Nonprofit Hospitals and Section 501(r) Under Review

Nonprofit hospitals, under the Affordable Care Act (ACA), Section 501 (r)s are required to:

  • conduct a Community Health Needs Assessment (CHNA) every three years and adopt an implementation strategy to meet the needs identified;
  • establish a written Financial Assistance Policy (FAP) and a policy relating to emergency medical care;
  • limit the amounts that it can charge individuals eligible for financial assistance under the FAP; and
  • limit the way that it collects outstanding charges prior to making a reasonable effort to determine whether an individual is eligible for financial assistance under the FAP.

In a recent letter to Commissioner Rettig, Chairmen Grassley and Senator Hatch of the Oversight Committee pressure the Internal Revenue Service (IRS) to report on their enforcement and compliance to these standards by nonprofit hospitals.

Nonprofit hospitals must be able to provide documentation of the above requirements to maintain their tax-exempt status. While the Senate committee looks to the IRS for reporting on Section 501 (r)s, the IRS will continue to implement their monitoring and enforcement responsibilities and nonprofit hospitals. Preparation is key for compliance.

As instructed by the IRS, for a CHNA, nonprofit hospitals must ensure the following:

  1. Define the community it serves;
  2. Assess the health needs of that community;
  3. In assessing the community’s health needs, solicit and take into account input received from persons who represent the broad interests of that community, including those with special knowledge of or expertise in public health;
  4. Document the CHNA in a written report (CHNA report) that is adopted for the hospital facility by an authorized body of the hospital facility; and
  5. Make the CHNA report widely available to the public.

A hospital facility is expected to have conducted a CHNA on the date it has completed all of these steps, including making the CHNA report widely available to the public.

SAE provides CHNA for all types of providers across care systems and regions. To request assistance to develop a CHNA, email or call (212) 684-4480 to connect with our team.