Community Health Needs Assessment

When President Barrack Obama signed into law the Patient Protection and Affordable Care Act (“PPACA”) on March 23, 2010, additional requirements were imposed on hospitals seeking to obtain or maintain charitable tax-exempt status as defined under Section 501 of the Internal Revenue Code of 1986.  One of the four requirements is the completion of a community health needs assessment (CHNA).  The CHNA requirements are not effective until tax years beginning after March 23, 2012, but most exempt hospitals have already begun the process of planning for and conducting CHNAs.

Hospital organizations that are required to meet the CHNA requirement.

• “State-licensed” hospital facilities are subject to the CHNA requirement.
• Organizations operating a hospital facility through a disregarded entity, joint venture, LLC, or other entity taxed as a partnership are subject to the CHNA requirement.
• Hospital organizations that operate multiple hospital facilities are required to document separately the CHNA and implementation strategy for each hospital facility, although the facilities may collaborate in meeting these requirements.

Documentation of a CHNA.  A hospital must document a CHNA in a written report that includes:

• A description of the community served by the facility and how the “community” was determined.
• A description of the process and methods used to conduct the CHNA, including sources and dates of data, analytical methods used, information gaps, collaborating organizations, and the identity and qualifications of third parties contracted with to assist in conducting the CHNA.
• A description of how the hospital considered input from persons representing the broad interests of the community served by the facility, including information on individuals and organizations that provided input.
• A prioritized description of all needs identified and a description of the process and criteria used in prioritizing the needs.
• A description of the existing healthcare resources in the community available to meet the CHNs identified in the CHNA.

How and when a CHNA is “conducted”.

• A CHNA is considered “conducted” in the year the written report is made widely available to the public.
• A CHNA is considered “conducted” only if it identifies and assesses the health needs of, and takes into account input from persons representing the broad interests of, the community served by the facility.

Community served by a hospital facility.  

• IRS intends to permit a hospital facility to take into account all of the relevant facts in defining the “community” served by the facility.  
• IRS generally expects a geographic description, but understands that it may include target populations.  
• The community may not be defined to exclude, e.g., medically underserved populations, low-income persons, minority groups, or those with chronic disease.  
• IRS is requesting comments on various geographic definitions of community – e.g., MSA.

Persons representing the broad interests of the community.  

• At a minimum, input from the following must be considered in the CHNA:  persons with expertise in public health; governmental entities with data relevant to community health needs; and representatives of medically underserved, low-income, chronic-disease, and minority populations. 

Making a CHNA widely available to the public.  The CHNA will be considered made widely available to the public if it is posted on the facility’s website.

Implementation strategy.  

• Each hospital facility must adopt an implementation strategy based on the CHNA.  
• The strategy must be written and address each need identified in the CHNA by either describing how the facility plans to meet the health need or identifying the health need as one the hospital facility does not intend to meet and explaining why the facility does not intend to meet the need.  
• The strategy should take into account the specific programs, resources, and priorities of the facility.  
• The strategy should describe any planned collaboration with other organizations.  
• The implementation strategy must be attached to the organization’s Form 990.

  How and when an implementation strategy is adopted.  

• The implementation strategy will be considered adopted on the date it is approved by an authorized governing body of the hospital.  
• The strategy must generally be adopted by the end of the same tax year in which the CHNA is conducted, although IRS requests comments on circumstances under which a facility should be provided additional time for adoption of the strategy as a transitional rule. 

Excise tax on failure to meet the CHNA requirements.  The $50,000 excise tax for failure to meet the CHNA requirements in a 3-year period will be assessed on a facility-by-facility basis and for each year of failure. 

For more information please contact Adam Shewmaker (ashewmaker@ddafhealthcare.com).