Today, the House Ways and Means Committee considered a number of bills to combat waste, fraud, and abuse within the tax code. Among the bills considered is the Tax-Exempt Hospital Transparency Act (H.R. 9504), which would expand federal reporting requirements for nonprofit hospitals. Their tax-exempt status comes with enormous benefits – but far less transparency, particularly within the 340B program. This commonsense legislation will track every dollar going to these hospitals to crack down on abuse within the system and ensure patients actually benefit.
Originally created in 1992, the 340B program has exploded to the tune of more than $80 billion in taxpayer dollars in recent years. While its original intent was to help safety-net providers serve low-income and uninsured patients, the law failed to require these hospitals to pass savings along to patients, document how they use 340B revenue, or demonstrate how 340B savings benefit the low-income and uninsured patients the program was intended to serve. That lack of accountability has made 340B a magnet for waste and abuse even as it has become one of the largest federal drug programs in the country.
The 340B program now includes thousands of participating hospitals and their affiliated clinics, and it has operated as a black box, with hospitals collecting billions in federal drug discounts each year with no requirement to disclose how much they collect or whether any of it reaches the patients it was designed to help. Some in Congress now seek to carve out hospital-owned clinics from the transparency and accountability measures this bill would impose — a loophole that would swallow the rule. Patients and the broader healthcare system are paying the price for the status quo. When hospitals and clinics retain 340B savings without demonstrating how those funds benefit patients, those costs do not disappear. Instead, they resurface as higher premiums, higher deductibles, and reduced access for the very communities the program was meant to protect.
This bill would require all tax-exempt hospitals to disclose how they are addressing their communities’ needs, submit audited financial statements, and report on financial assistance applications and charity care spending – commonsense requirements for recipients of billions in taxpayer funding. Large hospital systems would face additional facility-by-facility reporting on community health spending and administrative costs — covering both hospital campuses and the clinics operating under their umbrella — while high-revenue tax-exempt hospitals that participate in the 340B drug pricing program would, for the first time, be required to report dedicated information on their federal drug discount activity.
By advancing real transparency measures, the Committee is taking a necessary and overdue step toward restoring accountability to a program that has grown far beyond what the original authors ever envisioned. Any effort to carve out clinics from these requirements would simply shift the opacity from one pocket to another — leaving patients no better protected and the program no more accountable. Transparency is the first step toward ensuring 340B finally serves patients rather than padding hospital profits, and we urge the Committee to advance this bill without delay.