How Section 501(r) Requirements Can Strengthen Nonprofit Hospitals
The Patient Protection and Affordable Care Act of 2010 (PPACA) marks the beginning of a new era in government reporting for nonprofit hospitals. The consequences of not fulfilling the requirements under IRC Section 501(r) can be serious, including the loss of federal tax-exempt status.
Under Section 501(r), nonprofit hospitals must:
- Periodically conduct a community health needs assessment (CHNA);
- Provide written financial assistance and emergency care policies;
- Establish limitations on charges for emergency or medically necessary care; and
- Set policies and procedures related to billing and collections actions.
“Nonprofit hospitals can just meet these requirements with minimal effort, or they can find value in the information they are required to gather and analyze,” says Kurt Bennion, CliftonLarsonAllen’s health care engagement director. “This is really an opportunity for a hospital to strengthen its relationship with the community it serves.”
Bennion says a hospital should consider the public relations value in pointing out that it is actively working to be more accommodating to those who are struggling financially. The CHNA and its implementation plan are also an opportunity to be seen as an institution that dedicates resources to understanding and improving the health of the community.
- Specific Section 501(r) requirements and how to meet them
- Penalties for noncompliance
- Community health needs assessment process and implementation
Kurt Bennion, Health Care Engagement Director
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