The Centers for Medicare & Medicaid Services (CMS) issued final and proposed rules on April 26 giving states more flexibility regarding community-based services and support for Medicaid enrollees. The regulations were published in today's Federal Register. The final rule implements section 2401 of the Affordable Care Act (ACA), which establishes a new State option to provide home and community-based attendant services and supports. These services and supports are known as Community First Choice (CFC). The regulation provides an incentive for states to expand Medicaid coverage for home and community-based services by boosting the federal match rate. To qualify for this improved federal match rate, a state must agree to develop its Community First Choice benefit, maintain a quality assurance system, and collect and report information to CMS. Additionally, during the first 12 months of Community First Choice benefit implementation, the state must maintain or exceed the level of expenditures for home and community-based services provided under the state plan, waivers or demonstration for the preceding 12 months. While this final rule sets forth the requirements for implementation of CFC, it does not finalize the section concerning the CFC setting. CMS estimated that the final rule would have an impact of $1.3 billion in FY 2012.

The Internal Revenue Service (IRS) has issued a draft Schedule H and accompanying instructions for tax-exempt hospitals. As required by the Affordable Care Act (ACA), non-profit hospitals must respond to questions on financial assistance policies, billing and collection practices, emergency medical care, and individuals eligible for financial assistance, beginning with the 2011 tax filing year. The draft instructions have been revised to more clearly follow the statutory provision of Section 501(r) of the Internal Revenue Code. Several of the changes relate to billing and collections. For more information on tax-exempt hospital requirements, click here and here.

On July 7, 2011, the Treasury Department and the Internal Revenue Service (IRS) published a Notice and Request for Comments on a proposed policy regarding the Affordable Care Act’s new requirements related to tax exempt hospitals’ community health needs assessment (CHNA) obligations. Section 9007 of the Act added new Section 501(r) to the Internal Revenue Code, which delineates a series of statutory requirements, outlined in a previous implementation brief, applicable to nonprofit hospitals that seek tax-exempt status under Section 501(c)(3). The purpose of the Treasury/IRS Notice is to both describe the agencies’ approach to implementing hospital organizations’ CHNA obligations and to invite comments regarding their proposals. The CHNA requirements are effective for taxable years beginning after March 23, 2012. However, the Notice specifies that hospitals currently engaged in conducting CHNA-related activities -- including development and wide publication of a needs assessment and adoption of an implementation strategy -- can rely on the policies contained in the Notice as they move forward.

The Treasury Inspector General for Tax Administration (TIGTA) recently performed an audit on the Affordable Care Act (ACA) and the the Health Care and Education Reconciliation Act of 2010. TIGTA performed the audit to review the Tax Exempt and Government Entities (TE/GE) Division's initial planning activities for ACA implementation. The TIGTA review did not identify any concerns relating to the methodology the TE/GE Division is using to monitor and coordinate planning efforts.

In Notice 2010-39, the Internal Revenue Service solicits comment on new requirements for tax-exempt hospitals under the health reform law.