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Catholic and other not-for-profit health care organizations were established to respond to community needs. They are charitable institutions, reaching out to low-income and other vulnerable persons to improve access to health care and working with local partners to make their communities healthier places to live, work, and raise families.
Over the years, policymakers and the public have raised questions about whether not-for-profit hospitals are fully committed to their community service mission and deserving of tax-exemption. These debates have resulted in policy changes promoting greater transparency and accountability. The Internal Revenue Service (IRS) requires tax-exempt hospitals to complete Schedule H of the Form 990 to report their community benefit and other information related to tax-exemption. This hospital reporting form uses the community benefit reporting framework developed by the Catholic Health Association.
The Affordable Care Act (ACA) added requirements for tax-exempt hospitals to conduct and publish an assessment of community health need with input from the community and public health experts; adopt an implementation strategy for addressing needs identified in the assessment; and develop and publish financial assistance policies. The ACA also limits what hospitals can charge persons eligible for financial assistance, reinforces existing federal requirements regarding emergency medical care and addresses billing and collections policies and procedures. The ACA also requires the IRS to review, once every three years, community benefit activities for each tax-exempt hospital and submit a report annually to Congress regarding levels of charity care provided by tax-exempt, taxable and government hospitals; bad debt; unpaid costs for means-tested government programs; and community benefit costs incurred by tax-exempt hospitals.
These policy changes have helped to focus tax-exempt hospitals on addressing and evaluating prioritized community needs and strengthening community partnerships to improve community health. As policymakers evaluate community benefit activities it is important to keep in mind that the full benefit tax-exempt hospitals bring to their communities cannot be captured in a tax form that focuses mostly on dollars spent. Tax-exempt hospitals, through their roles as anchor institutions and community partners, are working address the root causes of poor health by changing the policies, systems and environments of their communities. These types of efforts also need to be recognized as community benefit along with dollars spent on financial assistance, as both are addressing community health needs.
As members of the Catholic health ministry, our mission of community service is based upon social justice teachings that call us to respect the human dignity of each person, promote the common