The Financial Accounting Standards Board is proposing that all hospitals report their levels of charity care using the actual cost of the care, in an effort to force the providers to report information that will be comparable across the industry.
Currently, the board's Generally Accepted Accounting Principles tell officials at not-for-profit and investor-owned hospitals to estimate the value of free care given to indigent patients by tallying how those services would have been billed to various payers. Critics say this has led to a great deal of variation in reporting, making side-by-side comparisons of hospitals difficult.
However, many hospitals have begun reporting charity care on the basis of what it costs the organization to provide the care. That includes the majority of nonfederal U.S. community hospitals, which must by law begin documenting their charity care on a cost basis for the newly enhanced tax disclosure forms this year as a requirement of their tax-exempt status. The FASB is proposing all hospitals report charity care on a cost basis in the financial statements.
That board is accepting feedback to the proposal through May 17, and will issue final ruling on the matter sometime after that, the board said.