Community Benefits

Not all hospital care is provided through the emergency department, the operating room, or in a hospital bed.  Across the state, Maryland’s hospitals are reaching out into their communities to address specific health care needs, and to make sure people who can’t afford care still receive it.  These and other efforts mean that Maryland’s hospitals are providing more than $1 billion worth of benefits to the communities they serve, according to the latest report released in July 2011 by the Health Services Cost Review Commission (HSCRC) — the state commission that regulates hospital rates.     

The HSCRC’s Maryland Hospital Community Benefits Report covers July 1, 2009 through June 30, 2010, a period in which Maryland’s hospitals provided a total of $1.05 billion in community benefits, up from $946 million in FY 2009.  That translates into an average 7.7 percent of hospitals’ operating expenses, also up from the previous year’s 7.6 percent.

What is Community Benefit?
HSCRC's Maryland Hospital Community Benefits Report
Community Benefit Reporting Requirements
Community Health Needs Assessment

What is Community Benefit?

Maryland’s hospitals provide programs and services that respond to identified needs in the communities hospitals serve, often with only partial or no compensation for the services.

• Maryland law recognizes these “community benefits” as activities intended to address community needs and priorities primarily through disease prevention and improvement of health status, including:
       -  Health services provided to vulnerable or underserved people;
       -  Financial or in-kind support of public health programs, such as
          management of chronic diseases like asthma and diabetes;
       -  Donations of funds, property, or other resources that contribute to
          a community priority, such as addressing obesity, preventing
          substance abuse, or providing health care services for the homeless;
       -  Health care cost containment activities; and
       -  Health education screening and prevention services.
• In Maryland’s unique hospital rate setting system, some funding for critical programs like uncompensated care, medical education, and addressing nurse shortages, is paid for through higher hospital rates so that hospitals can continue providing those services.
       -  When these costs are offset, the net community benefit provided
          by Maryland’s hospitals for which no assistance was received was
          $613 million, or 4.85 percent of total operating expenses, up
         significantly from the $453 million in net benefits provided the previous
         year.

All Community Benefits Reports submitted by Maryland’s hospitals are made available to the public on the HSCRC Web site.

Community Benefit Reporting Requirements

National Health Care Reform Requirements
Under the tax-exempt provisions in Health Care Reform, hospitals must:

• Perform a Community Health Needs Assessment during Tax Year 2011, 2012, or 2013, and:
       -  Conduct a needs assessment once every three years afterward;
       -  Adopt an implementation strategy to meet the community needs identified;
       -  Describe how the hospital is addressing the community health needs,
          if any needs are not being addressed and why; and
       -  May be subject to a $50,000 tax imposable by the IRS for each tax year
          that a hospital fails to meet the requirement of the Community Health
          Needs Assessment.
• Adopt certain financial assistance policies. Written policy must include:
       -  Eligibility criteria
       -  Basis for calculating amounts charged to patients;
       -  Method for applying assistance; and
       -  Actions hospital can take for non-payment (if there is not a separate
          collection policy)
• Provide, without discrimination, care emergency services regarding of eligibility under their financial assistance policy.
• Meet certain requirements on charges (prohibit use of “gross charges” to uninsured  to “amounts generally billed to those who have insurance”); and
• Meet certain billing and collection requirements (hospitals may not engage in “extraordinary collections actions” before making “reasonable efforts” to determine if patient qualifies for assistance).

In 2005, the U.S. Government Accountability Office (U.S. GAO) indicated that non-profit hospitals nationally may not be defining community benefit in a consistent manner that would enable policy makers to hold them accountable for providing benefits commensurate with their tax-exempt status. Over recent years, several changes have been required on the federal level to attempt to remedy this.

• IRS requires entire IRS Schedule H (Form 990) to be filed by non-profit hospitals for tax year 2009 that:
       -  Summarizes charity care policies
       -  Documents their community benefits and community building programs
       -  Identifies how they meet community health care needs
       -  Describes other activities or characteristics that IRS associates with
          tax-exempt status
       -  Distinguishes between charity care and bad debt
  

• Refine the definition of a community benefit and provide clarification of what is included or excluded in various community benefit categories. 
• Addition of a section to allow hospitals to account for Medicaid provider taxes for which hospitals do not receive offsetting revenue. 
• Changes to the Community Benefit Narrative instructions and related Evaluation Report include:
       -  Refining the definition of a community needs assessment;
       -  Altering the format and providing more references to make it easier for
          hospitals to meet the HSCRC’s expectations for reporting, and for the
          public to read and understand the reports;
       -  Adding questions to better understand who is involved with community
          benefit operations, and who is being consulted on community needs
          assessments; and
       -  Making the most of evaluation scoring based on the sufficiency of
          hospitals’ responses to narrative reporting questions. 

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