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~*I. -! ]I COMPTROLLER GENERAL OF THE UNITED STATES
WASHIN1GTON. D.C. 20548
February 25, 1980 .
B-197171
The Honorable Harrison A. Williams, Jr.
Chairman, Committee on Labor and
Human Resources
United States Senate
Dear Mr. Chairman:
Your letter of December 3, 1979, requested our Lcomments
on H.R. 26267 a bill to establish a National Commission on
Hospital Cos± s, to encourage voluntary efforts to contain
hospital costs, to provide for the orderly development of
State hospital cost containment programs, to encourage phil-
anthropic support for nonprofit hospitals, and for other
purposes. This bill has been passed by the House of
Representatives and has been jointly referred to the Committee
on Labor and Human Resources and the Committee on Finance.
Another bill--H.R. 934--reported to the Senate on December 10,
1979, by the Committee on Finance contains provisions which
are similar to many of those in H.R. 2626 and we have con-
sidered H.R. 934 in preparing these comments.
Section 3 of H.R. 2626 would establish a program to
fund State hospital cost containment programs. In order to
receive Federal funding, a State's program would have to dis-
regard any funds derived as a result of donor restricted
grants, gifts, or endowment income. 1/ Thus, such revenues
would not have to be offset against expenses. Section 5 of
H.R. 2626 extends this same principle to the determination
of payments under the Medicare, Medicaid, and Maternal and
Child Health programs. Current Medicare reimbursement
policy generally followed for these three programs provides
that funds resulting from unrestricted grants, gifts, and
endowments are not to be deducted from operating costs in
I/ Donor restricted refers to those grants, gifts, and
endowments which the donor has designated for
specific purpose such as construction of a hospital <I
wing or providing a particular type of service.
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