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Treasury Notes

 Assessing and Addressing Community Health Needs - the Next Step in Protecting Patients

By: Sabrina Siddiqui

The Affordable Care Act not only protects patients from hidden and high prices and unreasonable collections actions – it also requires charitable hospitals to take an active role in improving the health of the communities they serve.  Today, the Department of the Treasury took 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 issued today 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 health care law 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.  

Read more about today’s proposed rules here, and read more about the Affordable Care Act’s new requirements for charitable hospitals and the related proposed rules issued last year here.

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, so it’s only right that they provide a benefit to their communities.

Key protections – specifically, limitations on billing and collections actions and the financial assistance policy requirements – went into effect for tax years starting after March 23, 2010, while other provisions, such as community health needs assessment, went into effect for tax years beginning after March 23, 2012.  The proposed rules issued today, which with others are expected to be finalized this year, refine the policies that are already in effect.  Hospitals may rely on today’s proposed rules and other interim guidance issued by the Treasury Department as they comply with the new requirements of the health care law.​

Sabrina Siddiqui is Treasury's Spokesperson for Tax, Budget & Economic Policy.




Posted in:  Economic Policy
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