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Title 42, The Public Health and WelfareRelease 119-110

§1320b–4 Nonprofit Hospital or Critical Access Hospital Philanthropy

Title 42 › CHAPTER 7 — SOCIAL SECURITY › SUBCHAPTER XI — GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE SIMPLIFICATION › Part A — General Provisions › § 1320b–4

Last updated Sep 22, 2026|Official source

Summary

When Medicare or Medicaid work out what a nonprofit or critical access hospital’s reasonable operating costs are, the hospital must not subtract some kinds of money from those costs. This rule covers four types of funds: gifts, grants, or endowments (and their income) that donors did not earmark for operating costs; government grants that are not allowed to be used as operating money; donor-designated grants and income that the Secretary says should be encouraged for needed health care; and money from selling or mortgaging land or other capital assets the hospital got by gift or grant, if those proceeds cannot be used as operating funds. The rule about sale or mortgage proceeds does not stop a hospital from recovering the correct share of depreciation when it sells or disposes of assets that are depreciable.

Full Legal Text

Title 42, §1320b–4

The Public Health and Welfare, Source: USLM XML via OLRC

For purposes of determining, under subchapters XVIII and XIX of this chapter, the reasonable costs of services provided by nonprofit hospitals or critical access hospitals, the following items shall not be deducted from the operating costs of such hospitals or critical access hospitals:
(1)A grant, gift, or endowment, or income therefrom, which is to or for such a hospital and which has not been designated by the donor for paying any specific operating costs.
(2)A grant or similar payment which is to such a hospital, which was made by a governmental entity, and which is not available under the terms of the grant or payment for use as operating funds.
(3)Those types of donor designated grants and gifts (including grants and similar payments which are made by a governmental entity), and income therefrom, which the Secretary determines, in the best interests of needed health care, should be encouraged.
(4)The proceeds from the sale or mortgage of any real estate or other capital asset of such a hospital, which real estate or asset the hospital acquired through gift or grant, if such proceeds are not available for use as operating funds under the terms of the gift or grant.
Paragraph (4) shall not apply to the recovery of the appropriate share of depreciation when gains or losses are realized from the disposal of depreciable assets.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1997—Pub. L. 105–33 substituted “critical access” for “rural primary care” in two places in introductory provisions. 1989—Pub. L. 101–239 substituted “hospitals or rural primary care hospitals” for “hospitals” in two places in introductory provisions. 1982—Par. (4). Pub. L. 97–248 substituted “sale” for “scale”. 1981—Pub. L. 97–35 substituted “subchapters XVIII and” for “subchapters V, XVIII, and” in provision preceding par. (1).

Statutory Notes and Related Subsidiaries

Effective Date

of 1997 AmendmentAmendment by Pub. L. 105–33 applicable to services furnished on or after Oct. 1, 1997, see section 4201(d) of Pub. L. 105–33, set out as a note under section 1395f of this title.

Effective Date

of 1982 AmendmentAmendment by Pub. L. 97–248 effective as if originally included as part of this section as this section was amended by the Omnibus Budget Reconciliation Act of 1981, Pub. L. 97–35, see section 137(d)(2) of Pub. L. 97–248, set out as a note under section 1396a of this title.

Effective Date

of 1981 Amendment, Savings, and Transitional ProvisionsFor

Effective Date

, savings, and transitional provisions relating to amendment by Pub. L. 97–35, see section 2194 of Pub. L. 97–35, set out as a note under section 701 of this title.

Effective Date

Pub. L. 96–499, title IX, § 901(b), Dec. 5, 1980, 94 Stat. 2611, provided that: “The amendment made by subsection (a) [enacting this section] shall apply to grants, gifts, and endowments, and income therefrom, made or established after the date of the enactment of this Act [Dec. 5, 1980].”

Reference

Citations & Metadata

Citation

42 U.S.C. § 1320b–4

Title 42, The Public Health and Welfare

Last Updated

Sep 22, 2026

Release point: 119-110