Non-profit hospitals in Colorado that receive federal, state and local tax exemptions are expected to provide a certain amount of community benefits. And starting in August 2023, these hospitals, including Vail Health, will have new reporting requirements for how they spend on “community benefit.”
The new requirements are part of a bill Gov. Jared Polis signed into law on Wednesday, May 10, intended to bring more transparency to nonprofit health care organizations.
The need for the legislation emerged from the Colorado Department of Health Care Policy and Financing’s 2023 annual report on the hospital community benefits accountability report. The department reported that nonprofit Colorado hospitals invested “$965 million in community benefits in 2020-21, excluding the Medicaid shortfall.”
(By contrast, a report from the Colorado Health Association on Hospital Community Benefit Spending reported that Colorado hospitals “directly invested more than $1.9 billion in the health and wellness of their communities” in 2021.)
While the Colorado Department of Health Care Policy and Finance acknowledged that these contributions were “significant” in its report, it saw a need for the state to “improve the state’s understanding of where community dollars are actually being invested.” increasing transparency and accountability of hospitals to their communities moving forward.
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Community benefit is a broad term but generally refers to numerous activities, programs, and services intended to meet the needs of the community. This can include free or discounted health services, social determinants of health care spending, as well as spending on housing, food, transportation, interpersonal violence, education, and more.
Currently, community benefit spending requirements for hospitals are guided and overseen by the Internal Revenue Service.
The new law, in a statement by Kim Bimestefer, executive director of the department of health care policy and financing, is to “ensure that the voice of the local community is reflected in hospital community investment while provisions on reporting verify that the alignment is moving forward”.
There are five main components to the passed law intended to increase transparency and ensure community needs are met. These include more specific and detailed expense information reporting requirements; requirements for hospitals to engage with the community in their community benefit process; expanding requirements for the State Department to establish community engagement best practices; a calculation of the tax-exempt value of non-profit hospitals; and some non-compliance measures. All of these measures will go into effect in August.
Vail Health and Community Benefit
“Regardless of new state legislation, Vail Health has been a proud leader in the state for the past four years, investing to benefit the community,” said Nico Brown, chief strategy officer at Vail Health. “We gather extensive data and community input through our community health needs assessment to inform where our community benefits focus.”
Vail Health performs this assessment as part of the current regulatory requirements of the IRS every three years. The most recent report was released in October 2022. In an earlier interview with the Vail Daily, Brown said the report aims to identify “the gaps that we have here, it identifies at granular levels what we can do, what we’re doing and how we’re going to address those gaps.”
The report is compiled based on community demographic data and a community stakeholder process in collaboration with other local organizations.
As a result of this process, Vail Health has invested in a wide variety of community benefits, Brown said this week. This includes his $60 million cash commitment to behavioral health (including the creation of Vail Health Behavioral Health and support from other local organizations); a $194 million investment in compensation and benefits for its employees; free COVID testing and treatment; an increase in its financial assistance policy; and more.
It also includes “support from other local nonprofits like My Future Pathways, Community Market and Eagle Valley Community Foundation, Mountain Family Health Center, Vail Valley Charitable Fund, Vail Valley Partnership, and many others,” Brown said.
“The bill does not change Vail Health’s focus and investment in community benefits. It adds some administrative burden, which ultimately increases the cost of health care,” Brown said.
This, Brown added, is “just the opposite of what we’re all trying to achieve.”
However, the organization intends to “continue its significant community partnership and investment consistent with the needs of our communities and Vail Health’s strategic mission.”
The new law was just one of many health care bills passed by lawmakers and signed into law by Polis after the 2023 legislative session. Other legislation includes new rules and regulations on prescription drugs, health insurance, gender affirmation assistance, and more .
With the new slate of laws, not just this year, but in recent years, Brown recognized the work Vail Health and other Colorado health care institutions have ahead of them to comply.
“Given the amount of health care billing we have seen over the past four years, it would be prudent to take a break and work to properly understand what has been effective and what has not before enacting further health care related legislation and regulation,” Brown said.
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