Researcher: JO Page 1 3/31/21
OLR Bill Analysis
sHB 6550
AN ACT CONCERNING THE OFFICE OF HEALTH STRATEGY'S
RECOMMENDATIONS REGARDING VARIOUS REVISIONS TO
COMMUNITY BENEFITS PROGRAMS ADMINISTERED BY
HOSPITALS.
SUMMARY
This bill makes various changes to the law on hospital community
benefit programs. Among other things, it:
1. conforms to existing practice by shifting oversight of this law
from the Office of Healthcare Advocate (OHA) to the Office of
Health Strategy (OHS);
2. aligns with federal tax law by excluding for-profit hospitals
from state law on community benefit programs;
3. requires OHS, by January 1, 2023, and every two years after
that, to establish a minimum community benefit and
community building spending threshold for each nonprofit
hospital;
4. requires, rather than allows, nonprofit hospitals to develop
community benefit guidelines and changes their necessary
components (e.g. specifically requiring that they be intended to
reduce racial, ethnic, linguistic, and cultural disparities in
health);
5. requires nonprofit hospitals’ annual reports on community
benefits to describe certain investments they made and explain
how those investments addressed the needs identified in the
hospital’s triennial community health needs assessment (which
is required by federal law); and
6. removes managed care organizations (MCOs) from this law. 2021HB-06550-R000231-BA.DOCX
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The bill also makes several minor, technical, and conforming
changes.
EFFECTIVE DATE: Upon passage
HOSPITAL COMMUNITY B ENEFIT PROGRAMS
Scope
Under current law, a “community benefits program” is a voluntary
program to promote preventive care and improve the health status of
working families and at-risk populations in the communities within a
hospital’s or MCO’s geographic service area.
The bill makes these programs mandatory for nonprofit hospitals, in
line with federal law (see BACKGROUND). It removes other hospitals
and MCOs from this law. It also adds to the programs’ objectives the
(1) reduction of racial, ethnic, linguistic, and cultural disparities in
health and (2) improvement in the health of all populations in the
service area, not just working families and at-risk populations.
Reporting
Under current law, each hospital and MCO must submit a biennial
report on whether it has a community benefits program. If the hospital
or MCO has such a program, the report must describe its status and
address various components set forth in law.
The bill instead requires nonprofit hospitals to report annually on
their community benefit programs. They must report to OHS’s Health
Systems Planning Unit or a designee selected by OHS’s executive
director, rather than to the Healthcare Advocate or his designee as
under current law. (In practice, oversight of the community benefits
law has already shifted from OHA to OHS under a memorandum of
agreement.)
The bill makes related conforming changes to codify the transfer of
authority over this law to OHS. This includes authorizing OHS, rather
than OHA, to impose civil penalties of up to $50 per day on hospitals
that fail to report as required. As under current law, these penalties
may only be imposed after notice and an opportunity for a hearing. 2021HB-06550-R000231-BA.DOCX
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Report Components. The bill makes several changes to these
reports’ required components, including several minor and
conforming changes. For example, the bill specifies that the reports
must identify community health needs that were prioritized, not just
considered, in the process.
The bill also adds the following to the list of required report
components:
1. the demographics of the hospital’s geographic service area for
the prior taxable year;
2. the cost and description of each investment included in the
“Financial Assistance and Certain Other Community Benefits at
Cost” and “Community Building Activities” sections of the
hospital’s IRS form 990 (see BACKGROUND);
3. an explanation of how each such investment addresses the
identified needs in the hospital’s triennial community health
needs assessment and implementation strategy (see below); and
4. a description of available evidence showing how each such
investment improves community health outcomes.
Under the bill, a “community health needs assessment” is a
hospital’s written assessment, as described in federal regulations, that
(1) defines the community it serves, (2) assesses that community’s
health needs, and (3) solicits and considers people that represent the
community’s broad interests. An “implementation strategy” is a
written plan required by the federal regulations that addresses
community health needs identified through the assessment and that
(1) describes the hospital’s intended actions to address the health need
and impact of these actions, (2) identifies resources that the hospital
plans to commit to address the need, and (3) describes the planned
collaboration between the hospital and other facilities and
organizations to address the need (see BACKGROUND).
Required Posting and Analysis. Current law requires hospitals 2021HB-06550-R000231-BA.DOCX
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and MCOs to make copies of their community benefits program
reports available to the public upon request. The bill instead requires
OHS to post nonprofit hospitals’ reports on its website.
The bill transfers from OHA to OHS the duty to summarize and
analyze the submitted reports, including for adherence to the
community benefit guidelines (see below), and within available
appropriations. It requires OHS, by October 1, 2022, and annually after
that, to post the summary and analysis online. Under current law,
OHA must biennially make the summary and analysis available to the
public.
Community Benefit Guidelines (§ 1(c))
Current law allows hospitals and MCOs to develop community
benefit guidelines and requires any such guidelines to focus on certain
principles. The bill instead requires nonprofit hospitals to develop
these guidelines. It also modifies some of the principles that must
inform the guidelines.
Under existing law, the guidelines must focus on seeking assistance
and meaningful participation from the communities in the hospital’s
service area in (1) developing and implementing its community benefit
program and (2) defining the targeted population and specific health
needs to be addressed. The hospital must give priority to the needs
outlined in the Department of Public Health’s most recent state health
plan.
The bill extends this community participation focus to include the
hospital’s developing and implementing a plan for meaningful
community benefit and community building investments (see below).
It also requires the hospital to give priority to its triennial community
health needs assessment and implementation strategy.
The bill requires each nonprofit hospital to solicit commentary on its
implementation strategy from the communities in its geographic
service area, and consider revisions based on it.
The bill makes other revisions to the required guidelines 2021HB-06550-R000231-BA.DOCX
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conforming to the bill’s other changes, such as specifically requiring a
focus on the health care needs and resources of a broad spectrum of
racial and ethnic groups.
MINIMUM COMMUNITY BE NEFIT SPENDING THRES HOLD
The bill requires the OHS executive director or her designee, by
January 1, 2023, and biennially after that, to establish a minimum
community benefit and community building spending threshold that
nonprofit hospitals must meet or exceed during the biennium. Under
the bill, “community building” is activity that protects or improves a
community’s health or safety and may be reported on IRS Form 990.
The bill requires the threshold to be based on objective data and
criteria, including:
1. the hospital’s historical and current expenditures on community
benefits;
2. the community needs identified in the hospital’s triennial
community health needs assessment;
3. the hospital’s overall financial position based on audited
financial statements and other objective data; and
4. the hospital’s taxes paid and payments in lieu of taxes.
Under the bill, when establishing a spending threshold, OHS must
(1) consult with hospital representatives and at least one expert in
health care economics and (2) solicit and consider public comments.
The spending threshold must include the minimum proportion of
community benefit spending to be directed to addressing health
disparities and social health determinants identified in the community
health needs assessment during the next biennium.
BACKGROUND
Nonprofit Hospitals and Federal Requirements for Community
Health Needs Assessments
To maintain tax-exempt status under federal law, a nonprofit 2021HB-06550-R000231-BA.DOCX
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hospital must, among other things, (1) conduct a community health
needs assessment at least once every three years and (2) adopt an
implementation strategy to meet the needs identified in the
assessment. Federal regulations set forth various steps that hospitals
must take in completing these requirements (26 C.F.R. § 1.501(r)-3).
In addition, a nonprofit hospital must include certain related
information in its IRS Form 990 filing (the tax return for organizations
exempt from the income tax). Along with the standard form, there is a
specific attachment (Schedule H) that these hospitals must complete
which addresses, among other things, the hospital’s community
benefits, community building activities, and financial assistance policy.
COMMITTEE ACTION
Public Health Committee
Joint Favorable Substitute
Yea 22 Nay 11 (03/12/2021)