Healthcare Non-Profit Compliance Primer

VComply Editorial Team
Oct 1, 2020
10
Minutes

As a healthcare nonprofit, you have the opportunity to impact thousands of lives. However, being a healthcare nonprofit comes with it's fair share of regulatory and organizational issues that can affect your long term future. 

In this article, we’ll take a look at some common types of healthcare nonprofits, common compliance requirements for healthcare nonprofits, including HIPAA, and the best ways to manage healthcare nonprofit compliance.  


Types of Healthcare Nonprofits 

As varied as healthcare issues can be, there are many different types of healthcare nonprofits too. Let's take a look at some of the most common ones below. 


Community Healthcare Centers

These are federally funded 501(c)(3) organizations that provide healthcare services to low income groups. They are generally located in areas where people do not have access to medical support. They serve people from diverse backgrounds and communities. Apart from basic healthcare, they often provide programs related to nutrition, exercise, and wellness. They form a critical component of the public healthcare system, ensuring people in both urban and rural areas benefit from healthcare innovations. Even though they’re nonprofits, they work with cutting edge technology, equipment, and systems to ensure the best care for patients.  


Drug de-addiction centers

Rehabilitation centers for drug addicts are another type of healthcare nonprofit. The cost of enrolling in a private de-addiction facility can be out of bounds for people from low income households. Unfortunately, such people are more likely to develop habits of drug abuse and dependency. Thus, they are more in need of such services. Nonprofit centers such as these help people cope with depression and anxiety, and ultimately, eliminate their dependence on drugs. 


Mental healthcare centers

While physical health is important, mental wellbeing is also a crucial aspect of healthcare. Non profit mental health organizations help people recognize signs of mental distress and address them in a timely manner. Generally, mental health is considered a taboo topic and people refrain from talking too much about it. An important role of these nonprofits is also to raise awareness about mental health issues, and encourage people to come forward and seek help. Mental healthcare centers consist of professionals who help people cope with distress, both emotionally and psychologically. 


Common Compliance Requirements for Healthcare Nonprofits

Nonprofit healthcare organizations enjoy various benefits from the government, including a waiver of taxes. Hence, they are closely scrutinized by government bodies and must comply with certain rules and laws to maintain their nonprofit status.  Organizations that fail to meet federal compliance guidelines face penalties and fines, and can also be barred from raising funds. 


Some common compliance requirements for nonprofit healthcare organizations include: 


  • Form 990: Nonprofit healthcare organizations must submit form 990 to the IRS (Internal Revenue System). This form informs them of its mission, motives, and upcoming programs. 
  • Donation receipts: Healthcare nonprofits must keep a regular account of all the donations they receive. For donations higher than $250, the nonprofit must provide the donor with an acknowledgement receipt. Donation records must be presented to legal authorities when required. 
  • Fundraising: In order to raise funds, healthcare non profits must have a state license, and renew it on a yearly basis. Those organizations that do not have a valid state license are not permitted to raise funds. 
  • HIPAA for healthcare nonprofits: HIPAA is an act that protects the healthcare information of patients and ensures it is not shared without consent. Under this act, healthcare organizations must employ a set of measures to protect sensitive health information. We have covered this act in detail below.  


Board  and Grant Reporting

The board of a healthcare non profit organization serves as the guiding light for its actions, helps ensure that it is legally compliant at all times, and manages and supervises it's activities. Each board member should have a specific role. 


First and foremost, it is important for a board to ensure a healthcare nonprofit meets rules and regulations in the healthcare industry on an ongoing basis. Board members are also responsible for providing strategic leadership, financial stability, and executive support to a nonprofit organization. 


The board must develop and communicate the organization's vision, mission, and goals. It must continually monitor the organization's progress and outcomes. Typically, a robust system for evaluating performance should include the budget, balance sheet, income statement, annual report, and financial reports. These are all critical documents when filing the 990 form. 


In terms of legal compliance, the board must ensure all 990 filings are made on a regular basis. Finally, the board is also responsible for heading fundraising activities for a healthcare nonprofit.  Successful healthcare nonprofits are generally managed by enthusiastic board members, who regularly attend meetings, actively participate in every aspect of the nonprofit's functioning, and represent the organization in a positive manner. 


HIPAA for Healthcare Nonprofits

HIPAA stands for Health Insurance Portability and Accountability Act, implemented in 1996 to safeguard the privacy of healthcare information. The goal of HIPAA is to ensure that healthcare information of the public is not shared with any unauthorized parties, without an individual’s consent. 

To maintain the security of patients’ health information under HIPAA, healthcare nonprofits are expected to do the following: 


  • Encrypt emails that contain sensitive data
  • Draft policies around how health information should be distributed and documented 
  • Avoid using fax as a method of sending health information
  • Use passwords to protect sensitive information when sending it via email or another electronic system 

The HIPAA is enforced by the U.S Department of Health and Human Services. If an employee or consumer makes a complaint, it is investigated and corrective action is taken against non compliant organizations. 

Often, HIPAA violations occur when healthcare information is stolen, sensitive data is copied, or information is disclosed verbally.  

Violation of HIPAA can incur severe penalties for healthcare organizations. These include: 


  • Civil monetary penalties for unknown violations between $100 and $25000 per calendar year per violation, enforced by the Office For Civil Rights
  • Penalties up to $50,000 and one year of  imprisonment for knowingly obtaining or disclosing individually identifiable health information. 
  • Up to $1,00,000 and five years of imprisonment, for violations made under false pretenses. 
  • Up to $2,50,000 and ten years of imprisonment, for violations made with the intent to sell, transfer, or use for commercial advantage, personal gain or cause potential harm.

HIPAA violations have cost many hospitals and organizations hefty fines. St. Elizabeth’s Medical Center was charged a fine of $218,400 after they put the public health information of nearly 500 patients at risk. In another case, the Anchorage Community Medical Health Services had to pay a fine of $150,000 after a malware revealed the records of more than 2,700 patients. The center used outdated systems and software, and did not upgrade their technology. This case underlines the importance of processes and procedures, as well as regularly checking your software for malware. 


Why does a GRC software solution make sense for a healthcare non-profit?

It can be hard to detect security and compliance issues in growing and complex healthcare nonprofits. Moreover, compliance with HIPAA and other regulations often entails huge amounts of paperwork that healthcare organizations can find cumbersome. 

A simple solution to their compliance needs is using an automated compliance software that extends across through their entire organization. This will help them maintain consistency and minimize human error. 

An automated system for healthcare compliance such as VComply offers the following benefits to nonprofits: 


  • Efficient processes: A cloud based platform for storing data protects healthcare nonprofits from manual labour, helps redirect resources to patient care, and eliminates errors. With simple checklist and reporting capabilities, you can see patient data and well as any pending compliance requirements at a glance. 
  • High level of security: Violations of HIPAA and other regulations are often a result of human error. This can be eliminated with the help of a digital system. An automated system for organizing and managing patient data is both convenient and effective for healthcare nonprofits. Regular checks and updates ensure patient data is always secure, up-to-date, and easily accessible. 
  • Compliance with HIPAA and other regulations: You already know that compliance is of utmost importance to healthcare nonprofits. With automated compliance you'll be able to enforce reliable compliance processes, keep track of changing rules and regulations, as well as get regular updates of compliance actions needed on your part. This helps you consistently meet your compliance requirements in a quick and timely way. 


We hope this article sets you up to successfully fulfill your legal compliance needs. Violations of laws such as HIPAA are often the result of technical oversight and not keeping pace with changing technology. With the right tools and software, they are completely avoidable, so you can focus on what matters most: providing world-class patient care. 

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VComply Editorial Team

A comprehensive platform to govern risks, compliance and workflows in your organization.

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