Access Management Journal - March 2009 - (Page 14) There are many causes of patient non-compliance. If the patient is indigent, they may not provide documentation such as the W-2, pay stubs, copies of bills, etc. Other non-compliance issues include a patient’s discharge flow, or the patient’s pride, i.e. their not wanting to ask for charity. Such issues have created an operational concern in accounting for charity and bad debt accurately. time of service. Other advantages include more accurate community benefit reporting that may lead to alternative hospital reimbursement such as Disproportionate Share Hospital funding. The glass is either half-empty or half-full when it comes to complying with IRS Form 990, Schedule H. Although the new document reporting requirements provide some challenges this year, it also creates opportunities for hospitals to review and further define their practices and policies, and to possibly implement automated procedures that can save time and money. By using these requirements as a means to improve their operations, hospitals may find more benefits than problems going forward. l Solutions A hospital’s compliance with IRS 990, Schedule H involves employing objective systems, methods, and policies regarding charity and financial aid. Inherent in these systems should be the ability to automate policy and processes, accurately segmenting patient financial class, reducing patient noncompliance, and providing auditable data and reporting. Systems that provide this kind of benefit to hospitals are able to process hospital data in a batch and/or a real-time environment. Table 1 on page 13 provides an example of one such solution that determined in real time patient eligibility for financial assistance at the time of registration, is TransUnion’s Revenue Manager. A Midwest hospital system recently reviewed more than 60,000 bad debt accounts, including balances after insurance from 2008. The objective of the review was to identify which accounts should have been classified as bad debt and which should have been classified as charity. The results of the analysis were striking—86 percent of the accounts qualified for charity. While reclassification of bad debt accounts to charity for IRS reporting purposes is contingent upon on hospital policy and auditor review, results like these are not uncommon. In at least three other studies completed in 2008, more than 75 percent of bad debt accounts were determined to meet the hospitals’ charity policy. By using systems like Revenue Manager, hospitals are able to achieve greater efficiencies, gain assistance in complying with regulatory demands, and to achieve greater patient satisfaction by offering them the appropriate financial assistance at the Sources 1. Revenue Ruling 56-185, 1956-1 C.B. 202 2. Non-Profit Hospitals, Tax Exemption and Access for the Uninsured: Pitt Health Law Certificate Program 10 th Anniversary Symposium, Feb. 5, 2007. Mary Crossley 3. Revenue Ruling 69-545, 1969-2 C.B. 117 4. See Nancy M. Kane, Taking the Pulse of Charitable Care and Community Benefit At Nonprofit Hospitals, Statement to the U.S. Sen. Comm. On Finance 2 (Sept. 13, 2006) (estimating the value of exemption from all sources as approaching $20 billion per year). But see Richard L. Schmallbeck, The Impact of Tax-Exempt Status: The Supply-Side Studies, 69 L. & Contemp. Probs. 121, 131 (2006) (suggesting that “not much revenue is lost due to the [§ 501 (c)(3)] exemption”) 5. HFMA Form 990 Schedule H Cites HFMA’s Bad Debt Reporting Guidance. Jan. 23, 2008. Marty Callahan is a vice president of Healthcare Information Solutions for TransUnion. Callahan can be reached at mcallah@transunion.com. 14 Access Management Journal
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