Around 800-1000 words long and strictly no longer than 1200 words summarize “Req
ID: 329138 • Letter: A
Question
Around 800-1000 words long and strictly no longer than 1200 words summarize “Requirements for Non-profit Hospital Under Affordable Care Act” and address the following: - identify how the specific policy change “Requirements for Non-profit Hospital Under Affordable Care Act” may have altered incentives of agents in healthcare markets (i.e. patients, healthcare personnel, hospital managers etc.) - reflect on the specific policy change (Requirements for Non-profit Hospital Under Affordable Care Act) and its possible effects on how a hospital operates -the policy change a (Requirements for Non-profit Hospital Under Affordable Care Act) and its intended effect on incentives of different agents in the U.S. healthcare market -identify any challenges and potential unintended effects on incentives of different agents in the U.S. healthcare market -main discussion points about the policy change (Requirements for Non-profit Hospital Under Affordable Care Act) and a summary of opposing views -your comments about relevance of these discussions, their possible effects and possible challenges for a healthcare institution manager.
Explanation / Answer
Affordable Care Act (ACA) primary goals include making health insurance affordable and available to more people and lower the cost of health care generally.
501(c) (3) organization is the most common type nonprofit organizations in the United States
The provision conditions hospital organizations' eligibility for tax-exempt status on their ability to meet four basic requirements: (1) community health needs assessment and implementation strategy; (2) financial assistance policies, including adherence to the hospital's Emergency Medical Treatment and Active Labor Act emergency care obligations (which are expressly identified in the statute); (3) policies related to hospital charges; and (4) policies related to billing and collections.
A hospital organization is defined as “a facility which is required by a State to be licensed, registered, or similarly recognized as a hospital,” and “any other organization which the Secretary determines has the provision of hospital care as its principal function or purpose.” In cases in which a hospital organization operates more than one facility, the provisions apply to each facility.15 Except for the community health needs assessment requirement, which has a longer phase-in time period, the changes are effective in the first taxable year beginning after the date of enactment.
Summarizing new requirements for Charitable 501(c) (3) Hospitals
Establish written financial assistance and emergency medical care policies,
Limit amounts charged for emergency or other medically necessary care to individuals eligible for assistance under the hospital's financial assistance policy,
Make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy before engaging in extraordinary collection actions against the individual, and
Conduct a Community Health Needs Assessment (CHNA) and adopt an implementation strategy at least once every three years.
In general without strict regulations, hospitals have financial incentives to shirk this responsibility.
Beginning in 2009, hospitals under Section 501(c) (3) of the Internal Revenue Code were required to submit a newly redesigned IRS Form 990 and the supporting Schedule H on an annual basis. Form 990 providing details of mission, program and finance while Schedule H gives details of activities, policies, bad debt and levels of community benefit provision.
Market Influencers of Uncompensated Care
Both hospital types may have engaged in cost-shifting, raising prices to private paying patients in response to substantial reductions in Medicaid payments
Increased competitive pressures give nonprofit hospitals less latitude to produce outputs typically deemed to be socially worthy, and instead lead to more profit-seeking behavior
Impact on Patients:
When the regulations ended, hospitals reduced their charity care caseloads, pushing the unprofitable maternity patients to public hospitals - Reference (Almond, Currie and Simeonova 2010).
Uninsured rates can also reasonably be expected to affect a hospital’s provision of uncompensated care. Since uncompensated care provision increases in the presence of higher demand (Hsieh, Clement and Bazzoli, 2010), hospitals in regions with higher rates of coverage may be more likely to provide less care to indigent populations.
The New Tax Law
Formally known as Public Law 115-97, enacted on December 22, 2017. Changes for nonprofit hospitals and health systems in particular will affect unrelated business income tax, compensation and fringe benefits, and structuring of transactions.
Limitation on charges, and prohibition against ECAs are aimed at controlling community benefit actions by hospitals that are aimed at curbing undesirable practices at the individual patient level, going against Berg’s suggestions for meaningful change, 501(r)(3)’s CHNA is a drastic shift toward a focus on the health system’s community impact. Her suggestion was to rearrange Form 990’s hierarchy of community benefit activities to place “community health improvement services” evaluation above the hospital’s charity care activities, communicating the message that a community focus is much more important than an individual focus. The ACA’s changes fulfill this suggestion for meaningful reform and then some
The community health needs assessment provision does not address the relationship between the hospital's needs assessment/implementation planning obligations and its other obligations under the law. For example, nothing in the statute itself requires the assessment to specifically address the needs of the low-income and uninsured population living in its service area or the amount of free care that will be furnished and the manner in which uncompensated care needs will be met. Similarly, the statutory text leaves to agency interpretation the responsibility for defining key terms. At the same time, the law creates a powerful platform for an implementation strategy that ultimately yields a national system of community health needs assessments and implementation strategies that in scope parallels the law's broad concept of community health transformation.
Three basic reforms might advance the goal of broader hospital investment in community health.
1) There needs to be a clear articulation by the IRS of the importance of the relationship between community benefit spending on the one hand and community health needs assessments and implementation strategies on the other.
2) Greater transparency around the implementation strategy phase of the community health needs assessment process could spur greater hospital financial allocations to upstream community health improvement.
3) It’s time to eliminate the distinction between Part I and Part II of Schedule H.
Hospitals invest in their communities in multiple ways. The needs assessment process opens the door to a more rational and coordinated investment approach that is evidence based and that rests on an inclusive consultation process involving both communities and public health expertise to address area-wide goals.
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