Community Benefit Spending

Community Benefit Spending
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Community Benefit Spending
Under the Community Benefit Spending requirement, the federal government has put forth some expectations that hospitals should meet to qualify for the tax-exempt status. The hospitals are required to report expenses on community benefit to the Internal Revenue Service (IRS) (Begun & Trinh, 2019). They should report these expenses every year so that they can retain their tax-exempt status. While reporting community benefit expenses is an IRS requirement, other requirements were added by the Affordable Care Act (ACA) through section 501 (r). The first requirement is for hospitals to perform a community health needs assessment (CHNA) (Rubin, Singh, & Young, 2015). This assessment is to be completed every three years. They should also formulate a strategy on how they will address the identified health needs. The second requirement is that hospitals should write an emergency medical care policy and a Financial Assistance Policy (FAP) (Rubin, Singh, & Young, 2015). The FAP should indicate the method for applying for financial assistance, eligibility criteria for financial assistance, and the basis for calculating how much patients should be charged. Also, it should include the measures that the hospital may take in case of non-payments. FAP should be well-publicized. The third requirement is on the limitation on charges (Rubin, Singh, & Young, 2015). The hospital should put limits on the amounts charged for emergency care or any other necessary care provided to eligible individuals under the hospitals' FAP. These amounts should not be more than the amounts charged to insured patients. The fourth requirement is on billing and collections. Hospitals should ensure that they make reasonable efforts of determining whether a patient is eligible for financial assistance under the hospital’s FAP before making any extraordinary collection actions (ECAs) (Rubin, Singh, & Young, 2015). Failure to meet the above expectations could result in the revocation of the tax-empty status.
Community Benefit Spending varies from state to state. Many states have taken certain measures to ensure that hospitals are adhering to the expectations listed above. Mostly, States utilize state laws to ensure that hospitals meet the requirements of section 510 (r). According to Johnson, et al. (2019), about 7 states have established a minimum threshold for Community Benefit Spending. This ensures that the hospitals know exactly how much they should spend, on the minimum, in providing community benefits. Other states, such as Illinois and Delaware, have specific laws that address charity care spending and financial assistance (Johnson, et al., 2019). Such laws provide hospitals with some level of clarity on what entails charity. Also, they ensure that hospitals within the state are meeting the requirements as provided by the federal policy on the ...