14 April 2017 Ohio to require new reporting by tax-exempt hospitals and boards of health, issues guidance on alignment with state's priorities The Ohio Department of Health (ODH) has issued new guidance encouraging tax-exempt hospitals' alignment with the state's priorities and addressing several recommendations that the ODH outlined in a 2016 report on improving the state's population health planning. The new guidance follows state legislation issued last year requiring tax-exempt hospitals and boards of health to report on community health needs assessments and implementation strategies. In a 2016 report titled "Improving Population Health Planning in Ohio" (the 2016 Guidance), the ODH noted that Ohio's performance on population health has steadily declined relative to other states. The report outlined four recommendations to improve the population health planning infrastructure in Ohio: 1. Transparency and accessibility: Ohio should require local health departments and tax-exempt hospitals to submit all plans and assessments to the state. In addition, all tax-exempt hospitals should be required to submit their federal Form 990 Schedule H and corresponding attachments on an annual basis. Lastly, Ohio should make this information publicly available online. 2. State and local plan alignment: Ohio should issue guidance encouraging local health departments and tax-exempt hospitals to align priorities, metrics and strategies. 3. Hospital and local health department alignment: Ohio should issue guidance encouraging local health departments and tax-exempt hospitals to partner on assessments and plans. 4. Funding: Ohio should issue guidance encouraging tax-exempt hospitals to allocate a minimum portion of their total community benefit expenditures to activities that most directly support community health planning objectives, including community health improvement services and cash and in-kind contributions. The first recommendation was met with the passage of HB 390. Accordingly, effective September 28, 2016, Ohio Revised Code (ORC) 3701.981 requires tax exempt hospitals in Ohio to submit a copy of their existing community health needs assessments and implementation plans to the ODH by July 1, 2017. Tax-exempt hospitals that are not government-owned hospitals are also required to submit a copy of the organization's federal Form 990 Schedule H for the preceding fiscal year, including corresponding attachments and reporting on financial assistance and means-tested government programs and community-building activities reported in Parts I and II of that form. Government-owned hospitals are required to submit information that is equivalent to information identified in federal Form 990 Schedule H for the preceding fiscal year. After July 1, 2017, tax-exempt hospitals in Ohio will be required to submit the federal Form 990 Schedule H information to ODH annually within 30 days after filing with the Internal Revenue Service. After July 1, 2017, government-owned hospitals will annually be required to submit information equivalent to that identified in federal Form 990 Schedule H in a timely manner. The ODH will provide an online repository for this information required to be submitted by tax-exempt and government-owned hospitals. Beginning January 1, 2020, each board of health and tax-exempt hospital will be required to align their community health needs assessments and plans (e.g., implementation strategies) on a three-year interval to be established by the ODH. Furthermore, each tax-exempt hospital will be required to submit its community health needs assessment and implementation strategy covering years 2020 through 2023 to the ODH by October 1, 2020, and by October 1 for every three-year cycle thereafter. The ODH will provide an online repository for the assessments and plans to be submitted by the tax-exempt hospitals and boards of health. A publication recently issued by the Ohio Department of Health, titled "Improving Population Health Planning in Ohio: Guidance for Aligning State and Local Efforts" (the 2017 Guidance), addresses the other three recommendations outlined in the 2016 Guidance that were not addressed by HB 390. In the 2017 Guidance, the ODH initially outlines a collaborative effort to allow a broad spectrum of stakeholders to complete (a) a single plan to serve all community partners engaged in the process, or (b) individual plans that are aligned and informed by the efforts of the collaborative group. This collaborative effort should occur at the county level, at a minimum, with the local health departments and tax-exempt hospitals acting as the lead partners in the assessment and planning process. However, other community partners are still expected to participate. Furthermore, the ODH expects the local community planning and strategies to align with the State Health Assessment and the State Health Improvement Plan (SHIP). The ODH expects these collaborative efforts to use a single framework across the state to achieve economies of scale; tax-exempt hospitals will be able to modify the framework to fit their federal assessment and planning requirements. The ODH suggests starting the collaborative approach by identifying the priorities, strategies, outcome measures and populations of the community partners and sharing this information with the community partners to identify where plan and assessment overlap already exists. The ODH is developing templates and key data metrics/indicators to assist in this process. The state's health care priorities include: maternal and infant health, chronic disease, and/or mental health and addiction. There are a total of 10 priority outcomes associated with these three priorities. The State Health Improvement Plan (SHIP) further identified four cross-cutting factors related to these priority outcomes: (1) social determinants of health; (2) public health system, prevention and health behaviors; (3) healthcare system and access; and (4) equity. SHIP also created tools that assist in the development of cross-cutting strategies relevant to each priority outcome as well as cross-cutting outcome indicators relevant to each strategy. These cross-cutting outcome indicators measure and quantify the impact of the strategy. (See Master List of SHIP indicators tab in the SHIP.) Regarding Alignment, the ODH is encouraging hospitals and local health departments to jointly select at least two priority topic areas for their county from the SHIP as part of their collaborative planning and assessment process from the aforementioned Local Collaboration. For each of the two priority topics selected, the parties are expected to select at least one priority outcome indicator to track, at least one cross-cutting strategy to implement, and also at least one related cross-cutting indicator to measure the impact of the selected strategy. To create a stronger plan, the ODH suggests that the parties select at least one cross-cutting strategy and at least one related cross-cutting indicator for each of the three cross-cutting factors noted above. Furthermore, the ODH encourages hospitals and local health departments to inform community partners of action steps necessary and who is responsible for these actions. Hospitals that are tax-exempt under Internal Revenue Code Section 501(c)(3) are required to commit expenditures towards hospital community benefit activities. In the 2016 Guidance, the Health Policy Institute of Ohio reviewed the 2012 federal Form 990 Schedule H data for Ohio hospitals and determined that approximately 5% of Ohio hospitals' total net community benefit expenditures were allocated toward community health improvement services and cash and in-kind contributions, which is less than the 7.5% national average for 2011. Thus, the ODH is encouraging Ohio hospitals to work towards exceeding the national average for investments in community health improvement services and cash and in-kind contributions. The ODH will review the information submitted annually for ORC 3701.981 (see the background above), to report where hospitals' community benefit dollars are allocated in comparison to the national and state average. Additionally, ODH will report on a hospital's alignment with priorities and evidence-based strategies identified in the SHIP and a hospital's level of collaboration with local health partners. As a result, Ohio hospitals are being encouraged by ODH to increasingly align their community benefit investments with the priorities and investment-based strategies in their community's health improvement plan and the SHIP. Nonprofit and government hospitals that are tax-exempt under Internal Revenue Code Section 501(c)(3), which are considered "hospitals" under federal tax law and, therefore, obliged to meet the community health needs assessment requirements of Treasury Regulations Section 1.501(r)-3, are now legally bound to file information concerning their community health needs assessments and implementation plans for the most recent assessment and planning period with the ODH. The first such filing will be due July 1, 2017. Boards of health of a city or general health district are subject to the same requirements with the ODH. Effective January 1, 2020, hospitals and boards of health will also need to align their community health needs assessments and implementation plans on a three-year interval established by the ODH. While having a community health needs assessment and implementation plan is not new for nonprofit hospitals, since they are already subject to the federal tax law requirements, they must now pay attention to the additional filing due dates established under Ohio law for state filing purposes. Additionally, some tax-exempt hospitals that are not currently on the 2016-2019 Community Health Needs Assessment and Improvement Plan timeline will be required to incur an additional cost (or expedite a future expense) to obtain a Community Health Needs Assessment that corresponds with the ODH's timeframe. Government hospitals that have not had to previously provide information regarding its charity care and community benefit activities will have to develop and adopt policies and procedures necessary to gather the information requested by the ODH. While not effective as law yet, the additional efforts by the ODH to encourage every tax-exempt hospital in the state of Ohio to work more closely with their local department of health, and to align their goals and strategies with those of the state as espoused in the SHIP, is evidence of the growing degree of control that the state will exercise over how the health care needs of its citizens are being met. Should these guidelines be adopted, then the goals and strategies of hospitals in their community health needs assessments and implementation plans will need to be more closely aligned with the specific priorities that ODH has established. In addition, ODH will be monitoring a hospital's cash outlays for investments in community health improvement services, funding and in-kind contributions to see how they align with their implementation strategies and/or the priorities and evidence-based strategies identified in the SHIP. Also, a hospital's level of collaboration with local health partners will become increasingly important. It is unclear what sanctions might apply to an organization or its management for failing to follow the guidelines established by the ODH in the 2017 Guidance. However, if they aren't already doing so, nonprofit hospitals should begin the process of collaborating more closely with local health departments to review the health care needs of the community, in light of the health care priorities, priority outcomes and the cross-cutting strategies and outcomes stated in the SHIP. — For more information about EY's Exempt Organization Tax Services group, visit us at www.ey.com/ExemptOrg.
Document ID: 2017-0636 | |||||||||||||||||||
