BILL REQ. #:  H-3450.1 

Read first time 01/11/12.   Referred to Committee on Health Care & Wellness.

     AN ACT Relating to community benefits provided by hospitals; amending RCW 70.170.020 and 70.170.060; adding new sections to chapter 70.170 RCW; creating a new section; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   (1) The legislature finds that:
     (a) Nonprofit hospitals enjoy significant tax benefits in Washington. In return for this advantage, it is expected that nonprofit hospitals provide a commensurate level of benefit to the communities that they serve, including charity care.
     (b) Public hospital district hospitals operate health care facilities and provide health care services as are appropriate for the needs of the populations that they serve. As public entities it is imperative that they demonstrate through a public process that they are meeting their obligation to benefit the communities that they serve.
     (c) As of January 1, 2014, with the implementation of the Washington health benefit exchange and the expansion of the medicaid program, the number of uninsured individuals in Washington will decrease substantially. The reduced number of uninsured people in Washington presents an opportunity for hospitals to emphasize community benefit efforts that address broad population-based health responses to the prioritized needs of the community, through a collaborative effort with community members, rather than the provision of uncompensated care to uninsured individuals.
     (2) The legislature intends to build upon requirements established in the federal patient protection and affordable care act, P.L. 111-148, to increase the quality of, and accountability for, community benefit activities by nonprofit hospitals operating in the state of Washington.

Sec. 2   RCW 70.170.020 and 1995 c 269 s 2203 are each amended to read as follows:
     ((As used in this chapter:)) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Charity care" means necessary hospital health care rendered to indigent persons, to the extent that the persons are unable to pay for the care or to pay deductibles or coinsurance amounts required by a third-party payer, as determined by the department.
     (2) "Community benefits" has the same meaning as defined in 26 U.S.C. Sec. 501 and any implementing regulations and guidance adopted by the federal internal revenue service as it existed on the effective date of this section, or such subsequent date as may be provided by the department by rule, consistent with the purpose of sections 3, 4, and 6 of this act and RCW 70.170.060.
     (3) "Community benefit implementation strategy" has the same meaning as defined in 26 U.S.C. Sec. 501 and any implementing regulations and guidance adopted by the federal internal revenue service as it existed on the effective date of this section, or such subsequent date as may be provided by the department by rule, consistent with the purpose of sections 3, 4, and 6 of this act and RCW 70.170.060.
     (4) "Community building activities" has the same meaning as defined in 26 U.S.C. Sec. 501 and any implementing regulations and guidance adopted by the federal internal revenue service as it existed on the effective date of this section, or such subsequent date as may be provided by the department by rule, consistent with the purpose of sections 3, 4, and 6 of this act and RCW 70.170.060.
     (5) "Community health needs assessment" has the same meaning as defined in 26 U.S.C. Sec. 501 and any implementing regulations and guidance adopted by the federal internal revenue service as it existed on the effective date of this section, or such subsequent date as may be provided by the department by rule, consistent with the purpose of sections 3, 4, and 6 of this act and RCW 70.170.060.
     (6) "Department" means department of health.
     (((2))) (7) "Hospital" means any health care institution which is required to qualify for a license under RCW 70.41.020(((2))) (4); or as a psychiatric hospital under chapter 71.12 RCW.
     (((3))) (8) "Secretary" means secretary of health.
     (((4) "Charity care" means necessary hospital health care rendered to indigent persons, to the extent that the persons are unable to pay for the care or to pay deductibles or co-insurance amounts required by a third-party payer, as determined by the department.
     (5))) (9) "Sliding fee schedule" means a hospital-determined, publicly available schedule of discounts to charges for persons deemed eligible for charity care; such schedules shall be established after consideration of guidelines developed by the department.
     (((6))) (10) "Special studies" means studies which have not been funded through the department's biennial or other legislative appropriations.

NEW SECTION.  Sec. 3   A new section is added to chapter 70.170 RCW to read as follows:
     (1) As of January 1, 2014, each hospital that is organized as, or affiliated with, a nonprofit entity or is operated by a public hospital district must submit a community health needs assessment to the department. Following the submission of the initial community health needs assessment, the hospitals shall submit the assessments every three years. In addition to meeting the requirements for submission to the federal internal revenue service, the community health needs assessment requires submission of the following:
     (a) A description of the community served by the hospital, including both a geographic description and a description of the general population served by the hospital as well as any populations that are medically underserved, low-income, minority, or chronically ill;
     (b) A description of the prioritized health needs of the community.
     (i) In determining the community's health needs, the hospital must consider:
     (A) The five most common causes of death in the community;
     (B) Identified public health needs of the community;
     (C) The extent to which the community experiences ambulatory sensitive conditions. Ambulatory sensitive conditions are those preventable conditions, acute illnesses, and chronic diseases that decrease in response to primary care access, yet are associated with hospitalizations and increased societal health care costs; and
     (D) Social determinants of health that affect the community that the hospital serves.
     (ii) The assessment must explain the method used to determine the priorities of the community health needs;
     (c) A description of the existing health care facilities, health care providers, and other available resources within the community, including social services resources that address social determinants of health. The description must identify any existing facilities, providers, or resources that are owned, operated, or jointly managed by the hospital or any health system with which the hospital is affiliated;
     (d) A description of the sources of information that are the basis of the components of the community health needs assessment. Information must be based upon information received through:
     (i) Recognized authorities and sources of data, and to the extent available evidence-based programs and materials; and
     (ii) Comments solicited from and meetings held with members of the community served by the hospital, including:
     (A) Individual community members and interested nonprofit, community-based organizations;
     (B) Persons with special knowledge of or expertise in public health, including any local health jurisdiction in the community served by the hospital;
     (C) Tribal governments; and
     (D) Leaders, representatives, or members of populations that are medically underserved, low-income, minority, or chronically ill; and
     (e) For community health needs assessments submitted on or after January 1, 2017, an assessment of the impact that previously implemented community benefit implementation strategies have had on the health status and health outcomes of populations targeted for community benefit activities.
     (2) As of January 1, 2014, each hospital that submits a community health needs assessment under subsection (1) of this section shall submit a community benefit implementation strategy to the department within a year of submitting the community health needs assessment. In addition to meeting the requirements for submission to the federal internal revenue service, the community benefit implementation strategy requires submission of the following:
     (a) A description of the means through which the following individuals, organizations, and governmental entities were consulted in the development of the implementation strategy, including a summary of any discussions or written comments submitted by these entities:
     (i) Individual community members and interested nonprofit community-based organizations;
     (ii) Persons with special knowledge of or expertise in public health, including any local public health jurisdiction in the community served by the hospital;
     (iii) Tribal governments; and
     (iv) Leaders, representatives, or members of populations that are medically underserved, low-income, minority, or chronically ill;
     (b) The economic value of the community benefits, by category, that the hospital allocated within the previous three years to address the prioritized health needs of the community as identified in the community health needs assessment and a description of the programs that the community benefits supported;
     (c) A plan identifying the specific programs and activities that will be implemented to address the prioritized health needs of the community as identified in the community health needs assessment for the next three years, including both community benefit and community building activities. Hospital programs and activities should focus on:
     (i) A population health response to the prioritized needs of the community through a collaborative effort with community members;
     (ii) Linkages between clinical services and community health improvement through activities such as the use of hospital clinical staff and other staff with relevant expertise to identify barriers to acute and chronic disease management, identify critical community health needs, and improve care delivery; and
     (iii) Evidence-based programs and practices. Innovative programs and practices may also be supported if they have mechanisms for collecting data to measure performance and outcomes; and
     (d) A description of the mechanisms that will be used to assess the extent to which the programs and activities to be undertaken have addressed the prioritized health needs of the community, including impacts on health status and health outcomes.
     (3) The department shall:
     (a) Adopt rules to establish standards for hospitals to follow when conducting a community health needs assessment and developing a community benefit implementation strategy. The department shall consider federal requirements to prepare a community health needs assessment and shall minimize any conflicting administrative requirements; and
     (b) Make the community health needs assessments and community benefit implementation strategies available to the public.

NEW SECTION.  Sec. 4   A new section is added to chapter 70.170 RCW to read as follows:
     (1) A nonprofit hospital shall annually provide community benefits, including charity care, by complying with one or more of the standards set forth in subsection (2) of this section. The hospital shall file a statement with the department and the department of revenue no later than one hundred twenty days after the hospital's fiscal year ends, stating which of the standards in subsection (2) of this section have been satisfied. The first report must be filed no later than one hundred twenty days after the end of the hospital's fiscal year ending during 2015.
     (2)(a) A nonprofit hospital may elect to provide community benefits, including charity care, according to any of the following standards:
     (i) Community benefits, including charity care, are provided at a level which is reasonable in relation to the community needs, as determined through the community health needs assessment, the available resources of the hospital, and the tax-exempt benefits received by the hospital;
     (ii) Community benefits, including charity care, are provided in an amount equal to at least one hundred percent of the hospital's tax-exempt benefits, excluding federal income tax; or
     (iii) Community benefits, including charity care, are provided in an amount equal to at least five percent of the hospital's net patient revenue.
     (b) For purposes of satisfying (a)(iii) of this subsection, a hospital may not change its existing fiscal year unless the hospital changes its ownership or corporate structure as a result of a sale or merger.
     (c) A nonprofit hospital that has been designated as a disproportionate share hospital under the state medicaid program in the current fiscal year or in either of the previous two fiscal years is considered to have provided a reasonable amount of community benefits, including charity care, and is deemed in compliance with the standards in this subsection.
     (3) The provision of community benefits, including charity care, in accordance with subsection (2)(a)(i) of this section must be guided by the prudent business judgment of the hospital which will ultimately determine the appropriate level of community benefits, including charity care, based on the community needs, the available resources of the hospital, the tax-exempt benefits received by the hospital, and other factors that may be unique to the hospital, such as the hospital's volume of medicare and medicaid patients. These criteria are not determinative factors, but are guidelines contributing to the hospital's decision, along with other factors which may be unique to the hospital. In addition, the standards set forth in subsection (2)(a) (ii) and (iii) of this section may not be considered determinative of the amount of community benefits, including charity care, that will be considered reasonable under subsection (2)(a)(i) of this section.
     (4) In any fiscal year that a hospital, through unintended miscalculation, fails to meet any of the standards in subsection (2) of this section, the department of revenue may not revoke the hospital's tax-exempt status without the opportunity to cure the miscalculation in the fiscal year following the fiscal year the failure is discovered by both meeting one of the standards and providing an additional amount of community benefits, including charity care, that is equal to the shortfall from the previous fiscal year. A hospital may apply this provision only once every five years.

Sec. 5   RCW 70.170.060 and 1998 c 245 s 118 are each amended to read as follows:
     (1) No hospital or its medical staff shall adopt or maintain admission practices or policies which result in:
     (a) A significant reduction in the proportion of patients who have no third-party coverage and who are unable to pay for hospital services;
     (b) A significant reduction in the proportion of individuals admitted for inpatient hospital services for which payment is, or is likely to be, less than the anticipated charges for or costs of such services; or
     (c) The refusal to admit patients who would be expected to require unusually costly or prolonged treatment for reasons other than those related to the appropriateness of the care available at the hospital.
     (2) No hospital shall adopt or maintain practices or policies which would deny access to emergency care based on ability to pay. No hospital which maintains an emergency department shall transfer a patient with an emergency medical condition or who is in active labor unless the transfer is performed at the request of the patient or is due to the limited medical resources of the transferring hospital. Hospitals must follow reasonable procedures in making transfers to other hospitals including confirmation of acceptance of the transfer by the receiving hospital.
     (3) The department shall develop definitions by rule, as appropriate, for subsection (1) of this section and, with reference to federal requirements, subsection (2) of this section. The department shall monitor hospital compliance with subsections (1) and (2) of this section. The department shall report individual instances of possible noncompliance to the state attorney general or the appropriate federal agency.
     (4) The department shall establish and maintain by rule, consistent with the definition of charity care in RCW 70.170.020, the following:
     (a) Uniform procedures, data requirements, and criteria for identifying patients receiving charity care;
     (b) A definition of residual bad debt including reasonable and uniform standards for collection procedures to be used in efforts to collect the unpaid portions of hospital charges that are the patient's responsibility.
     (5) For the purpose of providing charity care, each hospital shall develop, implement, and maintain a charity care policy which, consistent with subsection (1) of this section, shall enable people below the federal poverty level access to appropriate hospital-based medical services, and a sliding fee schedule for determination of discounts from charges for persons who qualify for such discounts by January 1, 1990. The department shall develop specific guidelines to assist hospitals in setting sliding fee schedules required by this section. All persons with family income below one hundred percent of the federal poverty standard shall be deemed charity care patients for the full amount of hospital charges, provided that such persons are not eligible for other private or public health coverage sponsorship. Persons who may be eligible for charity care shall be notified by the hospital.
     (6) Each hospital shall make every reasonable effort to determine the existence or nonexistence of private or public sponsorship which might cover in full or part the charges for care rendered by the hospital to a patient; the family income of the patient as classified under federal poverty income guidelines; and the eligibility of the patient for charity care as defined in this chapter and in accordance with hospital policy. An initial determination of sponsorship status shall precede collection efforts directed at the patient.
     (7) The department shall monitor the distribution of charity care among hospitals, with reference to factors such as relative need for charity care in hospital service areas and trends in private and public health coverage. The department shall prepare reports that identify any problems in distribution which are in contradiction of the intent of this chapter. The report shall include an assessment of the effects of the provisions of this chapter on access to hospital and health care services, as well as an evaluation of the contribution of all purchasers of care to hospital charity care.
     (((8) The department shall issue a report on the subjects addressed in this section at least annually, with the first report due on July 1, 1990.))

NEW SECTION.  Sec. 6   A new section is added to chapter 70.170 RCW to read as follows:
     The department shall issue a report on the charity care provisions of RCW 70.170.060 and the community benefit implementation strategy reports of section 3 of this act at least annually, with the first report due July 1, 2015.

NEW SECTION.  Sec. 7   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 8   Sections 5 and 6 of this act take effect January 1, 2015.