Reporting for community benefit is of considerable importance for hospitals to meet mandated reporting requirements and to document a hospitals’ contributions to the health of the communities they serve.
Tax exempt hospitals are required to annually report to the IRS financial data and respond to questions that track compliance with the 501(r) rules on the Form 990 Schedule H.
Form 990 Schedule H and Instructions – IRS
In addition to federal community benefit standards, some states may also require financial reporting of community benefit efforts.
Visit the Hilltop Institute’s State Law Profiles to identify state reporting requirements for community benefit.
There are a number of finance-related issues that hospital professionals may face. Some of these issues include:
- Developing a positive working relationship between the Finance Department and community benefit and defining roles.
- Reporting financial contributions in a meaningful and understandable manner to a variety of stakeholders.
- Examining future trends in financial assistance with anticipated decreases in uninsured populations.
- Engaging the Board of Trustees in understanding the changing dynamics of financial assistance.
- Creating and amending financial assistance policies.
- Determining what investments should hospitals make in community infrastructure.
- Identifying how hospitals can align their strategic plans with their charitable contributions.
- Exploring ways hospitals can best focus financial resources to revitalize low-income neighborhoods and address preventive health care among communities of need.
These and many other issues can be explored by joining the discussion in the Finance Interest Group Forum www.communitybenefitconnect.org/community-of-practice/interest-groups/ and sharing resources and ideas.
Financial Assistance Policies
The Affordable Care Act resulted in changes to the Internal Revenue Code, creating Section 501 (r), which outlines requirements for hospitals’ Financial Assistance Policies. In addition to the federal regulations, some states also have regulations governing hospital Financial Assistance Policies.
A link to the IRS Requirements Related to Financial Assistance and Emergency Medical Care and the proposed regulations can be found here:
Another helpful resource is a summary explanation of the regulations by Community Catalyst. What does the Affordable Care Act say about hospital bills?
On December 31, 2014, the IRS issued the final rules that provide guidance on Financial Assistance Policies to nonprofit hospitals. The rules can be found in the Federal Register.
Clarification on the FAP list of providers can be found here.
The premier resource for community benefit financial reporting is the Catholic Health Association’s What Counts as Community Benefit.
The What Counts Hotline is an excellent resource to review questions and answers about community benefit financial reporting.
EY was commissioned by the American Hospital Association to analyze the federal revenue forgone due to the tax exemption of non-profit hospitals as well as the community benefits they provide. This study presents estimates for 2013, the most recent year for which community benefit information is available for non-profit hospitals based on Medicare hospital cost reports for approximately 3,000 non-profit general hospitals.
Healthcare Financial Management Association
An organization for health care finance leaders. Search the site for community benefit resources available to nonmembers.
An HFMA Newsletter self-study lesson by Mark Rukavina, Community Health Advisors