---
kind: "section"
citation: "42 U.S.C. § 1320b–4"
title: "42"
title_heading: "The Public Health and Welfare"
number: "1320b–4"
heading: "Nonprofit hospital or critical access hospital philanthropy"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/1320b-4"
units:
  - "Chapter 7 — Social Security"
  - "Subchapter XI — General Provisions, Peer Review, and Administrative Simplification"
  - "Part A — General Provisions"
---

# §1320b–4. Nonprofit hospital or critical access hospital philanthropy


For purposes of determining, under subchapters XVIII and XIX of this chapter, the reasonable costs of services provided by [nonprofit](/usc/42/300s–3.md?p=3) [hospitals](/usc/42/300s–3.md?p=1) or critical access [hospitals](/usc/42/300s–3.md?p=1), the following items shall not be deducted from the operating costs of such [hospitals](/usc/42/300s–3.md?p=1) or critical access [hospitals](/usc/42/300s–3.md?p=1):

- (1) A [grant](/usc/42/1397j.md?p=10), gift, or endowment, or income therefrom, which is to or for such a [hospital](/usc/42/300s–3.md?p=1) and which has not been designated by the donor for paying any specific operating costs.
- (2) A [grant](/usc/42/1397j.md?p=10) or similar payment which is to such a [hospital](/usc/42/300s–3.md?p=1), which was made by a governmental entity, and which is not available under the terms of the [grant](/usc/42/1397j.md?p=10) or payment for use as operating funds.
- (3) Those types of donor designated [grants](/usc/42/1397j.md?p=10) and gifts ([including](/usc/42/1301.md?p=b) [grants](/usc/42/1397j.md?p=10) and similar payments which are made by a governmental entity), and income therefrom, which the [Secretary](/usc/42/1301.md?p=a-6) 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](/usc/42/300s–3.md?p=1), which real estate or asset the [hospital](/usc/42/300s–3.md?p=1) acquired through gift or [grant](/usc/42/1397j.md?p=10), if such proceeds are not available for use as operating funds under the terms of the gift or [grant](/usc/42/1397j.md?p=10).

[Paragraph (4)](#4) shall not apply to the recovery of the appropriate share of depreciation when gains or losses are realized from the [disposal](/usc/42/2021b.md?p=7) of depreciable assets.


## Source credit

(Aug. 14, 1935, ch. 531, title XI, § 1134, as added Pub. L. 96–499, title IX, § 901(a), Dec. 5, 1980, 94 Stat. 2611; amended Pub. L. 97–35, title XXI, § 2193(c)(6), Aug. 13, 1981, 95 Stat. 827; Pub. L. 97–248, title I, § 137(b)(5), Sept. 3, 1982, 96 Stat. 377; Pub. L. 101–239, title VI, § 6003(g)(3)(D)(iii), Dec. 19, 1989, 103 Stat. 2153; Pub. L. 105–33, title IV, § 4201(c)(1), Aug. 5, 1997, 111 Stat. 373.)

## Notes

### 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 Amendment

Amendment 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 Amendment

Amendment 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 Provisions

For 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].”