Hospital Information

The Patient Protection and Affordable Care Act (PPACA) created a new IRS Code Section 501(r)(3) which imposes additional requirements for hospitals exempt from taxation under Section 501(c)(3). Specifically, all 501(c)3 hospitals, governmental hospitals that have an IRS Determinate (c)3 Letter, and hospitals that have every applied for and received a letter (for the hospital entity), have to comply.

Charitable Hospitals Must Complete a Community Health Needs Assessment

• At least once every three years; first one must be completed by end of tax year beginning after March 23, 2012.
• Include input from persons who represent the broad interest of the community, including members of the medically underserved, low-income and minority populations in the community, or individuals representing their interests.
• Include input from at least one person having public health knowledge or expertise, such as an individual from a state, local, tribal or regional governmental public health department.
• Include any written comments received on the hospital facility’s most recently conducted CHNA and implementation strategy.
• Make assessment widely available to the public
• Adopt a written implementation strategy to address identified community needs.*
• Failure to comply results in excise tax penalty of $50,000 per year.

Patient Protection and Affordable Care Act (Health Care Reform Law March, 2010)

* Notice 2011-52 – must be approved by authorized governing body (board of directors)

Community Health Needs Assessment Written Report

Treasury and the IRS intend to require a hospital organization to document a Community Health Needs Assessment for a hospital facility in a written report that includes the following information:

1. A description of the community served by the hospital facility and how it was determined.
2. A description of the process and methods used to conduct the assessment, including a description of the sources and dates of the data and other information used in the assessment and the analytical methods applied to identify community health needs. The report should also describe information gaps that impact the hospital organization’s ability to assess the health needs of the community served by the hospital facility. If a hospital organization collaborates with other organizations in conducting a CHNA, the report should identify all of the organizations with which the hospital organization collaborated. If a hospital organization contracts with one or more third parties to assist it in conducting a CHNA, the report should also disclose the identity and qualifications of such third parties.
3. A description of how the hospital organization took into account input from persons who represent the broad interests of the community served by the hospital facility, including a description of when and how the organization consulted with these persons (whether through meetings, focus groups, interviews, surveys, written correspondence, etc.) Describe the medically underserved, low-income or minority populations being represented by organizations or individuals providing input. If the hospital organization takes into account input from an organization, the written report should identify the organization and a summary of the input.
4. A CHNA only needs to identify and prioritize significant health needs. A hospital facility may determine whether a health need is significant based on all of the facts and circumstances present in the community it serves. Include a description of the process and criteria used in prioritizing such health needs.
5. A description of the existing health care facilities and other resources within the community available to meet the community health needs identified through the CHNA.
6. A hospital will be required to consider input on its existing CHNA or implementation strategy as part of conducting its next required assessment.

CHNA Written Report needs to be:

• Widely available to the public in both an electronic and paper form
• Conspicuously posted on the Web
• Must remain on the Web until two subsequent CHNA reports have been posted
• Given to anyone who asks, without charge

Implementation Strategy

Treasury and the IRS intend to require a hospital organization to specifically address each of the community health needs identified through a CHNA for a hospital facility in an implementation strategy, rather than in the written report documenting the hospital facility’s CHNA.

An implementation strategy is a written plan that addresses the significant community health needs identified through a CHNA. The implementation strategy, also known as the Community Health Improvement Plan (CHIP), should:

1. describe the actions the hospital facility plans to take to address the significant health needs identified; and
2. describe the anticipated impact of these actions; and
3. include a plan to evaluate the impact of the hospitals actions; and
4. if other significant health needs identified in the CHNA are not being addressed by the hospital facility, the document needs to explain why.

An Implementation Strategy needs to be:

• Approved by Board of Directors
• Attached to 990 (which is widely available to the public)
• Updated annually on the Form 990 (describe actions taken during that tax year to address the needs identified in the implementation strategy, or if no action was taken, the reasons why no action occurred)

Joint CHNA and/or Implementation Strategy

If a hospital facility conducts a joint CHNA process with other hospital facilities, all of the collaborating hospital facilities may produce a joint CHNA report, as long as all of the facilities define their community to be the same. The joint CHNA report must clearly identify each hospital facility to which it applies, and each hospital facility must adopt the joint CHNA report.

Hospital facilities adopting a joint CHNA report also may adopt a joint implementation strategy, provided the joint implementation strategy clearly identifies each hospital facility, its particular role and responsibilities in taking the actions described in the implementation strategy and the programs and resources it plans to commit in taking those actions.

The joint implementation strategy also must include a summary that helps the reader easily locate those portions of the joint implementation strategy that relate to the hospital facility.

Frequently Asked Questions