Hill-Burton Medical Facility Construction and Uncompensated Care
The Hill-Burton Act (42 U.S.C. §§ 291 et seq.) was the landmark 1946 federal program that built much of the modern American hospital infrastructure — funding construction of thousands of hospitals, nursing homes, and health centers across the country, particularly in rural and underserved areas. The construction grant program has largely wound down, but it left behind a durable legal legacy: the Hill-Burton uncompensated care obligation. Any facility that received Hill-Burton funds must, for a period lasting 20 years from program completion (or indefinitely for facilities still operating past that period), provide a specified annual volume of free or reduced-cost care to patients who cannot afford to pay. The regulations at 42 CFR Part 124 implement both the residual construction grant authority and — far more consequentially in practice — the ongoing uncompensated care compliance framework. Hospitals with active Hill-Burton obligations are required to post public notice of free care availability, accept eligible applicants regardless of their ability to pay, and report compliance to HHS. For low-income patients, Hill-Burton free care can cover hospital services that neither Medicaid nor other programs would pay for. An estimated 300+ hospitals and health facilities still carry active Hill-Burton compliance obligations.
Legal Authority
- 42 U.S.C. § 291 et seq. — Hill-Burton Act (Hospital Survey and Construction Act of 1946); authorizes federal grants to states for surveying hospital needs and constructing hospitals and health facilities; imposes uncompensated care and community service obligations on recipient facilities as conditions of the federal funding
- 42 U.S.C. § 300s — Public Health Service Act §§ 1600–1625 modernization provisions; updated the Hill-Burton program for migrant worker and homeless health facilities; carries forward the community service and uncompensated care obligation framework
- 42 CFR Part 124 — HHS (HRSA) implementing regulations; establishes the uncompensated care compliance requirements, annual obligation calculation methodology, patient eligibility standards for free care, complaint procedures, and federal enforcement mechanisms for facilities with outstanding Hill-Burton obligations
Key Mechanics
Hill-Burton created a two-part structure that remains relevant: (1) the original construction grants (largely completed by the 1990s) and (2) the perpetual community benefit obligations attached to those grants. Facilities that received Hill-Burton funding must provide a minimum annual volume of uncompensated care and a "community service" obligation (non-discriminatory access to all area residents, regardless of ability to pay). The uncompensated care obligation is calculated annually as a percentage of the facility's operating costs, based on the original grant amount and a formula in 42 CFR § 124.503. Patients must be at or below 200% of the federal poverty level to receive Hill-Burton free care (facilities may use higher income thresholds). Facilities must post Hill-Burton notices in admissions areas and respond to written requests for free care. HRSA enforces compliance through annual reporting, compliance reviews, and complaint investigations; patients who believe a facility wrongfully denied Hill-Burton care can file complaints with HRSA. Facilities that fail to meet their annual obligation carry forward the shortfall to the following year. The community service obligation continues indefinitely — there is no expiration date for this requirement, even for facilities that met the 20-year uncompensated care obligation period.
Current Rule (2026)
| Parameter | Value |
|---|---|
| Citation | 42 CFR Part 124 |
| Issuing agency | HHS (Health Resources and Services Administration — HRSA) |
| Statutory authority | 42 U.S.C. § 291 et seq. (Hill-Burton Act / Public Health Service Act Title VI and XVI) |
| Construction grant authority | Section 1625 of PHS Act — grants for facilities serving migrant workers, homeless persons, and other underserved populations |
| Uncompensated care income threshold | ≤100% of federal poverty guidelines for full free care; reduced-cost care up to 200% FPG |
| Annual compliance level | 3% of operating costs (or 10% of federal grant received, whichever is lower) |
| Notice requirement | Annual publication in local newspaper; posted notice at facility |
| Last major rulemaking | 52 FR 46031 (Dec. 3, 1987); 52 FR 48362 (Dec. 21, 1987) |
What This Rule Does
42 CFR Part 124 operates in two distinct parts. Subpart A (§§ 124.1–124.11) governs the active construction grant program under PHS Act Section 1625 — a surviving funding stream that supports construction and modernization of medical facilities specifically serving migrant agricultural workers, homeless individuals, and other populations who lack access to mainstream health care. Grants go to states, local governments, hospital districts, public and nonprofit institutions; applicants must demonstrate that the project will primarily serve the targeted underserved population. HHS evaluates applications on the basis of need, service population, feasibility, and financial sustainability (§ 124.5); grants may include conditions (§ 124.10) requiring ongoing service to the target population as a condition of award.
Subpart F (§§ 124.501–124.517) is the more consequential part for everyday health care access — it governs the continuing uncompensated care obligations owed by facilities that received Hill-Burton funds under the pre-1975 program. These facilities signed assurances at the time they received grants promising to provide a "reasonable volume" of services to persons unable to pay. Subpart F defines what "reasonable volume" means, who qualifies for free care, how facilities must publicize and implement their obligations, and what happens when facilities fail to comply.
The obligation endures: facilities remain subject to Subpart F as long as they operate and have active Hill-Burton compliance periods. HHS (through HRSA) monitors compliance, investigates complaints, and may require facilities to provide care to specific complainants who should have been served.
Key Provisions
- § 124.1 — Applicability (Subpart A): applies to grants under Section 1625 of the PHS Act for construction or modernization of medical facilities designed to serve migrant workers, homeless persons, or other underserved populations; grantees must be states, local government units, public or nonprofit health entities
- § 124.3 — Eligible applicants: states and political subdivisions (including cities, counties, hospital districts, and Indian tribal governments); public and nonprofit institutions with a history of serving the target population; for-profit institutions are not eligible for Section 1625 grants
- § 124.5 — Grant evaluation: HHS evaluates applications within available funding based on demonstrated need, target population size and service area, project feasibility, and long-term financial sustainability; grants may include performance conditions
- § 124.501 — Applicability (Subpart F): applies to any facility that received federal assistance under Title VI or XVI of the PHS Act and gave a written assurance of uncompensated care; most active obligations stem from grants made between 1946 and 1975; facilities still operating at the end of their initial compliance period typically remain subject to a community service (non-discrimination) obligation even after the uncompensated care period expires
- § 124.503 — Annual compliance level: a facility is in compliance with its uncompensated care obligation if it provides, in each fiscal year, uncompensated services with a value equal to the lesser of: (a) 3% of the facility's operating costs for that year, or (b) 10% of the total federal grant funds the facility received; this formula means that a hospital with $100 million in annual operating costs must provide $3 million in free/reduced care; a facility that received only $500,000 in Hill-Burton grants need only provide $50,000 in free care per year — the 10% cap limits obligations for facilities that received small grants
- § 124.504 — Notice of availability: a facility must publish notice of its uncompensated care program annually in a newspaper of general circulation in its service area; the notice must describe the program, state that free and reduced-cost care is available to eligible persons, and explain how to apply; the facility must also post permanent notice at the admission desk, emergency room entrance, and other prominent patient contact points — patients have the right to know about Hill-Burton care before being billed
- § 124.505 — Eligibility criteria: a person is eligible for Hill-Burton free care if they are unable to pay for health services — defined as annual income at or below 100% of the federal poverty guidelines and not covered (or not covered for the specific service needed) by third-party insurance or government programs; patients with incomes between 100% and 200% of FPG may be eligible for reduced-cost care on a sliding-scale basis; facilities may not require patients to complete extensive paperwork or documentation that would functionally prevent eligible persons from accessing care
- § 124.506 — Allocation of services: the facility must implement its uncompensated care program through a written plan; the plan must describe how the facility will distribute available free care across patient types (emergency, inpatient, outpatient) and ensure that free care is not concentrated in only the least expensive service categories; facilities cannot satisfy their obligation entirely through charity billing adjustments on services that insurers were paying anyway
- § 124.507 — Written determinations of eligibility: eligibility determinations must be in writing and provided to the patient; a patient who is denied Hill-Burton care must receive a written explanation; denial decisions are subject to HHS complaint review
- § 124.508 — Cessation of uncompensated services: a facility may request HHS approval to cease providing uncompensated services before its compliance period ends only if it demonstrates that the uncompensated care need in its service area no longer exists — an extremely high bar that is rarely granted; closure or sale of the facility triggers HHS review of outstanding Hill-Burton obligations
How It Affects You
If you're uninsured or underinsured and need hospital care: If the hospital you're going to received Hill-Burton funds (a list is available through HRSA at hrsa.gov), you have the right to apply for free or reduced-cost care under the Hill-Burton program before being billed. Eligibility is based on income (≤100% FPG for full free care; ≤200% FPG for reduced-cost care) and lack of insurance coverage for the specific services. You can ask the admissions desk or billing department whether the facility has a Hill-Burton obligation — they are required to tell you and required to provide the application. If you are denied Hill-Burton care and believe you were eligible, you can file a complaint with HRSA, which has authority to investigate and require the facility to provide the care.
If you're a hospital administrator or compliance officer: Active Hill-Burton obligations require an annual compliance calculation. You must determine your facility's operating costs and compute 3% of that amount; compare to 10% of your total Hill-Burton grant receipts; your annual free care target is the lower of the two. Track the value of uncompensated care you provide, using the costing methodology HHS allows (cost-to-charge ratio applied to the charges for free care rendered). Ensure your annual newspaper notice runs before the start of your fiscal year and that your internal posting is current. If you are approaching or below your compliance threshold, consider outreach to your community's lowest-income populations — active outreach is part of the regulatory spirit even if not always strictly enforced.
If you follow health equity or hospital accountability issues: Hill-Burton's uncompensated care obligations represent one of the earliest federal "community benefit" requirements on hospitals — predating the modern 501(c)(3) nonprofit hospital rules that require community benefit in exchange for tax exemption. However, Hill-Burton obligations apply only to facilities that actually received the grants; many hospitals that received no Hill-Burton funds have no binding obligation to provide free care beyond what emergency care laws (EMTALA) require. The geographic concentration of Hill-Burton obligations (many in rural and historically underserved areas where the original grants were targeted) means the program's continuing impact is similarly geographically concentrated. HRSA maintains a searchable database of facilities with active Hill-Burton obligations at hrsa.gov.
Statutory Authority
This rule implements:
- 42 U.S.C. § 291 et seq. (Hill-Burton Act / Title VI of the Public Health Service Act) — original hospital survey and construction grant authority; the assurance requirements that created ongoing uncompensated care obligations
- 42 U.S.C. § 300s et seq. (Title XVI of the PHS Act) — later medical facilities construction program with parallel assurance requirements; facilities receiving Title XVI grants are also subject to Part 124 Subpart F compliance
Recent Rulemakings
- 52 FR 46031 (December 3, 1987) — Major revision of Part 124 establishing the current Subpart F uncompensated care compliance framework: set the 3%/10% compliance level formula, the 100%/200% FPG income eligibility thresholds, and the written notice and eligibility determination requirements
- 52 FR 48362 (December 21, 1987) — Technical corrections to the December 3 rule
No major amendments since 1987. The program continues under the existing framework; HRSA periodically updates poverty guideline figures and provides guidance to facilities on compliance methodology.