Community Benefit Reporting on IRS Form 990 Schedule H

1. Community Benefit Reportingon IRS Form 990 Schedule H What does your hospital need to know?

2. Revised Form 990 • The Internal Revenue Service released instructions for the new tax form 990 used by not-for-profit hospitals to: • report revenue, expenses and operations • improve transparency and oversight across the tax-exempt sector and • For expanded disclosure of executive compensation and governance. • http://www.irs.gov/charities/article/0,,id=181089,00.html

3. It also requires hospitals to report free and discounted care and other subsidized services on a separate questionnaire, Schedule H, creating a national standard for disclosing community benefits.

4. The redesigned Form 990 has the potential to help tax-exempt hospitals better tell their community benefit story--but completing the new form could amount to a major undertaking for hospitals, particularly those that have never prepared community benefit reports.

5. Revised Form 990 features a new schedule, Schedule H, that establishes a uniform standard for the reporting of charity care and other community benefits by tax-exempt hospitals. • Schedule H also allows an organization to describe its exempt accomplishments and mission up front and requires organizations to explain their community benefit activities.

6. Schedule H will begin to be used for tax year 2008 (returns filed in 2009), with a transition period for certain requirements. • Starting with tax year 2009, it will require that hospitals collect and analyze data regarding their community benefit activities and the charity care they provide, and determine the value of both according to standards adopted by the IRS.

7. HFMA's Statement 15 • The final version of Schedule H also references HFMA's Statement 15, which provides guidance on the correct way to measure and report components of uncompensated care.

8. HFMA's Statement 15 • HFMA's Statement 15: • 7.3 The P&P Board recommends footnoted disclosure that patients go into the charity care category if their accounts include a discounted patient-pay portion under the facility’s charity care policy (as discussed in section 6.4). Calculations should include all accounts, including sliding scale adjustments. • The reimbursement calculation needs to include all accounts if any portion of an account that qualifies for charity care includes amounts received or expected.

9. HFMA's Statement 15 • HFMA's Statement 15 Financial statement footnotes: • A clear description of the organization's charity care policy (see paragraph 7.5) • The cost of charity care provided (see paragraph 7.6) • The volume (also sometimes referred to as the units, amount, value, quantity, or level) of charity care provided, (see paragraphs 7.7, 7.8, and 7.9); and • Receipts relating to charity care, (see paragraph 10.1)

10. Charity Care Policy • 7.5 Charity care policy. • Detailed disclosure of the organization's charity care policy is required, including discounted rates for uninsured or underinsured patients. The note about this policy may include information such as the following: • The XYZ Hospital provides services without charge, or at amounts less than its established rates, to patients who meet the criteria of its charity care policy. The criteria for charity care consider (describe criteria, such as family income, net worth, extent of financial obligations for healthcare services, etc.). • Discounts are provided on a sliding scale based on (describe discount criteria).

11. Charity Care Policy Checklist • Checklist of Items to Be Considered in a Charity Care Policy. • 1. Eligibility determinations when there is insufficient information provided by the patient to fully evaluate all the criteria, and the ability to pay cannot be reliably determined. (See paragraph 3.7.)

12. Charity Care Policy Checklist • Checklist of Items to Be Considered in a Charity Care Policy. • 2. The extent of verification necessary for eligibility determinations. (See paragraph 3.8.)

13. Charity Care Policy Checklist • Checklist of Items to Be Considered in a Charity Care Policy. • 4. The time frame within which patients are eligible for charity care. (See paragraph 4.2.)

14. Charity Care Policy Checklist • Checklist of Items to Be Considered in a Charity Care Policy. • 4. The frequency of evaluation of the adequacy of the charity care allowance. (See paragraph 5.2(e).)

15. Charity Care Policy Checklist • Checklist of Items to Be Considered in a Charity Care Policy. • 5. Discounts for low-income, uninsured patients who have the ability to pay a small portion of their bill. (See paragraph 6.4.)

16. Charity Care Policy Checklist • Checklist of Items to Be Considered in a Charity Care Policy. • 5. The criteria for a collection to be reasonably assured under GAAP. (See paragraph 8.1(b).) • GAAP - Generally Accepted Accounting Principles

17. Charity Care Policy Checklist • DOCUMENTS: • Statement 15 by HFMA • Form 990 Changes • Schedule H • Policy Assessment Worksheet

18. Charity Care Policy Checklist • Checklist of Items to Be Considered in a Charity Care Policy. • 5. The criteria for a collection to be reasonably assured under GAAP. (See paragraph 8.1(b).)