Hospitals reporting free medical care and other subsidized aid to the Internal Revenue Service starting in tax year 2009 seemingly must have formal charity-care policies and community needs assessments to do so, Julie Trocchio, the Catholic Health Associations senior director of community benefit and continuing care, told hospital officials gathered in Seattle for the Healthcare Financial Management Associations Annual National Institute.
Hospital disclosure on Schedule H of the newly redesigned Internal Revenue Service Form 990 instructs hospitals to report charity care as identified under its policy for free and discounted care, which creates an unstated IRS requirement for such policies, said Trocchio, in a session held in advance of the conference. Similarly, other subsidized aid reported separately as community benefits must meet a demonstrated need, which hospitals can do with a formal assessment of local needs, she said.
Nearly all questions on the Schedule H are voluntary until tax year 2009, but Trocchio urged hospitals to practice completing the disclosure before the deadline. We recommend everyone complete it to find out what they know and what they dont know, she said.
Hospitals should consider voluntarily disclosing some community benefit activities in tax year 2008 to publicly promote such subsidies, said Keith Hearle, president of Verite Healthcare Consulting, who joined Trocchio to explain the nuances and potential pitfalls of the Schedule H to pre-conference attendees. Such voluntary promotion of charity care and community benefits could be important because hospitals must report to regulators in tax year 2008 more detailed information on executive compensation, a highly scrutinized issue for tax-exempt hospitals, he said.