Community Needs Assessment Provision Provides Opportunities for Exempt Hospitals
BNA’s Health Law Reporter, May 13, 2010
A provision of the Patient Protection and Affordable Care Act (Pub. L. No. 111-148) that requires exempthospitals to conduct a community health needs assessment (CNA) at least once every three years should be viewed as an opportunity to better understand community health needs and coordinate how to meet those needs in the rapidly evolving health care reform environment, according to attorneys and consultants who spoke with BNA.
They said exempt hospitals already should be familiar with health needs assessments as part of their community benefit planning activities but that they should recognize the importance of a timely and robust assessment of baseline community health needs to meeting a series of strategic planning and other business needs beyond mere tax law compliance.
The CNA provision requires exempt hospitals to complete the assessments or risk substantial excise taxes
and a potential loss of exemption under Internal Revenue Code § 501(c)(3). Penalties can reach $50,000 per
year for each hospital that fails in tax years beginning after March 2012 to comply with the CNA requirement,
included in new code Section 501(r), and multi-hospital systems must prepare a CNA for each hospital.
The threat of sanctions notwithstanding, those who spoke to BNA said assessments should be undertaken to support planning capabilities and improve community relations, not just as an exercise to meet regulatory requirements or justify tax exemption. In addition, as health care reform—and a new emphasis on improved and coordinated care—is implemented, a well-designed and complete CNA could prove to be an invaluable tool, they added.
Most exempt hospitals will not be starting from scratch, they continued, as the community benefit planning
activities most already are conducting have a community health needs assessment component. What will
be different for some hospitals is the degree to which they are being asked to engage their community representatives,
the extent to which they must publicize CAN results, the mandate that they implement a strategy for
meeting those needs, and the requirement that they report to regulators—in their Form 990 filings—on their
status in meeting the identified needs, they added.
Just Do It. According to Dan Mulholland, with Horty Springer & Mattern in Pittsburgh, there are so many
good business reasons to conduct a robust community health needs assessment, the thought of not doing one
should not even be considered an option. ‘‘Exempt hospitals can use CNAs as a planning tool for their medical
staff needs and for designing the programs they offer their communities,’’ he said.
‘‘In addition to being at risk for penalties, you’ll be in an uncomfortable spotlight if you don’t do an assessment,’’
Mulholland said. ‘‘You should either start doing one now or fine tune what you are already doing to
meet this requirement,’’ he added.
T.J. Sullivan, with Drinker Biddle & Reath LLP, Washington, agreed, saying that the CNA requirement
offers an opportunity for hospitals to refine their understanding of the need for health care services in their
communities. ‘‘Do it. Do it right. Don’t take short cuts. Publicize it when you are done.’’
Patsy Matheny, a health care consultant in Columbus, Ohio, said it this way: ‘‘If you are going to take the
time to conduct a CNA, make it useful and practical. If you take it seriously, it will give you an opportunity to
link strategic direction with identified community needs.’’
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‘‘We stress the importance of prioritizing the needs of the most vulnerable and disadvantaged community members in this process.’’
JESSICA CURTIS, COMMUNITY CATALYST, BOSTON
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Matheny said the CNA process presents opportunitiesfor keeping community benefit expectations in
front of tax-exempt hospitals and educating them onthe underpinning of community benefit, which is for a
hospital to use its resources to meet community needs.The process also should allow them to forge community
partnerships that would be expected to be strengthenedthrough CNA implementation, she added.
Matheny stressed that a CNA cannot be just aboutcharity care—given that health care reform is expected
to reduce the number of uninsured individuals—butmust reflect quantitative and qualitative data about the
range of services needed in the community to addressits specific health care needs.
‘‘The end result should be a useful, dynamic tool—nota document that gathers dust on the shelf—that assists
hospitals in improving the community’s health status, inimproving inpatient and outpatient clinical indicators,
in fulfilling the hospital’s mission, in enhancing partnershipswith the community, in program planning and
evaluation, in prudently spending resources, and inmeeting regulatory requirements,’’ Matheny said.
New Requirements. The CNA preparation and reportingrequirement is just one of the new provisions affecting
tax-exempt hospitals implemented as part of thehealth care reform law signed in March. Exempt hospitals
also are now required to have written financial assistancepolicies, to place certain upper limits on patient
charges, and to limit the use of ‘‘extraordinary collectionactions.’’
The provisions, the first major change to hospital exemptionqualification requirements in over 40 years,
stemmed from efforts spearheaded by Sen. Chuck Grassley (R-Iowa) and others who claimed many taxexempt
hospitals are not providing sufficient charity or other public benefits to justify the tax dollars beingspent to subsidize their operations.
The new provisions were written by Grassley andSenate Finance Committee Chairman Max Baucus (DMont.),
have been components of legislative proposals that have been under discussion since the beginning of
the health care reform debate, and were contained in the Senate health care reform bill approved by the Senate
in December 2009.
Rachel Remaley, also an attorney with HortySpringer, said the requirements were adopted in the
face of these and some other critics who sought more drastic measures in the form of charity care minimums
and the threat of lost exemption for hospitals that do not give enough back to their communities. ‘‘While Section
501(r) in some ways gives exempt hospitals an opportunity to control their destiny in the face of these
criticisms, the train of lost exemption and charity care minimums may still be coming,’’ Remaley said.
‘‘The community input requirement in particulargives exempt hospitals the opportunity to put ‘community’
back into ‘community hospital’ and allows them to reestablish community connections and loyalty by doing
this really well,’’ Remaley added.
Jessica Curtis, a project director and staff attorneywith Community Catalyst in Boston, said her organization
sees the CNA process as an opportunity for hospitals to leverage existing resources across organizations,
involve the community, and prioritize the needs identified by disadvantaged community members. ‘‘We stress
the importance of prioritizing the needs of the most vulnerable and disadvantaged community members in this
process,’’ she said.
‘‘Community involvement in the assessment processis important in its own right and can take many forms:
for example, meetings or focus groups with community members, community-based organizations, faith-based
groups, and others to discuss the most pressing needs in the community,’’ Curtis said. ‘‘It may also help relieve
hospitals’ assessment burdens,’’ she added.
Assessment Components. The key components of theCNA required under the new law are not specifically set
forth there. Rather, those components can be gleaned from existing models utilized or extrapolated from approaches
used for public health assessments and community benefit planning.
The main initial steps involve defining the relevant‘‘community’’ and obtaining input and data from appropriate
sources. The definition of the community served by a hospital can be based on a variety of approaches,
but input, under Section 501(r), must be obtained from ‘‘persons who represent the broad interests of the community
served by the hospital, including persons having specialized knowledge or expertise in public health.’’
Most models say a ‘‘community’’ can be definedbased on geographic boundaries; a demographic approach,
taking into account age or income or insurance; patient flow data; or a health status approach focusing
on the prevalence of a particular disease, such as HIV,diabetes, or cardiovascular disease.
With respect to the required community input, mostmodels suggest a community health needs assessment
should be based on public health data and other indicators of community health and stem from consultations
with representatives of the designated community. Use of existing data and information is preferable to ‘‘reinventing
the wheel’’ and collaboration with other providers or interested parties is generally encouraged.
The hospital’s needs assessment process should involvemembers of the hospital and medical staffs who
are most knowledgeable about the needs and available resources in the community. It also should include community
leaders, representatives from the other health care and service providers, and members of the populations
that have been identified as ‘‘at risk.’’
According to one model, suggested in guidelines issuedby the Massachusetts attorney general in July
2007, the CNA should focus on the health status of the designated community, giving special consideration to
the special needs of the poor, of the elderly, of racial, linguistic, and ethnic minorities, and of refugees and
immigrants. Data from all sources then can be evaluated to prioritize community need according to:
- income level of the affected population;
- presence of significant barriers that hinder accessto appropriate health care delivery programs;
- absence of relevant and accessible programs;
- specific primary, acute, or chronic health careneeds;
- assessment of the hospital’s capability of respondingto the identified needs; and
- availability of other service providers, both publicand private.
Collaboration, Publication. Several commentators suggestedthe value of collaboration between health care
providers and community interests in both assessing and meeting each community’s identified needs. Mulholland,
for example, cited the possibility that multiple hospitals in a given community might want to pool theirresources in the data gathering phase.
Curtis agreed, saying that, ‘‘because needs assessmentcollaborate with other health care institutions, community
organizations, and public health officials to identify and target needs whenever possible.’’ Curtis said this
could include using available public health data and statements of health departments’ priorities.
Remaley noted that some special interest organizationsin the affected community will want to coordinate,
will want to be part of the implementation plan, and may be willing to share in some of the costs.
Curtis also stressed the need to allow the public to reviewand comment on assessments prior to finalizing
them. Mulholland agreed, saying, ‘‘before you release the CNA, let everyone look at it.’’ He recommended that
hospitals engage their medical staffs and boards of directors in the process, getting their comments as well
and issuing it only after board members have signed off on it.
After it is done, the CNA must, under Section 501(r),be made ‘‘widely available’’ to the public. Most commentators
suggested that this requires at the very least posting on a hospital web site and other efforts to alertthe community of the CNA and its findings.
BY PEYTON M. STURGES
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