Traversing the Regulatory Maze of Charity Care: The Institutional Method and IRC §501(r)

The search for a concise definition of charity care continues to elude both practitioners and healthcare administrators. U.S. legislators recently took action by creating the new Internal Revenue Code (IRC) §501(r), mandating hospitals document and justify their tax-exempt status. The new provisions still do not provide a succinct definition of charity care, but may provide an opportunity to establish a quantifiable baseline of the normal level of charity care for hospitals. This paper looks to the history of charity care in the U.S., recent regulatory challenges, the theory of legal realism, and the institutional method to develop an approach to provide clear guidance on acceptable levels of charity care.