Treasury Department Publishes Proposed Rules on Community Health Needs Assessments for Charitable Hospitals

The Affordable Care Act requires charitable hospitals to take an active role in improving the health of the communities they serve. The Department of the Treasury has taken the next step in refining new policies already in place that hold charitable hospitals to a higher standard when it comes to addressing the health needs in their communities. The proposed rules add details on how hospitals should conduct community health needs assessments and define how the IRS will enforce any violations of the new standards.

The ACA requires charitable (tax-exempt) hospitals to:

• Limit charges. The hospital may not charge individuals eligible for financial assistance more for emergency or other medically necessary care than the amounts generally billed to patients with Medicare or private commercial insurance.

• Establish and Disclose Financial Assistance Policies. Each hospital must establish and widely disclose a financial assistance policy that clearly describes the eligibility criteria for financial assistance and the method for applying for financial assistance. 

• Abide by reasonable billing and collection requirements. A hospital is prohibited from engaging in certain collection methods (for example, sending a debt to a credit agency or garnishing wages) until it makes reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy. 

• Perform a community health needs assessment. Each charitable hospital must conduct and publish a community health needs assessment at least once every three years – and disclose annually on its tax form the steps it is taking to address the health needs identified in the assessment. 

Charitable hospitals are more than half of the nation’s hospitals. These hospitals receive many benefits, including tax-free earnings and receipt of tax-deductible contributions. Coalitions may want to consider looking to charitable hospitals, and the community health needs assessment programs as a potential funding source for coalition activities that are focused on population health improvement.