douglas w. lyon, cpa and trina hackensmith presented by: welcome! wisconsin hospital association and...

Douglas W. Lyon, CPAand

Trina Hackensmith

Presented by:

Welcome!

Wisconsin Hospital Association

and Members

Background

Historical Challenges to All NFP Hospitals

Are not-for-profits sufficiently charitable?

Should the playing field be level?

Is the “Community Benefit Standard” adequate?

2©Lyon Software, 2011

Heath Care Reform

PPACA Requirements for charitable hospitals:

Community health needs assessment

Implementation strategy

Financial assistance (FA) policy

Free emergency care to those meeting FA policy

Limit charges to those meeting FA policy

No extraordinary collection practicesJulie Trocchio, Catholic Health Association, 2010

Topics for Today’s Webinar

A Review of “What Counts”

New Requirements – Health Reform and IRS

Implementing a Community Benefit Program

identify who should be involved in the tracking/reporting process

Identify programs, collect data

report to your communities

CBISA Survey™ and CBISA Online™

A Review of “What Counts”

What is Community Benefit?

Community benefit programs or activities provide treatment and/or promote health and healing as a response to identified community needs.

For a program to “count”:

1.It must address a documented community need, and

2.It must have at least one of these community benefit objectives

a) Improve access to health care services

b) Enhance health of the community

c) Advance medical or health care knowledge

d) Relieve/reduce the burden of government/other community efforts

6Source: A Guide for Planning & Reporting Community Benefit 2008 Edition

1. It must address a documented community need

•Health needs assessment survey

•Public health department

•Healthy Communities/Healthy People 2010 goals

•CDC

•Board or management

•Community leaders

•Research findings

Source: A Guide for Planning & Reporting Community Benefit 2008 Edition

2. It must have at least one of these community benefit objectives

a) Improve access to health care services

•The program is available broadly to the public

•The program participants include vulnerable or underserved

persons

•A barrier to access is reduced or eliminated

•If the program ceased to exist, the community would lose

access to a needed service

b) Enhance health of the community

•The program is designed around public health goals and

principles

•The program yields measurable improvements to health status

•The community’s health status would decline if the program

ceased to exist

•A public health agency provides comparable services

•The program is operated in collaboration with public health

partners

c) Advance medical or health care knowledge

•The program trains health professionals/students as they

advance toward health profession degrees or other credentials

•The organization does not require trainees to join the staff

•Health professional continuing education programs are open to

professionals in the community

•The program involves research, with findings available broadly

to the public within a reasonable period of time

d) Relieve/reduce the burden of government/other community efforts

•The program relieves a government financial or programmatic

burden

•Government provides the same or a similar service

•Government provides support of the activity

•If the program were closed, cost to government or another tax-

exempt organization would increase

•The program receives philanthropic support through community

volunteers or contributions

What is NOT Community Benefit

A program does not count as community benefit, if:

The program is primarily for marketing purposes

A n objective “prudent layperson” would question whether the program truly

benefits the community / The program benefits the organization more than the

community

The program or donation is unrelated to health or the hospital’s mission

The program represents a community benefit provided by another entity or

individual

Access to the program is restricted to individuals affiliated with the hospital

The activity represents a normal “cost of doing business” or is associated

with the current standard of care

What Qualifies (Counts) as a Community Benefit?

Charity Care, at cost

Unreimbursed Medicaid

Unreimbursed Costs-other

Means-tested Government

Programs

Categories A-G

A. Community Health Improvement

B. Health Professions Education

C. Subsidized Health Services

D. Research

E. Financial & In-kind Contributions

F. Community Building Activities

G. Community Benefit Operations

Questions and Recommendations

Community Health Improvement

Q: We continue to wrestle with the decision about counting prenatal education and lactation services in the community…

R: In most situations, we recommend that prenatal classes not be reported as community benefit because they are typically part of a hospital's comprehensive maternity program, and, while not legally or professionally required, is the current standard of care.

Source: http://www.chausa.org/Pages/Our_Work/Community_Benefit/What_Counts/What_Counts_Q_and_A/Categories/

Q: All babies born in our facility are sent home with hats that are knit by

our volunteers. If parents of limited means request booties, sleepers, quilts, receiving blankets, etc., we provide the parents with a bag of needed supplies. All these supplies are donated to us.Can we report as community benefit our employees' time to support this program? Our facility is paying the employees for their time.

R: This is a lovely program but since these items are only for your own

patients and are part of the services you provide them, the costs to support this program should not be reported as community benefit.

Q: When should care management be reported as community benefit?

R: Visit the “What Counts Q & A” section on CHA’s website (www.chausa.org) for the complete answer to this and other questions.

Health Professions Education

Q: Should we report the cost to our organization to train chaplains? Our Clinical Pastoral Education (CPE) program receives federal reimbursement for three supervisor positions in our CPE program.

R: We recommend reporting as community benefit the cost of the CPE program as long as the students are not required to work for your organization post training and you offset the cost of the CPE program with both the federal funds you receive and student fees. This cost should be reporting in the category of Health Profession Education.

Cash and In-Kind Contributions

Q: Should we report the expenses for recreational fundraising events.

R: The task force recommends that organizations consider the

following guidelines when deciding whether to report fundraising costs for golf outings, galas and other entertainment-oriented events:

•Do not report any costs if the primary purpose of the event is marketing/public relations. •Do not report costs related to entertainment aspects (green fees, prizes, food). •Report other expenses associated with fundraising, such as staff time, if all of the proceeds go to community benefit. •Be very conservative and be sure any expense reported passes the "laugh test.”

Cash and In-Kind Contributions

Q: Our hospital provides 24/7 telemedicine services to community

hospitals, primarily in EDs, to assist with the evaluation of patients with symptoms of an acute stroke… There is no charge to the community hospitals or patients for this service… regardless of their insurance coverage.

R: We recommend first carefully analyzing why this program is being

provided… If the primary purpose of the program is to address an identified community health need, we recommend reporting this as an "in–kind" contribution ...You are providing the service to other organizations, not directly to patients, and services to other organizations should be reported in this category.

Community Building Activities

Q: Our hospital participates in the Volunteer Income Tax Assistance

(V.I.T.A) program with the IRS, a free tax preparation program open to individuals and their families who earn less than $46,000 a year…

R: We recommend it be reported as "Community Building" in the

category of "Community Support" . We further recommend that your organization determine - to the extent possible - the actual cost to the organization for providing the service, for example, the employees' time if they participate on paid time. If your employees are not participating on paid time, then calculate the administrative expenses incurred to coordinate this activity. We do not recommend reporting what you might have charged. Community benefit equals actual expense not lost opportunity costs.

Community Benefit

For the complete questions and answers to these and many other “what counts” questions, visit CHA’s website

http://www.chausa.org/communitybenefit/

©Lyon Software, 2011

IRS Requirements: Form 990 Schedule H

New IRS Requirement: Form 990 Schedule H

What does Schedule H want to know?

Programs and Services

• Community Benefit

• Community Building

Policies

• Charity Care

• Billing and Collection

• Assessment

Other information

• Medicare

• Bad Debt

• Joint Ventures

• Facilities

990H Part I: Community Benefit

24IRS Schedule H, 2009 Form

990H Part II: Community Building

IRS Form 990H Part VI: Essays

Part VI questions describe: how the organization assesses the health needs

how the organization informs patients about financial assistance

the community the organization serves

how community building activities promote health of the communities

other ways the organization promotes the health of the community

(if part of a system) the role of the system and affiliates in promoting health

990H Part VI: Essay Questions

The three main team members in collecting, tracking and reporting community benefit:

Finance

Community Benefit Professional

Communicators

IRS Form 990 Schedule H: The Team

The first 3 lines of Part I, Table 7 – lines 7a through 7c

Charity Care

Medicaid

Other Means-Tested Programs

IRS Form 990 Schedule H: Finance

IRS prescribed format

Allows for IRS specified fields such as Medicaid orprovider taxes and uncompensated care pools.

Cost-based: cost accounting or ratio (with IRS prescribed numerator and denominator)

CBISA™ Charity Care, Medicaid and Means-Tested Screens

The form itself (Part III) and instructions call for some limited information on:

Medicare

Bad Debt

They’re not Part I – Community Benefit – but they are items of interest to the IRS.

Part III

Part I, Table 7, lines 7e through 7j

Part II Community Building Activities

Part VI Questions

Further Information is collected by your

community benefit professionals.community benefit professionals.

IRS Form 990 Schedule H: CB Professional

Each program must be qualified as a true community benefit, using the CHA Guide and the IRS instructions. (CHA and the IRS are in complete agreement on these definitions)

There are often 100s of these CB programs in most hospitals, even CAHs and other smaller hospitals.

IRS Form 990 Schedule H: CB Professional

Programs

Hospital staffs will quickly embrace a “team effort” / “team approach”, for compelling reasons

The Team Approach

Coordinators

SeniorLeadership

Finance

PR & Marketing

Reporters

Board Members Tax & Legal

Three Easy Steps

1. Create a team

Who should be involved?

2. Identify and account for the Programs currently in place, assess needs, develop more programs

What counts, what’s needed, and what do you collect?

3. Report to your communities

How do you tell your story and who needs to know?

• Programs

Titles e.g., Charity Care; Health Screenings; Mobile Van

Types e.g., Charity Care; Medicaid; A – G

Objectives e.g., increase access

Community need e.g., can’t get to hospital

Target audience(s) e.g., disadvantaged

Step 2: Qualify & Identify Existing Programs

Collect the Required Data

• Statistics

Number of persons served

Hospital costsStaff hoursSuppliesOther direct (if any)Indirect (if applicable)

Offsets (program fees, net patient service revenue)

Step 2: Qualify & Identify Existing Programs

Collect the Required Data

Total Cost – Total Offsets = Net Community Benefit

Step 3: Tell Your Story

• Tell your story

Through numbers

Through narratives

• Results / Outcomes

Can be related to community needs

Can be related to program objectives

Can (usually) be measured (numbers, ratios, percentages)

Can always be described (anecdotal outcomes)

• Strategies for telling your story

1. Separate community benefit report

2. Community section in the annual report

3. 990 Schedule H

4. Internally

• Bulletin boards

• Newsletters

• Cafeteria table tents, etc

Resources/Checklists for Implementing an Effective Community Benefit Program

Resources: Implementing a Community Benefit Program

Meeting the Federal Requirements:

What to report as community benefit

Community health need assessment

Implementation strategy

Financial assistance policies

Billing and collection policies

Community Assessment Checklist

Done at least every 3 years

Gets input from persons who represent broad interests of community

Gets input from persons with special knowledge of public health

Is made widely available to the public

Can be done with/by others

Implementation Strategy Checklist

Adopted an implementation strategy to meet needs found in assessment

Description of how organization is addressing needs identified

Description of any needs not addressed and “reasons why such need are not being addressed”

Financial Assistance Policies Checklist

Criteria for eligibility

Basis to what is charged patients

Method for applying for financial assistance

Measures to “widely publicize” the policy

Nondiscrimination in emergency care for eligible persons

Source: A Guide for Planning & Reporting Community Benefit 2008 Edition

Billing and Collection Checklist

Limitation on what is charged to persons eligible for financial assistance

Prohibition against use of gross charges

No “extraordinary collection actions” until eligibility determination

Catholic Health Association

www.chausa.org/communitybenefit

Association for Community Health Improvement (ACHI)

www.communityhlth.org

Resources: Other Organizations

Trends in Community Benefit

Moving from random acts of kindness to strategic thinking

Moving from fringe to core business

Moving from counting to evaluation

Moving from the basement to the boardroom

Professionalism, accountability, transparency

Julie Trocchio, Catholic Health Association, 2010

CBISA Survey™

CBISA Online™

Login to CBISA Online™

CBISA Online™

What’s New: Some Changes to CBISA Online™ in the last 12 months

Locking and Closing a Fiscal Year

IRS 990H Enhancements Additional fields for IRS Bad Debt screens Joint Venture screen IRS Multi Reports “Memo Only” fields for Restricted gifts/grants/support

Reporter Enhancements “Publishing” feature Copying Programs & Occurrences Reports & Listing

CBISA Online™

What’s New: Some Changes to CBISA Online™ in the last 12 months

Program Enhancements “Targeted for” moved to Program/General screen Community Benefit Objectives (4)

CBISA™ Customizations

Custom Report Generator

Email Users from the User Control Panel

“Bring Forward” Department rates

CBISA Online™

1. Complete your Program and Occurrence information

2. Complete your Financial Services numbers a) Charity Careb) Medicaidc) Other Means Testedd) IRS Medicaree) IRS Bad Debt

3. Check the box to send any narratives/stories from the Leadership Journal

CBISA Online™

Acknowledge the Snapshot request (ok) and import any Pending records

Accept the Snapshot request

CBISA Survey™

Login to CBISA Survey™ using the secure URL and the User Name and Password assigned to you by your State Administrator

https://www.cbisaonline.com/wi_8901_survey

CBISA Survey™

Choose each Activity in the Browse Box, then “add” the Occurrence. “Save” each new Occurrence.

CBISA Survey™

“Add” and “Save” each applicable Financial Service Record: Charity Care, Medicaid, Other Means-Tested, Medicare, Bad Debt

CBISA Survey™

Let’s you know your Association is requesting your data=

Edit your facility (Defaults, highlight your hospital name, click edit)

CBISA Survey™

…and you are done!

Accept the Rollup Request

Disclaimer: This webinar presentationIs not intended to constitute tax advice upon which your organization should rely. For qualified advice, consult with a tax professional.

douglas w. lyon, cpa and trina hackensmith presented by: welcome! wisconsin hospital association and...

community benefit programs

community needs

community benefit objectives

documented community

community cadvance medical

public health goals

public health agency

public health partners

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