Monday, March 13, 2023
One of the tax law benefits from ObamaCare is the required Community Health Needs Assessment. Mary, my Dean for a very brief period before I left Pittsburgh for better weather but a far worse governor, published a remarkably prescient article in the Howard Law Journal about 501(r) shortly after it was adopted. Prescient because she predicted that the Community Health Needs Assessment could play a key role in addressing disparities in health care:
Health disparities based on race and ethnicity, as well as disability, gender, and socio-economic status, are numerous, pervasive, and tenacious. Researchers are still striving mightily to understand and document the complex and interacting factors that produce and perpetuate the differences in health status and health outcomes, so that steps can be taken to diminish and eliminate those instances of inequality. Of course, addressing disparities is not the central or most commonly known concern of the Affordable Care Act, which may be most widely known for its provisions reforming markets for health insurance and requiring that individuals have health insurance coverage.
The drafters of the legislation, however, were by no means oblivious to the problem of disparities, and indeed one goal expressly stated in the ACA is to reduce health disparities across populations. Embedded throughout the Act are numerous provisions that explicitly seek to diminish disparities, whether by addressing access to health care for persons with disabilities or by taking steps to increase the diversity of the health care workforce and to enhance workers’ cultural competency. Moreover, to the extent that the Act is eventually effective in providing health coverage to most of the Americans who are currently uninsured (a disproportionate percentage of whom are non-white), it will predictably lessen existing disparities in rates of health insurance coverage, which may translate into a salutary effect on the disparities in health outcomes and health status experienced by members of racial and ethnic minorities.
This Essay suggests that the community health needs assessment (CHNA) requirement could be implemented in such a way that it would function as a valuable addition to the existing toolkit for addressing disparities.
To prove the point, look at what's happening in Georgia, where stakeholders allege that a nonprofit hospital's search for paying customers has resulted in increased health care disparity along racial lines. Here is how one media reports it:
The civil rights organization NAACP, along with Georgia Democrats and other lawmakers, has filed two federal complaints against Marietta, Ga.-based Wellstar Health System following its closure of two Atlanta hospitals in primarily Black areas. In May 2022, Atlanta Medical Center South in East Point, Ga., closed its emergency department and ended inpatient services. The hospital began diverting traffic to Atlanta Medical Center, its 460-bed sister facility, which shuttered in November 2022 despite backlash from community members, government officials and nearby healthcare organizations.
The first complaint, filed with the IRS, asks for an investigation of Wellstar's tax-exempt status. The second, filed with HHS' civil rights office, alleges the hospital closures violated the 1964 Civil Rights Act. The two hospitals that closed saw primarily Black patients, while hospitals in wealthier white areas have remained open. The health system has pursued more hospitals in white areas since closing the Atlanta hospitals — including a partnership with Augusta University Hospital System, which could include a hospital in a 71.3 percent white county — The Augusta Chronicle reported March 8.
Wellstar has pushed back against allegations of intentional racism surrounding the hospitals' closures since they arose. The day after Atlanta Medical Center shuttered, Wellstar CEO Candice Saunders said its closure was not abrupt. She said the health system held an exhaustive search for partners, but none was willing to move forward after learning more about the hospital's finances.
Here are excerpts from the IRS complaint.
Specifically, we ask IRS to investigate whether Wellstar has complied with the requirement to conduct a community health needs assessment (CHNA) and then to adopt an implementation strategy to address community health needs identified in the CHNA. While Wellstar did produce a CHNA for the two hospitals, which it considered together, it did not adopt or execute an implementation strategy to meet the many needs it identified, first among them, access to appropriate health care. In fact, it abruptly closed the two hospitals in 2022, uprooting a system of care that had served the minority community for generations. Meanwhile, it is pursuing a new venture to acquire control of a hospital system in Augusta, GA, and, likely, to build another hospital in a whiter, wealthier county.
The complainants basically make the case that when Wellstar acquired the two downtown Atlanta hospitals it never had an intention to meet community needs, but instead used the CHNA to assess future profitability, and when that assessment proved bleak it shut the hospitals down, precipitating a medical brain drain resulting in a "medical desert" right smack in the middle of downtown Atlanta. At the same time, according to the complaint, Wellstar is looking to acquire more hospitals and provide more care in affluent and whiter suburbs. Now urban dwellers -- mostly people of color -- have to commute through ATL's horrendous traffic all day long for a 30 minute doctor's appointment. Some simply go without, especially since the hospital's closure resulted in downtown physicians shutting down and moving out as well.
By the way, in the 13 years since 501(r) was enacted, there has only been one reported revocation of a hospital's exempt status for failure to comply with the CHNA requirement. That 2017 case involved a little hospital out near Green Acres somewhere and, I kid you not, this is what the crusty old well-meaning hospital CEO told the IRS examiner:
Look, you little snot nosed city boy. We really ain't never asked, nor do we have any need or desire for your fancy New York City tax exemption. Or wherever you come from. All your fancy schmancy tax exemption rules do for us is get in the way of our Medicare reimbursements and such. It was them city boys before us who sought out your goll durn exemption, something we never needed or wanted. We ran them outta town and I'ma tellin you here and right now that we have neither the resources, the time, nor the patience for some stupid CHNA assessment. People are sick, can't you see that? Now gone git!
You think I am making this up? Read the bottom of page two of the Form 886-A attached to the letter ruling if you don't believe me. By the way, I have not found any other rulings, administrative or judicial, revoking tax exemption for a hospital's failure to comply with 501(r). But in Minnesota last year, compliance with 501(r) was a huge factor in the Minnesota Tax Court's reversal of a county's denial of property tax exemption to a nonprofit hospital. The Tax Court's detailed finding in Perham Hospital District v County of Otter Tail quoted extensively from the hospital's CHNA in support of its decision to reverse the assessor's denial of property tax exemption. The Minnesota Supreme Court upheld that ruling early last year. So it seems the CHNA can be both a sword and a shield. As it should be.