Utilizing the Required IRS CHNA to Inform Strategic Opportunities
The passage of the Patient Protection and Affordable Care Act (ACA) in March 2010 brought along Internal Revenue Code (IRC) Section 501(r), adding more tasks to achieve and maintain 501(c)(3) tax exempt status. Chief among those requirements is the need for non-profit, charitable hospitals to do the following as part of 501(r)(3):
- Every three years, conduct a Community Health Needs Assessment (CHNA);
- Pursue feedback from a variety of community stakeholders as part of the CHNA;
- Implement a strategy to address those needs identified from the CHNA; and
- Make the final CHNA report widely available to the public
This particular requirement was put in place to confirm that non-profit hospitals are considering and responding to the unique health needs of its community – as opposed to merely operating a care center where people go to be healed and sent home without consideration for the larger healthcare environment.
These IRS rules require non-profit hospitals to truly act as community resources where the impoverished and medically underserved can receive quality care. In addition to the CHNA requirements, there are three other main sections of IRC 501(r) that are in place to protect the medically underserved and indigent population:
- Financial Assistance Policy and Emergency Medical Care Policy – Section 501(r)(4);
- Limitations on Charges – Section 501(r)(5); and
- Billing and Collections – Section 501(r)(6).
Hospitals often consider the CHNA and other 501(r) compliance processes solely as part of a regulatory compliance plan, yet do not benefit from the information obtained. As shown in our “Key CHNA Requirements and Strategies” below, Advis works with your organization to develop a CHNA where real strategic planning decisions are based to drive actual results for your community and help grow your organization.
Advis has extensive experience working with non-profit organizations. Contact Advis today for assistance with IRC 501(r) compliance for your organization.
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Key IRC 501(r)(3) CHNA Requirements & Strategies
When conducting a CHNA, there must first be a definition of the community served. This establishes the scope of responsibility moving forward (i.e., a hospital should not be responsible for population members that fall outside of its service area). This step not only establishes a geographic area, it also sets the target populations for focus through analysis of the underlying community census (e.g., women, children, the aging, etc.). Through our data science team, Advis efficiently analyzes numerous data sources to clearly and accurately define the hospital’s geographic area and patient population based on internal and public information.
Once the target geographic and patient population scopes are established, the hospital needs to solicit input from a variety of people who represent the broad interests of the community. Key stakeholder input must include: 1) at least one state, local, tribal or governmental representative with relevant expertise, 2) a member of the medically underserved, low-income, and minority population (or individuals representing those populations), and 3) written comments received on the hospital’s previous CHNA and implementation strategy.
A CHNA is likely to uncover many health needs and barriers to access in the community. To better assess the needs of the community, prioritization must occur. A list of all discovered health needs must be prioritized by burden, severity, and urgency. Additional considerations need to be made in regards to feasibility and effectiveness of possible interventions as well as the importance of community health needs from the community’s perspective. Advis employs advanced data analyses to assist in determining this priority structure, illustrating the reasoning necessary to support decision-making.
After the top health needs are identified and selected for intervention, an implementation strategy is created. The implementation strategy must describe the actions intended as well as available community resources. The implementation strategy also needs to describe why a hospital chooses not to address other identified health needs, such as resource constraints, lack of expertise, or low prioritization. This key compliance requirement should be constructed in a meaningful manner to assist with the organization’s larger strategic planning. In working with Advis, your organization will take this community information one step further to inform strategic development, service line optimization, and other growth opportunities available to the hospital.
Upon completion of community data analysis, a final report can be generated that brings together all the relevant information in a shareable format. The CHNA needs to be widely available to the public in digital and printed formats. Additionally, the hospital must adopt the implementation strategy decided upon in the CHNA by the 15th day of the fifth month after the end of the taxable year in which the CHNA was conducted.
For assistance with CHNAs or other IRC Section 501(r) requirements, contact Advis today.