Hospital oversight bill heads to full Senate, but without criticized amendments

A bill aimed at providing more oversight for nonprofit hospitals in Montana is on its way to the full Senate, but without an amendment that health care organizations say could have cost them millions in fees.

The Montana Senate Public Health, Welfare and Safety Committee opted against moving House Bill 45 ahead with the proposed amendments after a hearing on Wednesday, where they heard from nonprofit health care administrators from across Montana.

HB 45 was filed by Bigfork Rep. Bob Keenan, a Republican, but it came at the request of the Montana Department of Public Health and Human Services. Department brass wanted the agency authorized to create standards and reporting requirements for an annual community benefits report. It was reported last fall by KFF Health News, formerly Kaiser Health News, that Montana’s nonprofit hospitals benefit from state and federal tax breaks each year with little oversight of how that’s earned.

A report from KFF in 2021 showed the state’s wealthiest nonprofit hospitals, which secure these tax exemptions to operate as charities, “fall short of other medical facilities in what they give back to their communities to get those breaks.”

Earlier opposition to the bill, such as criticisms from the Montana Hospital Association that the legislation was overreaching, have been overshadowed by an amendment introduced by Republican Kalispell Rep. Matt Regier in February.

Regier’s amendment would require nonprofit hospitals to pay various utilization fees that would be deposited into a community mental health revenue account with the Department for Public Health and Human Services. It would have required each hospital in the state to pay to the department a utilization fee in the amount of $70 for each inpatient bed day, as well as a fee in the amount of 0.90% of hospital outpatient revenue. In addition, nonprofit hospitals would have been required to pay the department a community benefit utilization fee in the amount of $3 for each inpatient bed day.

Logan Health President and CEO Craig Lambrecht was among other health care administrators in the state that attended the hearing to express how a proposed amendment would negatively affect the hospital system. Health care administrators told the committee that they were in support of HB45 — just without Regier’s amendment.

Lambrecht told the committee that if the bill passed with the proposed amendment, it would cost Logan Health $18 million a year.

“We’re about an $88 million a year organization, we’re about break even right now to 1%, and I can tell you most of my colleagues right now are below the line, and how in the world with a tax on expenses, if you are below the line and losing money, how do you survive?” Lambrecht said.

He said if faced with an $18 million cut to their budget, the system would probably have to pare down mental health services. Access to mental health services has been a huge focus for Keenan, the bill’s sponsor, and the state public health department this session.

Lambrecht’s estimates on how the amendment would affect Logan echoed comments from other Montana hospital administrators present, who told committee members the requirement would put a massive strain on already precarious financial positions.

Billings Clinic spokesperson Amy Germoljez told the committee the proposed amendments would come at a heavy financial cost to their system. Billings Clinic, which is in talks with Logan Health to integrate the two health care organizations, announced major budget cuts recently.

The legislation’s sponsor, Keenan, spoke in favor of moving the bill forward without the proposed amendments.

“At this point, I would suggest that, respectfully, you pass the bill as it came here and we look at this issue further in the next session,” Keenan told the committee.

Committee Vice Chair Sen. Dennis Lenz, R-Billings, said he wants to keep pursuing transparency in how nonprofit hospitals give back to their community.

“These are our first steps on this bill, we need to keep heading that direction … I also don’t think this is where the Legislature is going to fully settle out with HB 45 in its present form, but we’ve started down that road and I will be supporting it,” Lenz said.

The committee voted unanimously to send HB 45 to the floor without the proposed amendments.

In an email, Logan Health Executive Director for Marketing and Communications Mellody Sharpton said that, along with other Montana hospitals, they are grateful for this result and “relieved for our communities and organizations.”

“We are supportive of the bill,” she said.

Reporter Taylor Inman can be reached at 406-758-4433 or by emailing tinman@dailyinterlake.com.