by John Kansky, Joshua Vest and Nir Menachem
Per IRS guidelines, not-for-profit hospitals, which make up 73% of non-governmental U.S. acute care hospitals, receive tax exemptions from sales, property and income taxes in exchange for the diverse set of community benefiting activities (CBAs) they provide. The conditions for not-for-profit status, which include being able to demonstrate a reduction in governmental burden and a promotion of general welfare, have not materially changed since 1969. However, IRS changes that went into effect in 2009 were designed to reduce ambiguity and more clearly define how CBAs must be reported and quantified.
We believe that hospital participation in community health information exchanges (cHIEs) should be considered a CBA under IRS guidelines. While it does not appear that IRS guidelines prohibit such participation, IRS has not specifically commented that this practice is allowed. As a result, some hospitals may already be counting their involvement in a cHIE as a CBA, some may be considering doing so and more may be unaware of the possibility.
Click here to read the rest of the perspective on how participation in a cHIEs fulfills all seven points of IRS' descriptions of a qualifying CBA.