Regulatory Advisory

IRS Releases CHNA Proposed Rule
Charitable hospitals receive guidance on ACA reporting obligations

The Internal Revenue Service (IRS) yesterday released the attached proposed rule providing guidance to charitable hospital organizations on the community health needs assessment (CHNA) requirements and related excise tax and reporting obligations under the Affordable Care Act (ACA). ACA requires charitable hospitals to conduct a CHNA at least once every three years for tax years beginning after March 23, 2012.  The definition of community includes geographic location, as well as target populations served or a hospital’s special medical focus. The proposed rule requires a hospital to adopt a written implementation strategy to address significant community health needs in the same tax year it conducts the CHNA. Hospitals would be required to annually attach their most recent implementation strategy to their Form 990 and describe the steps taken in that year to address identified health needs. Finally, the proposed rule describes the consequence for noncompliance with CHNA requirements, including excise taxes and revocation of a hospital’s tax-exempt status. Minor and inadvertent errors or omissions due to reasonable cause would not be considered failure to comply if they are promptly corrected.

The IRS noted that it intends to finalize its new proposal in conjunction with a 2012 proposed rule on financial assistance and emergency medical care policies for hospitals (see CHA’s comments on the previous proposed rule). Yesterday’s proposed rule will be published in the April 5 Federal Register, with comments due July 5. CHA will work with members to prepare comments. A fact sheet on the proposed rule is also attached.