March 5, 2008
The redesigned IRS 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, according to "Schedule H: What Hospitals Should Do" by Jeni Williams in the March issue of hfm magazine.
The revised Form 990 features a new Schedule H that establishes a uniform standard for the reporting of charity care and other community benefits by tax-exempt hospitals. In Schedule H, the IRS refers to HFMA's Principles and Practices Board Statement 15 as the preferred practice for bad debt reporting.
Schedule H also allows an organization to describe its mission and requires organizations to explain their community-benefit activities. Schedule H will begin to be used for tax year 2008 (returns filed in 2009), with a transition period for certain requirements.
Here's how hospitals can prepare.
Form a multidisciplinary group to strategically address how to meet the reporting demands of Schedule H. This "community benefit steering committee" should develop a process for collecting community benefit data from throughout the organization while simultaneously educating the board of trustees and staff on what is considered community benefit, why community benefit is integral to the mission of the organization, and the new IRS reporting requirements.
Review the programs your organization currently counts as community benefit, to ensure they meet IRS standards. "Hospitals will have to increase their attention to detail to ensure that their community benefit numbers are all very defensible and would survive audit," says Keith Hearle, president, Verite Healthcare Consulting, LLC. You will learn the key risk areas where organizations must make special effort to provide accurate and complete information from the session "The New Form 990: What You Must Know and Do," on Wednesday, June 25, at ANI: The Healthcare Finance Conference, June 23-26 in Las Vegas.
Collect community benefit data regularly throughout the year. Hospitals should collect community benefit data according to the same timetable that other strategic indicators are reported to their board of trustees, whether monthly or quarterly, suggests Patsy Matheny, a community benefit consultant.
Consider the use of IT to facilitate data collection. "There are excellent tools for collecting community benefit data that allow for real-time data collection," says Matheny.
Sharpen your charity care policies. "Look at who qualifies for charity care very carefully," Hearle says. "Doing this will help to minimize the number of patients who would have qualified for financial assistance under the organization's charity care policy, but whose accounts were written off to bad debt because of a problem with the organization's charity care policy or with the documentation these patients provided." (Get more information on charity care policies from the Patient Friendly Billing project.)
Use tax year 2008 as a dry run. Doing so will help identify weaknesses in your community benefit reporting cycle and enable your organization to make any needed improvements before the new IRS requirements go into effect.
You can get more practical information from the full version of this article, as well as from "Community Benefit: How Much Is Enough?" by Howard A. Levenson, both in the March issue of hfm magazine.
Reporting community benefit is just one of an array of legal and regulatory areas that are currently undergoing heightened scrutiny. Other areas include antitrust, fraud and abuse, billing the uninsured, corporate responsibility, privacy, taxation, employment, and credentialing. Tactics to minimize risk in all these areas are covered in the popular "Legal Update" session on Tuesday morning at ANI: The Healthcare Finance Conference. And later that day, the session "OIG and Emerging Risk Areas" shows what is behind the recent OIG and DOJ investigations, prosecutions and litigation, as well as opportunities to evaluate and minimize those risks. Access full information about ANI: The Healthcare Finance Conference. You can also tap the expertise of your peers and other industry experts on healthcare compliance concerns by subscribing to HFMA's Healthcare Compliance Forum.
Visit the HFMA web site for more business resources that will help you make a difference in your organization.
If you have questions or comments about "HFMA Wants You to Know," contact editor Robert Fromberg at rfromberg@hfma.org.
"HFMA Wants You to Know" ISSN: 1540-0697. Volume VII, Issue 5. Copyright 2008, Healthcare Financial Management Association.
All rights reserved. March 5, 2008.