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Tag: community health needs assessment (CHNA)

Health Reform and the Mission of Nonprofit Hospitals

flying cadeuciiEver since 1969, when the IRS established the “community benefit” standard for hospital tax exemption, nonprofit hospitals have been able to achieve federal tax exemption without any precise accountability for the benefits they provided.

The ACA’s passage, however, ushered in significant changes to federal tax-exemption standards for hospitals.

The new § 501(r) of the Internal Revenue Code requires hospitals to take numerous measures, including establishing written financial assistance policies, limiting the amount charged to patients eligible for financial assistance, and limiting their use of “extraordinary collection actions” against patients.

These requirements responded to concerns about how some purportedly “charitable” hospitals treated uninsured patients and, more generally, hospitals’ lack of transparency regarding indigent care.

They stop well short, however, of requiring hospitals to provide any particular quantum of free care to patients unable to pay.

Section 501(r) also incorporates a different tack, requiring that at least once every three years, a hospital conduct a “community health needs assessment” (CHNA) and adopt an “implementation strategy” to respond to the needs identified by the assessment.

The needs assessment requirement is novel as a matter of federal tax policy, but is similar to mandates previously existing in a number of states.

As announced in the statute and fleshed out in Proposed Regulations issued by the IRS in April 2013, the CHNA requirement entails a series of steps.

In identifying and prioritizing community health needs, a hospital must take into account “input from persons who represent the broad interests of the community served by the hospital facility, including those with special knowledge of or expertise in public health.”

Once the assessment is completed, the hospital must make a report on it “widely available to the public” and adopt an “implementation strategy” to meet the community health needs it identified.

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