What Types of 

Hospitals Form the Safety Net?” Health Affairs, vol. 16, no. 4 (July/August 1997); A. 

Davidoff, A. LoSasso, G. Bazzoli, and S. Zuckerman, “The Effect of Changing State Health 

Policy on Hospital Uncompensated Care,” Inquiry, vol. 37 (Fall 2000); K. Thorpe, E. Seiber, 

and C. Florence, “The Impact of HMOs on Hospital-Based Uncompensated Care,” Journal 

of Health Politics, Policy and Law, vol. 26, no. 3 (June, 2001); and GAO, Nonprofit 

Hospitals: Better Standards Needed for Tax Exemption, GAO/HRD-90-84 (Washington,

D.C.: May 30, 1990). 

Page 12 GAO-05-743T 
We found that, for all three hospital groups, the top quarter of hospitals 

devoted substantially greater percentages of their patient operating 

expenses to uncompensated care, on average, compared with the bottom 

quarter of hospitals. (See fig. 3.) For example, in California’s nonprofit 

hospital group, the top quarter of hospitals devoted an average of 7.2 

percent compared with 1.4 percent for the bottom quarter of hospitals. 

Similarly, in Florida’s government hospital group, the top quarter of 

hospitals devoted an average 19.6 percent compared with an average 5.2 

percent for the bottom quarter of hospitals. From state to state, the 

difference in ranges between top and bottom quarters was also 

substantial. For example, in Indiana’s government group, the average 

share of operating expenses devoted to uncompensated care for hospitals 

in the top quarter was about 3 times larger than for those in the bottom 

quarter; whereas in California, the average share for the top quarter of 

hospitals was almost 13 times higher than that of the bottom quarter. 

Page 13 GAO-05-743T 
Figure 3: Average Share of Patient Operating Expenses Devoted to Uncompensated Care for Hospitals Ranked in Top and 

Bottom Quarters, by Ownership Type, 2003 

Notes: Hospitals were ranked by percentage of patient operating expenses devoted to

uncompensated care. The average percent of patient operating expenses devoted to uncompensated

care for a hospital ownership group is calculated by dividing the sum of uncompensated care costs 

for hospitals in that group by the sum of the group’s total patient operating expenses. Hospitals 

include nonfederal, short-term, acute care general hospitals. 

When examining hospitals’ shares of total uncompensated care costs in a 

state, we found that uncompensated care costs remained concentrated in

a disproportionately small number of hospitals. Specifically, each state’s 

top quarter of hospitals accounted for a disproportionately large share of

the state’s uncompensated care costs. For example, in Texas, the top 

quarter of hospitals accounted for about 50 percent of total 

uncompensated care costs, yet accounted for only 18 percent of the total 

beds. (See table 5). Moreover, in Texas, six major government teaching 

institutions accounted for 34 percent of total uncompensated care costs, 

which amounted to over half of the contribution of the hospitals in the top 

Page 14 GAO-05-743T 
quarter. This pattern was also true for California, Florida, and Georgia. For

example, in California, 13 major teaching hospitals accounted for 42 

percent of total uncompensated care costs.16 In contrast, in Indiana, total 

uncompensated care costs were distributed more evenly across a greater 

number of hospitals. 

Table 5: Percentage of Total Uncompensated Care Costs in a State for Hospitals 

Ranked in Top Quarter, 2003 

State 

Percentage of state’s total 

uncompensated care Percentage of states’ hospital beds

California 68 25

Florida 47 22

Georgia 39 19

Indiana 21 14

Texas 50 18

Source: GAO analysis of state and CMS data.

Notes: Hospitals were ranked by percentage of patient operating expenses devoted to

uncompensated care. Hospitals include nonfederal, short-term, acute care general hospitals. 

Several factors explain which hospitals were likely to be in their group’s 

top and bottom quarters. For example, in our five-state analysis, we found 

that whether a hospital was a teaching institution was an important 

predictor of whether it would be in the top quarter of a state’s government 

hospital group. Hospitals that had teaching programs were more likely to 

be in the top quarter of a government hospital group. In contrast, teaching 

status was not an important predictor for either the nonprofit or for-profit 

hospital groups’ top quarter. For nonprofits, hospitals in rural areas were 

more likely to be in the top quarter than hospitals located in urban areas.

Other factors that were outside the scope of this study, such as differences 

in the proportion of uninsured populations in the hospital market, may 

have also influenced the likelihood of a hospital’s inclusion in the top or 

bottom quarter. 

 16We defined major teaching hospitals as those hospitals having an intern or resident-to-bed 

ratio of 0.25 or more and minor teaching hospitals as those having an intern or resident-tobed ratio greater than 0 and less than 0.25. 

Page 15 GAO-05-743T 
In addition to providing uncompensated care, hospitals may provide other 

services to their communities for which they are not reimbursed. In our 

review of hospitals’ Web sites and reports about community benefits—

published documents specifying the types and value of services hospitals 

provide to communities—we found that, regardless of ownership status, 

hospitals reported providing a wide range of community benefits.17

Variations in the types of community benefits hospitals reported providing 

could be explained by differences in the community benefits hospitals 

chose to provide as well as by variations in the applicability, specificity, 

and breadth of state requirements. 

Hospitals Reported 

Providing a Wide 

Range of Other 

Community Benefits 

Certain hospital industry guidance defines community benefits as the 

unreimbursed goods and services hospitals provide that address their 

communities’ health needs, including health education, screening, and

clinic services, among others. Consistent with this industry definition, we 

found through our review of reports and Web sites that hospitals reported 

providing similar types of services, including: 

• community health education such as parenting education, smoking 

cessation, fitness and nutrition, health fairs, and diabetes management; 

• health screening services such as screening for high cholesterol, cancer, 

and diabetes; 

• clinic services, including clinics targeted to specific groups in the 

community, such as indigent patients; 

• medical education for physicians, nurses, and other health professionals; 

• financial contributions, including cash donations and grants, to 

community organizations; 

• coordination of community events and in-kind donations—such as food, 

clothing, and meeting room space—to community organizations; and 

• hospital facility and other infrastructure improvements. 

Community health education and health screenings were listed by most of 

the reports and Web sites we reviewed. Clinic services, support groups, 

community event coordination, cash contributions to charities, and 

 17To determine the types of community benefits hospitals reported providing, we reviewed 

15 publicly available reports about community benefits for nonprofit and for-profit 

hospitals and six government hospitals’ Web sites. 

Page 16 GAO-05-743T 
medical education for health professionals were listed by over half of the 

reports we reviewed.18

Because of the wide variation in hospitals’ reporting of community 

benefits, we were not able to discern clear patterns in the provision of 

these benefits across hospital ownership groups. The variation could be 

explained by differences in the community benefits hospitals chose to 

provide as well as by variations in the applicability, specificity, and 

breadth of state requirements. Specifically, the five states reviewed require 

all hospitals to report financial data, including data on the cost of charity 

care they provide. However, as shown in table 6, California, Indiana, and 

Texas also have statutory requirements for nonprofit hospitals to develop

plans for meeting their communities’ health needs and to report annually 

on the types and value of the community benefits they provide.19 Of these 

three states, only Texas and Indiana require nonprofit hospitals to report 

using standardized forms and have the explicit statutory authority to 

impose fines for noncompliance as part of the requirements.20 The Texas 

form is more specific, as it includes line-items that capture the hospitals’ 

unreimbursed costs associated with providing traditionally “unprofitable” 

health services such as trauma care and community clinics, education of 

medical professionals, medical research, and cash and in-kind donations 

made by the hospital to local charities. Indiana’s form provides nonprofit 

hospitals more flexibility in delineating the types and value of their 

community benefits but includes supplementary guidance to nonprofit 

hospitals about what should be considered community benefits, including

financial or in-kind support of public health programs, communityorientated wellness and health promotion programs, and outreach clinics 

in economically depressed communities. California has no form for annual 

community benefit reports but requires that hospitals classify the services 

provided into broad, statutorily defined categories, including cash and inkind donations to public health programs, efforts to contain health care 

 18Our findings on the types of community benefits hospitals reported providing are 

consistent with our findings in GAO/HRD-90-84 and industry publications. 

19Georgia requires all “hospital authorities,” which create or operate nonprofit hospitals, to

submit “community benefit reports” that disclose the cost of charity and indigent care 

provided. GA. CODE ANN. § 31-7-90.1 (2004). However, this information is otherwise 

required of hospitals in all groups in Georgia as part of financial reporting requirements. 

GA. CODE ANN. § 31-6-70 (2004). 

20In Texas, for-profit and government hospitals receiving Medicaid DSH payments are 

generally required to meet the same community benefit reporting requirements as 

nonprofit hospitals. TEX. HEALTH & SAFETY CODE ANN. § 311.046(e) (2004). 

Page 17 GAO-05-743T 
costs and enhance access, and services that help maintain a person’s 

health. 

Table 6: Community Benefit Requirements for Nonprofit Hospitals

State Description of requirements Penalties for noncompliance

CaliforniaaMaintain community benefit plans that include measurable objectives for meeting the 

community’s needs within specified time frames and mechanisms to evaluate 

effectiveness. In addition, report annually on the plans, as well as the types and value 

of community benefits provided. 

None explicitly authorized as 

part of requirements. 

Florida None. Not applicable.

GeorgiabNone. Not applicable.

IndianacMaintain and report annually on community benefit plans that include measurable 

objectives for meeting the community’s health care needs within a specified time 

frames, evaluation strategies, and a budget. In addition, must describe the types and 

value of any additional community benefits. 

Fines explicitly authorized as 

part of requirements for failure 

to make annual report. 

TexasdMaintain and report annually on community benefit plans that include measurable 

objectives for meeting the community’s health care needs within specified timeframes, 

mechanisms for evaluating effectiveness, and a budget. In addition, must describe the 

types and value of community benefits provided. 

At a minimum, hospitals are required to provide: 

(1) charity and government-sponsored indigent care at a level that is reasonable in 

relation to community needs, the available resources of the hospital, and the taxexempt benefits received; 

(2) charity and government-sponsored indigent health care equal to 100 percent of 

state tax-exempt benefits; or 

(3) charity care and other community benefits equal to at least 5 percent of net patient 

revenue, provided that charity care and government-sponsored indigent health care are 

provided in an amount equal to at least 4 percent. 

Fines explicitly authorized as 

part of requirements for failure 

to make annual report. 

Hospitals that fail to provide 

the required community 

benefits must be reported 

annually to attorney general

and comptroller. 

Source: GAO analysis.

a

CAL. HEALTH & SAFETY CODE §§ 127345, 127350, and 127355 (2004). 

b

Georgia requires all “hospital authorities,” which create or operate nonprofit hospitals, to submit 

“community benefit reports” that disclose the cost of charity and indigent care provided. GA. CODE 

ANN. § 31-7-90.1 (2004). However, this information is otherwise required of hospitals in all groups in 

Georgia as part of financial reporting requirements. GA. CODE ANN. § 31-6-70 (2004). 

c

IND. CODE § 16-21-9-4 – 16-21-9-8 (2004). 

d

TEX. HEALTH & SAFETY CODE ANN. §§ 311.043 – 311.047 (2004). 

According to state officials or state hospital association representatives in

the five states we reviewed, for-profit and government hospitals are not 

required to report on the community benefits they provide outside of the 

requirements to report financial data, including data on the cost of charity 

care they provide. However, as we found through our review, some of 

these hospitals report publicly—for promotional purposes—on the 

Page 18 GAO-05-743T 
community benefits they provide, either through published reports or by 

posting general information on their Web sites. 

Moreover, the three states with community benefit reporting 

requirements—California, Indiana, and Texas—conduct limited 

monitoring of nonprofit hospitals’ community benefit reports. For 

example, according to officials from state agencies, none of the three 

states conducts audits of nonprofit hospitals’ self-reported community 

benefits information, although Texas reviews the reports to ensure that 

“reasonable” types of services are listed as community benefits. In 

addition, these states do not routinely use the data collected through 

community benefit reports to review hospitals’ tax-exempt status. 

Our comparison of the hospital ownership groups’ uncompensated care 

costs, as a percentage of patient operating expenses, was instructive. 

Differences between the nonprofit and for-profit groups were often small 

when compared with the substantial differences between the government

group and the other two groups. Moreover, the burden of uncompensated 

care costs was not evenly distributed among hospitals, which meant that a

small number of nonprofit hospitals accounted for substantially more of 

the uncompensated care burden than did others receiving the same tax 

preference. 

Concluding 

Observations 

As for the other community benefits hospitals reported providing, we were 

not able to discern a clear distinction among the government, nonprofit, 

and for-profit hospital groups. Hospitals in the five states reported 

conducting a variety of activities, which the hospitals themselves 

considered community benefits. We were unable to assess the value of 

these benefits or make systematic comparisons between hospitals or 

across states. 

These observations illustrate a larger point that I and others raised at the 

hearing last month—namely, that current tax policy lacks specific criteria 

with respect to tax exemptions for charitable entities and detail on how 

that tax exemption is conferred. If these criteria are articulated in 

accordance with desired goals, standards could be established that would 

allow nonprofit hospitals to be held accountable for providing services of

benefit to the public commensurate with their favored tax status. 

Page 19 GAO-05-743T 
Mr. Chairman, this concludes my prepared statement. I will be happy to 

answer questions you or the other Committee Members may have. 

For further information regarding this testimony, please contact A. Bruce 

Steinwald at (202) 512-7101. Kristi Peterson, Thomas Walke, Joanna Hiatt, 

Kelly DeMots, Mary Giffin, Emily Rowe, Craig Winslow, and Hannah Fein

contributed to this statement. 

Contact and 

Acknowledgments 

Page 20 GAO-05-743T 
Page 21 GAO-05-743T 

Appendix I: Scope and Methodology 

To examine the provision of uncompensated care by the three hospital 

ownership groups, we obtained 2003 uncompensated care data from five 

states—California, Florida, Georgia, Indiana, and Texas. We obtained all

other data, such as cost-to-charge ratios,1

 patient operating expenses,2 and 

all descriptive statistics, from 2002 and 2003 Medicare hospital cost 

reports.3

 We selected the five states because they represented 

geographically diverse areas; had a number of hospitals in each ownership 

group sufficient to make comparisons; and collected hospital-specific 

uncompensated care data, which not all states maintain.4

 The 2003 state 

uncompensated care data and 2002 and 2003 Medicare hospital cost 

reports were the most recent available at the time of our analysis. We also 

interviewed health officials from all five states as well as officials from the 

Centers for Medicare & Medicaid Services (CMS), the American Hospital

Association, and the Federation of American Hospitals. We limited our 

analysis to nonfederal, short-term, acute care general hospitals for which a 

cost report was available.5

 This analysis included critical access hospitals 

that provide general acute care. Our study included about 92 percent of 

nonfederal, short-term, acute care hospitals in the five states. 

We defined uncompensated care as the sum of charity care and bad debt

costs as reported in the state data. To determine uncompensated care 

costs, we multiplied uncompensated care charges by a hospital-specific 

cost-to-charge ratio. Although specific definitions of charity care varied,

states generally defined it as charges for patients deemed unable to pay all 

or part of their bill, less any payments made by, or on behalf of, that 

specific patient. States generally defined bad debt as the uncollectible 

payment that a patient is expected to, but does not pay. Our definition of

 1

These cost-to-charge ratios are specific to hospital costs and charges as a whole, not to 

Medicare costs and charges. 

2

Patient operating expenses include those expenses incurred for patient care. They exclude 

such expenses as those incurred for operating a parking garage, gift shop, and certain other 

nonmedical expenses. 

3

The reporting period of certain hospitals differed between the state data and the cost 

reports. Therefore, we combined the 2003 state data with the cost report, either 2002 or

2003, that best overlapped the state data’s reporting period. 

4

Reliable, hospital-specific data were not available nationwide. In addition, some states do 

not have sufficient diversity in hospital ownership to make comparisons for the purpose of

this analysis; in particular, some states have very few for-profit hospitals. 

5

Cost, charge, and other data obtained from the states and other sources are for individual

hospitals, even if a hospital is part of a larger hospital system. 
uncompensated care does not include any contractual allowances or cost 

shortfalls.6

 In addition, we did not subtract any charity care-specific block 

grants or donations a hospital may receive, as this information was not 

available for all states. 

We analyzed uncompensated care cost data from two perspectives——

namely, each hospital ownership7

 group’s percentage of (1) total 

uncompensated care costs in a state, and (2) average patient operating 

expenses devoted to uncompensated care. To examine factors that could 

explain differences in the provision of uncompensated care by hospital 

ownership groups, we examined certain hospital characteristics including 

a hospital’s size, teaching status, and location. We used patient operating 

expenses to measure hospital size. For teaching status, we defined major 

teaching hospitals as those hospitals having an intern/resident-to-bed ratio 

of 0.25 or more and minor teaching hospitals as those having an 

intern/resident-to-bed ratio greater than 0 and less than 0.25. We defined a 

hospital as urban if it was located in a metropolitan statistical area and as 

rural if it was not located in a metropolitan statistical area. We 

supplemented our analysis with a review of the literature to determine 

other factors that could explain differences in the provision of 

uncompensated care by hospital ownership groups. 

We assessed the reliability of the hospital Medicare cost reports and the 

reliability of state uncompensated care cost data from California, Florida, 

Georgia, Indiana, and Texas in several ways. First, we performed tests of 

data elements. For example, we examined the values for uncompensated 

care costs and patient operating expenses to determine whether these data 

were complete and reasonable. We also verified that the dollar amount of 

uncompensated care in the 2003 data was consistent with the amount in 

2002. Second, we reviewed existing information about the data elements. 

For example, we compared descriptive statistics we calculated from the 

Medicare hospitals cost reports with statistics published by CMS. Third, 

we interviewed state and agency officials knowledgeable about the data in 

 6

Contractual allowances are the difference between a hospital’s full charges for a service 

and the payment it has agreed to accept for that service from a particular insurer. Cost

shortfalls are the difference between the accepted payment for a service and the actual 

cost of that service, in the case that the payment is less than the cost. 

7

In order to determine a hospital’s ownership status, we compared its ownership from the

state data (if available) to that from the Medicare cost report data. Where the two sources 

did not match, we used the 2002-2003 AHA Guide to confirm one of the sources as correct. 

If possible, we also confirmed ownership status using the hospital’s Web site. 

Page 22 GAO-05-743T 
our analyses and knowledgeable about hospital uncompensated care 

costs. We determined that CMS and all five states performed quality 

assurance tests on the data before releasing them. Overall, we determined 

that the data we used in our analyses were sufficiently reliable for our 

purposes. 

To examine hospitals’ provision of community benefits other than 

uncompensated care, we reviewed 21 hospital reports and Web sites for 

information about such benefits in five states. Specifically, we reviewed 12 

publicly available reports about the community benefits provided by 

nonprofit and for-profit hospitals and 3 reports for for-profit hospital 

systems representing multiple hospitals. We also reviewed 6 government 

hospitals’ Web sites to determine the extent to which they publicized the 

provision of services that are generally considered community benefits. 

We also examined laws in five states regarding community benefit 

requirements for nonprofit hospitals, reviewed the literature, and 

interviewed state officials and hospital association representatives. 

We conducted our work from February 2005 through May 2005 in 

accordance with generally accepted government auditing standards. 

Page 23 GAO-05-743T 
Page 24 GAO-05-743T 

Appendix II: Statutory Definitions of 

Community Benefits in the Five States 

Reviewed 

Table 7 summarizes the statutory definitions of community benefits for 

nonprofit hospitals in the states we reviewed. We found that the statutes 

vary considerably in their specificity and scope. In addition, of the five 

states we reviewed, only the Texas statute contains an explicit link 

between the statutory definition of community benefits and hospitals’ 

qualifications for state tax exemptions. 

Table 7: Statutory Definitions of Community Benefit for Purposes of Requirements Specific to Nonprofit Hospitals 

State Statutory definition of community benefit 

Cross-reference to tax exemption in

community benefit provisions

CaliforniaaHospital activities to address community needs and priorities through disease 

prevention and improvement of health status, including, but not limited to: 

(1) health care services, rendered to vulnerable populations (e.g., charity care 

and unreimbursed costs of providing services to uninsured and underinsured); 

(2) health promotion, prevention services, adult day care, child care, medical 

research and education, nursing and other professional training, home 

delivered meals, aid to the homeless, and outreach clinics; 

(3) financial or in-kind support of public health programs; 

(4) donation of funds, property, or other resources for a community priority; 

(5) health care cost containment; 

(6) enhancement of access to health care; 

(7) services offered without regard to profitability to meet a community need; 

and 

(8) goods and services to help maintain a person’s health. 

No provisions explicitly crossreferencing definitions and related 

requirements to tax exemption. 

Florida Not defined. Not applicable.

GeorgiabNot defined, but community benefit reporting requirement refers to charity and 

indigent care. 

No provisions explicitly crossreferencing definitions and related 

requirements to tax exemption. 

IndianacUnreimbursed cost to hospitals of providing charity care, governmentsponsored indigent care, donations, education, government-sponsored 

program services, research, and subsidized health services. Does not include 

hospital taxes or other government assessments. 

No provisions explicitly crossreferencing definitions and related 

requirements to tax exemption.d

Texase Unreimbursed cost to hospitals of providing charity care, governmentsponsored indigent health care, donations, education, government-sponsored 

program services, research, and subsidized health services, but not hospital 

taxes or other government assessments. 

Numerous provisions crossreferencing definition of community 

benefit and related requirements to tax 

exemption. 

Source: GAO analysis.

a

CAL. HEALTH & SAFETY CODE §§ 127340 and 127345(c) (2004).

b

GA. CODE ANN. § 31-7-90.1 (2004). 

c

IND. CODE ANN. §§ 16-18-2-64.5 and 16-21-9-1 (2004). 
d

There are no provisions explicitly cross-referencing community benefits to nonprofit hospitals’ tax 

exemption, but hospital-owned physician offices or practices, or other property not substantially 

related to inpatient facilities, must provide or support charity care or community benefits, as it is

defined above, to qualify for property tax exemption. IND. CODE ANN. § 6-1.1-10-18.5 (2004). 

e

TEX. HEALTH & SAFETY CODE ANN. §§ 311.042 and 311.045 (2004). 

Page 25 GAO-05-743T 
Page 26 GAO-05-743T 

Appendix III: Government Payments for 

Uncompensated Care and Other 

Unreimbursed Costs 

Hospitals may receive direct payments from different government sources 

to help cover their unreimbursed costs. Such payments may include 

special Medicare and Medicaid payments, known as disproportionate 

share hospital (DSH) payments, Medicare bad debt reimbursement, and 

other state payments. 

Medicare DSH: The Medicare DSH adjustment provides payments to 

hospitals that serve a disproportionate share of low-income patients. The 

Congress mandated this adjustment in 1986 to address the concern that 

hospitals that serve such patients have higher Medicare costs per case 

because they have higher overhead and labor costs and their patients are 

in poorer health with more complications and secondary diagnoses. 

Hospitals qualify for the Medicare DSH adjustment based on their lowincome patient share.1

 The low-income patient share is computed as the

percentage of a hospital’s Medicare inpatient days attributable to patients 

that are eligible for both Medicare part A and Supplemental Security 

Income2

 plus the percentage of total inpatient days attributable to patients 

eligible for Medicaid, but not Medicare part A. For hospitals that qualify 

for a DSH adjustment, their actual adjustment is based on several factors, 

including the number of acute care beds, number of patient days for lowincome patients, and location (rural or urban). See table 8 for Medicare 

DSH payments in 2003 to the hospitals in the selected states we analyzed. 

 1

To qualify for Medicare DSH, a hospital must have a share of low-income patients that 

exceeds 15 percent. Alternately, large hospitals located in urban areas can qualify if more

than 30 percent of their total net inpatient care revenue is for indigent care and comes from

state and local governments (excluding Medicare and Medicaid funds). 

2

Medicare Part A pays for inpatient hospital stays, care in a skilled nursing facility, hospice 

care, and some home health care. The Supplemental Security Income program makes

payments to people with low income who are at least 65 or are blind or have a disability.
Table 8: Medicare DSH Payments to Hospitals Reviewed, 2003 (in millions) 

State Medicare DSH payment to hospitals (in millions)

California $1,122

Florida 486

Georgia 209

Indiana 94

Texas 637

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general hospitals. 

Medicaid DSH: The Medicaid statute requires that states make DSH 

adjustments to the payment rates of certain hospitals treating large 

numbers of low-income and Medicaid patients. The Medicaid DSH 

adjustment was established by the Congress in 1981 and establishes broad 

guidelines for hospital eligibility to receive Medicaid DSH and for the 

methods used to compute the amount of payment. States have discretion 

in designating DSH hospitals and calculating adjustments for them.3

 States 

also vary in terms of program rules and resource levels as well as the 

degree to which they target payments to different types of hospitals.4

Medicaid DSH is the largest source of financial support for hospital 

uncompensated care and is funded jointly by the states and the federal 

government. State approaches to financing the state portion of Medicaid 

DSH include obtaining funds from hospitals through provider taxes or 

intergovernmental transfers in order to establish the state’s contribution 

required to obtain the federal match for Medicaid DSH funding. Therefore, 

it is not always possible to determine what portion of Medicaid DSH 

payments to individual hospitals is the net additional payment to the 

hospital. 

Medicare bad debt reimbursement: Medicare partially reimburses acute 

care hospitals for bad debts resulting from Medicare beneficiaries’ 

nonpayment of deductibles and copayments after providers have made 

reasonable efforts to collect unpaid amounts. If a hospital can document 

 3

Congressional Research Service, Medicaid Disproportionate Share Payments 

(Washington, D.C.: 2005), 15. 

4

Congressional Research Service, Medicaid Reimbursement Policy (Washington, D.C.: 

2004), 36. 

Page 27 GAO-05-743T 
that a Medicare patient is indigent, the hospital can then forgo collection 

efforts from the patient. Medicare pays hospitals 70 percent of their 

reimbursable bad debts, except critical access hospitals,5

 for which it pays 

100 percent of their reimbursable bad debts. See table 9 for total Medicare 

bad debt reimbursements in 2003 to the hospitals in the selected states we 

analyzed. 

Table 9: Medicare Bad Debt Reimbursements to Hospitals Reviewed, 2003 

State Medicare bad debt reimbursement to hospitals (dollars in millions)

California $160

Florida 55

Georgia 45

Indiana 20

Texas 78

Source: GAO analysis of state and CMS data.

Note: Hospitals include nonfederal, short-term, acute care general hospitals. 

Other state sources: Other state sources of payment to hospitals for 

uncompensated or unreimbursed care vary widely, and may include 

special revenues such as tobacco settlement funds, uncompensated care 

pools that are funded by provider contributions, and payment programs 

targeted at certain services such as emergency services. For example, 

Massachusetts has used a portion of the state’s tobacco settlement fund to 

help cover uncompensated care costs. 

 5

See GAO, Medicare: Modest Eligibility Expansion for Critical Access Hospital Program 

Should Be Considered, GAO-03-948 (Washington, D.C.: September 2003). 

(290443) Page 28 GAO-05-743T 
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