Non-Profit Hospitals Must Assess Community Health Needs to Comply with Affordable Care Act

Nov 12, 2012 at 05:25 pm by steve


In order to retain their 501 (c)(3) status, non-profit hospitals are now required to perform community health needs assessments as mandated by the Patient Protection and Affordable Care Act (ACA). Results of the assessments will provide guidelines for addressing current and future health care needs for each hospital’s primary service area.

The ACA requires that these hospitals must perform a community health needs assessment at least once every three years or face financial penalties for failing to do so. The requirements are effective for taxable years beginning after March 23, 2012, and the penalty for non-compliance is an excise tax of $50,000 on the hospital organization.

The Alabama Quality Assurance Foundation (AQAF) currently is working with UAB hospitals, St. Vincent’s hospitals and Providence Hospital in Mobile to develop a strategy for meeting these new assessment requirements.

“In the past, health needs assessments have been performed by hospitals to determine if they are meeting the needs of their customers. Community and private foundations also have commissioned these studies to ensure they are using their resources wisely,” says Wes Smith, MD, chief executive officer of AQAF. “It appears that the Internal Revenue Service is now putting non-profit hospitals under greater scrutiny. It is requiring that they make regular efforts to identify the needs of the communities that they serve and that they develop strategies to meet those needs. As the ACA is fully implemented in the coming years and the burden of uncompensated care is diminished, the IRS may use the community health needs assessment process as a part of the analysis for 501 (c)(3) designation.”

The process must take into account input from people representing the broad interests of the community served by the facility, including those with special knowledge or expertise in public health issues. The needs assessment process must be made widely available to the public. According to the IRS notice outlining the community health needs assessment requirements, a hospital must include a description of how it is meeting these community needs assessment requirements in its IRS Form 990 filing. Specifically, it must file a description of how the facility is addressing the identified needs and a description of the needs not being addressed along with an explanation of why this is the case

AQAF is helping its hospital customers develop an implementation strategy. Brooke Hinson, MBA/MHA, program manager of corporate services for AQAF, says the assessment is a six-step process. “We recommend that the facility develop a six- to nine-month project plan for implementation. If it is one hospital and not a system of hospitals, the process can be completed more quickly because the resources are centralized. Larger hospital systems may take nine months or longer,” she says. Creating the infrastructure for the assessments is the first of the six steps.

“This step includes identification of staff members who need to be involved and how the group will work together. We then need to discuss which community resources can contribute to the process,” she says. Step two is determination of the purpose and scope of the health needs assessment. “The purpose is to meet the requirements of the IRS Revenue Coke 501(r)(3) pertaining to 501 (c)(3) hospitals,” Hinson says, “and the community need identified must address one of the following criteria: improve access to health care services; enhance the health of the community; advance medical health knowledge; relieve or reduce the burden of government.”

The next two steps involve the collection and interpretation of data and definition and validation of priorities. “A comprehensive community health needs assessment gathers various types of data from several sources and links them to solutions,” Hinson says. “In order to translate the needs statements into an implementation strategy, it is critical that we achieve consensus among all stakeholders.”

Documenting and communicating the results of the assessment is the next step, which supports the final step – developing the implementation strategy. “The community health needs assessment should summarize the hospital’s plans to address community health needs. The plan should be used by hospital leaders to understand and communicate goals, objectives and methods that will be used to engage in community needs,” Smith says. “It also may be used by community members to understand the hospital’s role in addressing community health problems and serve as a resource for community organizations that want to work with the hospital on improving the health of the community.”

Smith says that AQAF wants to participate not only in developing these reports for its customers, but also in identifying the solutions. “The language in the notice allows for collaboration, so we can have one concerted effort and share with other communities if we are all working on the same thing,” he points out. “By sharing resources, I believe we will have effective outcomes.”

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