Not-for-profit hospitals will have to report a lot more bad-debt information, and it wont be included in the community benefit reporting under the final 2008 Internal Revenue Service Form 990 for tax-exempt organizations released today. Whats more, the instructions will explicitly state that bad-debt expense and Medicare shortfalls are not to be reported as part of a hospitals community benefit. Rather, under a separate part of the schedule, not-for-profit hospitals will be asked to describe in some detail how they calculate bad-debt expense. Part 3 of the schedule has been revised from the draft, requiring a hospital to report aggregate bad-debt expense at cost, provide an estimate of how much is attributable to people who qualify for charity care and also provide its rationale for what portion of the bad debt it receives constitutes community benefit. Hospitals also will be required to report whether they have adopted the Healthcare Financial Management Associations Statement No. 15, and provide the text of their footnotes to their financial statements that describe bad-debt expense.
The new Part 3 also collects Medicare shortfall information and gives a hospital the opportunity to describe what portion of Medicare shortfalls it believes should constitute community benefit and explain its rationale.
Schedule H will be phased in beginning in 2008 by requiring basic identifying information. Except for a part requiring identifying information, all other parts of Schedule H will be optional for 2008, the IRS said. However, the entire Schedule H must be completed for tax years beginning in 2009. -- by Cinda Becker