990 prob­lems

Modern Healthcare - - Margin Vs Mission - —Alex Kacik

A check­list in the Sched­ule H sec­tion of the In­ter­nal Rev­enue Ser­vice Form 990 reads:

Does the com­mu­nity health needs as­sess­ment de­scribe …

The de­mo­graph­ics of the com­mu­nity? Check.

How the data was ob­tained? Check.

Pri­mary and chronic dis­ease needs? Check.

How needs are pri­or­i­tized? Check.

But for many of the 990s an­a­lyzed by Mod­ern Health­care, a check mark was miss­ing for the ques­tion: “Did the hos­pi­tal no­tify mem­bers of the com­mu­nity who are most likely to re­quire fi­nan­cial as­sis­tance about the fi­nan­cial as­sis­tance pol­icy?”

Therein lies one of the fun­da­men­tal flaws of Sched­ule H; providers are often not held ac­count­able given the vague frame­work of their com­mu­nity ben­e­fit re­port­ing.

While the nar­ra­tive sec­tion aims to ex­plain where the check marks fall, some say Sched­ule H re­port­ing is dif­fi­cult to as­sess since it’s hard to tell if hos­pi­tals are help­ing im­prove com­mu­ni­ties year over year.

“The change-mak­ers don’t lis­ten to the peo­ple,” Chicagoan He­len Lit­tle said dur­ing a com­mu­nity meet­ing co­or­di­nated by Rush Univer­sity Med­i­cal Cen­ter and West Side United, a coali­tion of health sys­tems, gov­ern­ment agen­cies, res­i­dents and com­mu­nity groups.

Tri­cia John­son, a pro­fes­sor of health sys­tems man­age­ment at Rush, said bet­ter mea­sures of health out­comes re­lated to com­mu­nity ben­e­fit would help all hos­pi­tals un­der­stand how much they are mov­ing the nee­dle.

A group of Univer­sity of Michi­gan and Ge­orge­town Univer­sity re­searchers has set out to see what an out­come-based mea­sure­ment would look like and they laid out some first steps for cre­at­ing them. The Na­tional Qual­ity Fo­rum en­dorsed a set of stan­dard­ized, sci­en­tif­i­cally eval­u­ated in­di­ca­tors that hos­pi­tals can use to as­sess pop­u­la­tion-health per­for­mance. Sim­i­larly, the Agency for Health­care Re­search and Qual­ity mea­sures pre­ventable ad­mis­sions that can be used to gauge hos­pi­tals’ im­pact on pop­u­la­tion health. But at­tribut­ing out­comes to an in­di­vid­ual hos­pi­tal was a chal­lenge, they found.

Mean­while, hos­pi­tals are so fo­cused on check­ing the reg­u­la­tory boxes that they lose the real in­tent be­hind it,

ex­perts said.

When a Catholic Health As­so­ci­a­tion task force was help­ing guide providers through ap­pro­pri­ate com­mu­nity ben­e­fit re­port­ing, it asked a hos­pi­tal for de­tails on $100,000 in re­ported physi­cian vol­un­teer ser­vices. Hos­pi­tal of­fi­cials said that it had high school stu­dents fol­low doc­tors around.

An­other hos­pi­tal asked whether it could count used TVs it do­nated to a school. The an­swer was no.

“One could make an ar­gu­ment that the IRS never re­ally made ex­pec­ta­tions clear about what a hos­pi­tal should or shouldn’t be do­ing, which is why so much vari­a­tion ex­ists,” said Bradley Her­ring, an as­so­ciate pro­fes­sor at Johns Hop­kins Bloomberg School of Pub­lic Health who has com­pared not-for-profit hos­pi­tals’ com­mu­nity spend­ing to that of for-prof­its.

But now, the IRS is tak­ing a closer look. For fis­cal 2017, out of 1,193 hos­pi­tals re­viewed, the agency flagged onethird, or 388. Those is­sues were re­lated to hos­pi­tals that didn’t file a com­mu­nity health needs as­sess­ment, ones that didn’t have fi­nan­cial as­sis­tance or emer­gency care poli­cies, and providers that lacked billing and col­lec­tion re­quire­ments, the IRS said.

The agency didn’t cite any is­sues with the 501(r)(5) re­quire­ments re­gard­ing lim­i­ta­tions on charges. That’s where the IRS tracks how hos­pi­tals cal­cu­late the “amount gen­er­ally billed,” which serves as a cap for those who qual­ify for fi­nan­cial as­sis­tance.

The IRS re­voked the tax-ex­empt sta­tus of one uniden­ti­fied gov­ern­ment-run crit­i­cal-ac­cess hos­pi­tal in Fe­bru­ary 2017 af­ter it didn’t file its com­mu­nity health needs as­sess­ment on time and then didn’t make it widely avail­able, ac­cord­ing to a redacted let­ter from the agency. It also did not file an im­ple­men­ta­tion re­port.

“We have moved from the ed­u­ca­tion to the en­force­ment phase,” said Don Ste­wart, part­ner at the law firm Waller Lans­den Dortch & Davis. “More hos­pi­tals are get­ting no­tices from the IRS to pro­vide more in­for­ma­tion re­lated to where in­for­ma­tion is sup­posed to be on their web­site or other de­fi­cien­cies. So hos­pi­tals have to be re­ac­tive now so they don’t run into au­dit is­sues.”

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