Member Article

Many healthcare boards believe that they have satisfied the 501(r) community health needs assessment (CHNA) requirements by completing their organization’s CHNA report and adopting an implementation strategy. After doing that, the board may feel ready to focus on other pressing issues until the next three-year CHNA deadline.

Board members, however, need to be aware that their hospital or health system must also annually provide up-to-date descriptions of the actions actually taken during the year to address the significant health needs identified. The community, advocacy and interest groups, unions, local media, and other interested parties will be keeping watchful eyes on the hospital’s progress with meeting the identified needs. In addition, the IRS will now be shifting to an enforcement phase with the 501(r) requirements, and boards need to understand the new IRS rules on correcting any errors or omissions with their CHNA.

The Affordable Care Act imposed several requirements on 501(c)(3) organizations that operate hospitals, including facilities they operate through joint ventures, in order to maintain their tax-exempt status. These requirements (referred to as the “501(r) requirements”) include conducting a CHNA every three years and adopting an implementation strategy to meet the community health needs identified. Other 501(r) requirements focus on establishing financial assistance policies, limiting amounts charged for emergency or other medically necessary care to individuals eligible under the hospital’s or health system’s financial assistance policy, and refraining from certain collection actions.

With the final regulations on the 501(r) requirements issued at the end of last year and the general sense within the healthcare industry that the Affordable Care Act is now here to stay, any continued thoughts that healthcare boards and executives have that the 501(r) requirements may be modified or not survive should now have dissipated. Boards need to be shifting from a soft compliance and “wait and see” approach to a long-term formalized compliance and review approach with 501(r).

The following action steps are required for each CHNA to be completed every three years:

• Define the community the hospital/health system serves.
• Assess the health needs of the community.
• Complete a written CHNA report.
• Formally adopt the CHNA report and document such action.
• Formally adopt written plans for implementation strategies to address each of the identified significant health needs of the community.
• Make the CHNA report widely available to the public (typically through the hospital’s Web site).
• Include a copy of the adopted implementation strategy or a website reference to such strategy in the hospital’s Form 990 filed with the IRS.

The work is not done after the CHNA action items described above are completed for the year. The CHNA report is not a document to be completed and filed away by the board. It must be a “living” document for the hospital along with the implementation strategy plans attached to it. Although the detailed preparation, compilation, and communication aspects of the CHNA may be delegated or contracted out, the oversight and decision-making responsibilities with respect to the organization’s current CHNA and implementation actions should be kept as a standing review item at regular board meetings. The board, general counsel, and management need to have a clear understanding of the continuing oversight of 501(r) and compliance duties.  

The hospital board should make sure it is reviewing and documenting the following items each year:

• A description of the actions taken during the year by the hospital to address the significant health needs identified through its most recent CHNA.
• The reasons why no actions were taken, if any, with respect to any identified significant health needs.

Since the CHNA is a public document, the board needs to stay informed about how the hospital is meeting the identified community health needs each year and whether any action items need to be added or revised.  In addition, procedures should be followed for correcting any errors or omissions with the CHNA.