Today, Reps. Cindy Axne (IA-03) and Neal Dunn, M.D. (FL-02) introduced bipartisan legislation to reduce tax burdens on health care providers that could limit their ability to combat the novel coronavirus (COVID-19).

In response to COVID-19, Congress authorized $175 billion for the Public Health and Social Services Emergency Fund (PHSSEF) to help health care providers cover expenses and lost revenue due to the pandemic. While the Department of Health and Human Services (HHS) has utilized the Provider Relief Fund (PRF) to distribute this critical assistance, providers that pay federal taxes face significant tax penalties that undermine the utility of the aid. 

The Eliminating the Provider Relief Fund Tax Penalties Act of 2020 would ensure that all health care providers, regardless of taxpaying status, will not be subject to taxes on aid provided through the PRF – and guarantees expenses attributable to the PRF are tax deductible. By guaranteeing that PRF relief funds do not add to providers’ tax bills, health care leaders can utilize to the full value of their benefit.

“Our nation’s health care providers are working tirelessly to combat COVID-19. Our hospitals, rural health clinics, and community health centers have been working on the frontlines to combat coronavirus, and countless others have worked to continue serving our communities during this public health emergency,” said Rep. Axne. “It is critical that every dollar of assistance to our health care providers can go as far as possible to keep people safe and healthy. Our bipartisan legislation will ensure that we aren’t shortchanging our providers by approving aid with one hand and taxing it with the other. A hospital’s tax bill should not stand between our providers and the patients who need their care.”

“Our health care providers have gone above the call of duty this year. Providers fighting on the frontlines should not have to face an undue tax burden as a consequence of accepting COVID-19 related aid,” said Rep. Dunn, M.D. “The physicians, nurses, physical and occupational therapists, home health aides, lab technicians, and countless other health care professionals who have sacrificed for our country deserve our thanks and this bill is a step in the right direction.” 

According to the American Medical Association (AMA), Federation of American Hospitals (FAH), and a wide-range of health care organizations, these tax requirements may cause taxpaying health care providers to lose 21% or more of the benefit as compared to non-taxpaying providers.

The Eliminating the Provider Relief Fund Tax Penalties Act of 2020 has the endorsement of the American Medical Association, Federation of American Hospitals, American Optometric Association, American Physical Therapy Association, American Academy of Dermatology Association, Private Practice Section of the American Physical Therapy Association, American College of Physicians, American Dental Association, and American Association of Homecare.

“While treating patients on the front lines of COVID-19, physicians have endured challenges to keeping their doors open. They have struggled to secure personal protective equipment to prevent community spread while also seeing a reduction in non-emergency procedures. The American Medical Association appreciates that Congress created the Provider Relief Fund to help physician practices respond to the multitude of fiscal pressures associated with COVID-19, and this bill would build on that original effort,” said Susan R. Bailey, M.D., President of the American Medical Association. “The tax penalties for entities that receive Provider Relief Fund grants threaten to exacerbate the economic troubles that Congress sought to alleviate through enactment of the CARES Act.  We applaud Reps. Axne and Dunn for introducing this bipartisan, common-sense bill and urge quick passage to ensure the maximum effectiveness of the Provider Relief Fund.”

“Representatives Axne and Dunn are to be commended for their leadership in proposing legislation that would prevent a tax penalty from being levied on federal grants distributed to providers and hospitals on the frontlines of the COVID-19 pandemic. Congress established the vitally needed Provider Relief Fund to ensure patients’ access to quality care,” said Chip Kahn, President and Chief Executive Officer of the Federation of American Hospitals. “It seems unfathomable that Congress intended to tax such a large proportion of providers impacted by the COVID-19 crisis, nor treat tax-exempt and tax-paying providers differently.  The Axne and Dunn bill is critical to ensuring that many providers will not be subjected to taxation on these grants and that the resources Congress allocated to providers to keep their doors open will not be diluted.”

"Payments from the Provider Relief Fund have been a lifeline for physician practices across the country as we try to cope with both the financial and clinical havoc that COVID-19 has brought to our businesses,” said Jacqueline W. Fincher, MD, MACP, President of the American College of Physicians. “Making the relief fund payments non-taxed would allow physician practices to realize their full benefit. Supporting physician and their practices is key to ensuring that Americans can continue to access the health care services they need at this critical time."