AHA News Now, December 5, 2006
HFMA Issues Guidelines for Reporting Charity Care and Bad Debt
The Healthcare Financial Management
Association yesterday released revised accounting
guidance suggesting how health care providers should measure and report bad
debt and charity care. The guidance addresses criteria for charity care
policies; valuation, recording and disclosure of charity care and bad debt; and
classification of receipts related to charity care. It states all health care
providers should differentiate bad debt from charity care, and that the
organization's mission and state reporting requirements will influence the
extent of disclosure about charity care. Costs, not charges, should be the
primary reporting unit for valuing charity care, and each hospital should
decide, based on circumstances, whether Medicare shortfalls should be part of
its community benefit disclosure, the organization adds. "In all cases where
Medicare shortfalls are disclosed, the disclosure should be separate from
charity care and accompanied by sufficient detail and context to help readers
understand each reported cost calculation," the guidance says.
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