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					Finally. . . the IRS speaks
      IRS Notice 2011-52
  Anticipated Regulatory Provisions

Community Health Needs Assessment
Requirements for Tax-exempt Hospitals

          Published July 7, 2011
        What is Notice 2011-52?

• Released by IRS on July 7, 2011
• Addresses the community health needs
  assessment (CHNA) requirements included
  in Section 9007 of the Affordable Care Act
• Includes specific provisions that the Treasury
  Department (Treasury) and the Internal
  Revenue Service (IRS) ANTICIPATE will be
  included in the proposed regulations.
• Invites comments from the public
         What is Notice 2011-52?

• CHNA requirements are effective for tax
  years beginning after March 23, 2012
• Some hospitals may choose to start the
  process of conducting CHNAs in advance
  of the effective date
• Hospital can rely on the terms in this notice
  with respect to any CHNA
  o Made widely available to the public, and
  o Implementation strategy must be adopted on or before the date
    that is six months after the date further guidance is issued
    CHNA reporting requirements

• The CHNA requirements apply to every
  hospital organization that has been
  recognized (or seeks recognition) under
  Code Section 501(c)(3).
The “meat” of the notice
1   Hospital organizations affected

    2       Multiple hospital facilities

        3    CHNA documentation

        4    When and how to conduct

    5       Definition of community served

6   Community input
The “meat” of the notice

7    Widely available to public

     8        Implementation strategy

          9    How / when to adopt strategy

      10       Excise taxes

     11       CHNA reporting requirements

12   Effective date
   Hospital organizations affected
• State-licensed hospital facilities
  o All will be considered “hospital organizations”
    and must satisfy the CHNA requirements.
  o Includes any organization, including those that
    operate a state-licensed facility through a
    disregarded entity or a joint venture, limited
    liability company, or other entity treated as a
    partnership for federal income tax purposes
   Hospital organizations affected
• Non-state licensed with principal purpose of
  providing health care
  o Treasury and IRS will define this in future guidance
  o Future guidance regarding the categories of
    organizations meeting this definition will apply
• Does not affect hospital facility located
  outside of 50 States and District of Columbia
   Hospital organizations affected

• Government hospitals
  o Section 501(r) includes ALL hospital organizations
    that are or seek to be recognized as 501(c)(3)
  o Section 501(r) does not explicitly address
    government hospitals, NOR does it include an
    exception for government hospitals.
   Hospital organizations affected

• Government hospitals
  o Accordingly, Treasury and the IRS intend to apply
    501(r) to EVERY hospital organization with a
    501(c)(3) status.
  o The Treasury and IRS request comments
    regarding alternative methods a government
    hospital may use to satisfy the requirements of
    section 501(r)(3), [the community health needs
    assessment requirement].
       Multiple hospital facilities

• Must meet requirements SEPARATELY with
  respect to each hospital facility
• Must conduct CHNA and adopt
  implementation strategy for EACH hospital
  facility it operates
• Must document separately the CHNA and
  implementation strategy for EACH of its
  hospital facilities
        CHNA documentation

• Must conduct CHNA at least once every
  three years
• Must have a written report to document the

          A                    B                 C
      Community           Process               Input

• Report must contain a description of the
  community served by the hospital facility
  and how it is determined.
• Community is defined by geographic
  location, such as
     • city
     • county, or
     • metropolitan region

• Community may also be defined by target
  populations served
     • children,
     • women, or
     • the aged

• And/or the hospital’s principal functions
     • focus on a particular specialty area or
     • targeted disease
   Definition of community served

• May NOT define in a manner to exclude
  o   Medically underserved populations
  o   Low income persons,
  o   Minority groups
  o   Chronic disease needs

• IRS and Treasury request comments
  regarding different geographically-based
  definition of community

• Report must contain description of the
  process and methods used for the
  assessment, including identities and
  qualifications of third-party collaborators
• Information gaps that impact the hospital’s
  ability to assess the health needs of the
  community served by the hospital facility.
     When and how to conduct

• Must identify and assess the health needs of
  the community served
• Must take into account input from persons
  who represent the broad interests of the
  community served
      When and how to conduct

• May use information collected by other
  o Public health agency
  o Non-profit organization
• May collaborate with other organizations
           Community input

• MUST take into account input from persons
  who represent the broad interests of the
  “community”, including

              Special knowledge of or expertise in
                         public health

             Federal, tribal, regional, State or other
                  local health departments

             Leaders, representatives or members of
              medically underserved, low income,
             minority or chronic disease populations
                 Community input

• May consult and seek input from other
  persons located in the community
  o   Health care consumer advocates
  o   Non-profit organizations
  o   Academic experts
  o   Local government officials
  o   Community-based organizations
  o   Health care providers
  o   Low-income persons
  o   Minority groups
  o   Those with chronic disease needs
  o   Private businesses
  o   Health insurance and managed care organizations
Include a description of
o HOW the hospital organization took into
  account input from persons who represent
  the broad interests of the community served
  by the hospital facility, and
o WHEN and how these groups were
  o   meetings,
  o   focus groups,
  o   interviews,
  o   surveys,
  o   written correspondence, etc.
Identify name of organization AND name and
title of:
  • at least one individual with whom the hospital
    organization consulted;
  • the individual(s) who has special knowledge and
    expertise in public health including
    •   Name
    •   Title
    •   Affiliation
    •   Brief description of the individual’s knowledge or

Any individual providing input who is a
“leader” or “representative” of populations
described in paragraph (3) of section 3.06
must be identified
     • By name and
     • Description of the individual’s
       leadership and representative role

Report must include a description of all the
community health needs identified through
the CNHA, as well as a description of the
process and criteria used in prioritizing such
health needs.

          Resource inventory

Report must contain a description of the
existing health care facilities and other
resources within the community available to
meet the community health needs identified
through the CHNA.

     When and how to conduct

• Must be conducted in a taxable year or in
  either of the two immediately preceding
  taxable years
• One assessment required every three years
• Considered “conducted” in the taxable
  year that the written report is made widely
  available to the public
      • Written report must include all five
        elements previously discussed
      Widely available to public

• MUST post written report of findings on the
  hospital facility’s, or if the individual facility
  does not have its own website, hospital
  organization’s website, or
      Widely available to public

• The written report may be posted on a
  website established and maintained by
  another entity as long as either
  o a link to the report is provided on the website,
    along with clear instructions for accessing the
    report; or
  o if neither the hospital nor hospital organization
    has a website, a direct website address, or URL, is
    provided for accessing the document to anyone
    requesting a copy.
     Widely available to public

• Treasury and IRS will consider posting on a
  website as “widely available to the public” if
  4 elements are met.
    7. Widely available to public

• Report must be available to the public until
  the date on which it makes a subsequent
  CHNA for that hospital widely available to
  the public.
• Treasury and IRS welcome comments
  regarding whether future guidance should
  provide additional methods for making
  report widely available to public.
      Implementation strategy

Implementation strategy:
 A written plan set forth (adopted)
 addressing how a hospital plans to meet
 EACH of the health needs identified through
 the CHNA.
       Implementation strategy

• The requirement to adopt must be met
  separately for EACH hospital facility an
  organization operates.

• To meet the requirement the written plan
  must either
  1. Describe how the hospital plans to meet the
     health need, or
  2. Identify the health need as one the hospital
     does not intend to meet and explain why it does
     not intend to meet it.
       Implementation strategy

• Describe how the hospital plans to meet the
  health need
  o Identify programs and resources used to meet
    the health need AND the anticipated impact of
    those programs and resources.
  o Include any planned collaboration with
    governmental, non-profit, or other health care
          Implementation strategy

• Can collaborate with other organizations
  o   Related organizations
  o   Other hospital organizations
  o   For-profit and government hospitals
  o   State and local agencies (i.e. public health departments)
• All organizations must be identified.
       Implementation strategy

• The IRS will require hospitals to attach a
  copy of the most recently adopted
  implementation strategy to it’s annual Form
• If no Form 990 is required, implementation
  strategy will not be submitted.
                                               Needs assessment must
                                               be posted on internet.

Implementation Strategy will be submitted to
IRS each year.
     How/when to adopt strategy

• Must adopt strategy for EACH hospital
  facility by the last day of its first taxable year
  beginning after March 23, 2012.
• Strategy is considered “adopted” when it is
  approved by the authorized governing
  body of the hospital organization.
• Strategy must be adopted in the SAME
  taxable year as the CHNA was conducted!
                Excise taxes

• IRS will impose a $50,000 excise tax
  (“penalty”) for any taxable year that a
  hospital fails to comply with CHNA
• Excise tax will apply to EACH year
  requirements are not met in any three-year
• If an organization has more than one facility,
  the penalty will apply separately with
  respect to each hospital facility’s failure to
  meet requirements.
11. CHNA reporting requirements
11. CHNA reporting requirements
     CHNA reporting requirements

• REMINDER: Responses to these questions
  are optional on Forms 990 for taxable years
  beginning on or before March 23, 2012.
• IRS will require attached to the annual Form
  990 the hospital’s most recently adopted
  implementation strategy for EACH facility.

   If a hospital organization only conducts one CHNA and adopts
  one implementation strategy for a hospital facility in a given three-
   year period, Treasury and the IRS will allow it to attach the SAME
 implementation strategy for that hospital facility to the Form 990 for
                       each of those three years.
                        CHNA Timetable
  Hospital      Due date of     IRS required dates   D&T recommended       Initial IRS related
fiscal year   first CHNA/IS*        to conduct       dates to complete**   benefit reporting
    end                                                                            year
   3/31        3/31/2013        Between 4/1/2010        No later than         FY ending
                                 and 3/31/2013           3/31/2012            3/31/2013

   6/30        6/30/2013        Between 7/1/2010        No later than         FY ending
                                 and 6/30/2013           6/30/2012            6/30/2013

   9/30        9/30/2013        Between 10/1/2010       No later than         FY ending
                                  and 9/30/2013          9/30/2012            9/30/2013

  12/31        12/31/2013       Between 1/1/2011        No later than         FY ending
                                 and 12/31/2013          12/31/2012           12/31/2013

*IS – Implementation Strategy

** We recommend CHNA and Implementation Strategy be completed
at least one year prior to the initial IRS filing due date. This will provide
the hospital an opportunity to perform, track, cross-reference and
report CHNA related community benefits with the initial effective IRS
filing date.

• Comments should be submitted on or
  before September 23, 2011
• Include NOTICE 2011-52 on the cover page
  o Internal Revenue Service
     CC:PA:LPD:PR (Notice 2011-52)
     Room 5203
     P.O. Box 7604
     Ben Franklin Station
     Washington, DC 20044

• Submissions may be sent electronically to
  o Put Notice 2011-52 in subject line
  Thank you for joining us!

       Cindy DuPree


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