cbisa™ financial defaults and the irs 990 schedule h a resource for finance use “enter” on...

CBISA™ Financial Defaults and the IRS 990 Schedule

HA resource for Finance

Use “enter” on your keyboard, or click your left mouse button to move through the screens 1

For any CBISATM questions, contact Customer Support: (419)-885-4593 or [email protected]

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Planning for Community Benefit

The information provided in this presentation does not constitute legal or tax advice. The material is provided for informational/educational purposes only.

How does Finance help in the planning for Community Benefit?

Review/explain the financial assistance policy

Establish standardized methods and policies

Develop average rates for salaries and indirect costs

Advise and provide oversight and support (what counts and how to count it)


©Lyon Software 2013

Review/explain the financial assistance policy

Community benefit professionals and reporters need to understand the financial assistance policy.

Who will be reporting on the program? Finance (if the program is part of the financial assistance program, i.e., charity care) or the community benefit team?



Establish standardized methods and policies

When policies and procedures are in place, the job of collecting, reporting and tracking community benefit becomes much more efficient. Finance can help set some standardized practices and policies.



Develop average rates for salaries and indirect costs

CBISA uses average salary rates for departments and up to four (4) group rates plus indirect cost percentages for programs that take place in the hospital (or facility) and those that take place in the community.



Advise and provide oversight and support (what counts and how to count it)

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 efforts9Source: Catholic Health Association Guide for Planning & Reporting Community Benefit 2012 Edition


A program does not count as community benefit, if:

The program is primarily for marketing purposes

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

An objective “prudent layperson” would question whether the program truly

benefits the community (the program benefits, or appears to benefit, the

organization more than the community)

The program represents a community benefit provided by another entity or

individual

Access to the program is restricted to employees or physicians affiliated

with the hospital

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

with the current standard of care10


Source: Catholic Health Association Guide for Planning & Reporting Community Benefit 2012 Edition

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Financial Assistance,

at cost

Medicaid

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



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Financial Assistance,

at cost

Medicaid

Other Means-Tested

Government Programs

Categories A-G

Subsidized Health Services



Finance specifically provides the numbers (persons served, expenses and offsetting revenue) for Financial Assistance, Medicaid and Other Means-Tested Programs. Also, because those three costs may also be included in Subsidized Health Services (Category C), Finance must remove any double counting entries and determine whether the service is still subsidized.

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Financial Defaults


Financial Defaults: Fiscal Year

Select the active fiscal year from the dropdown list

Enter in the applicable fiscal year starting and ending dates on the Reporting Unit/Financial information page

14©Lyon Software 2013

Hint: To access the Reporting Unit/Financial page, choose Options/Org Defaults. Highlight the reporting unit, and click on “Edit”

Financial Defaults: Expenses, Revenues & Indirect %’s

Enter total functional expenses (for IRS 990H reporting), operating expenses and revenues, and indirect cost factors

Hint: The amounts entered at the beginning of the year will be estimates. You will want to update the dollar amounts with final audited numbers prior to running your community benefit reports and 990H reports.


Financial Defaults: Indirect Method

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After entering the indirect cost method percentages:

1. The Administrator/Coordinator will set the default method at the Program level


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2. Select the applicable method of calculation for each occurrence

Financial Defaults: Indirect Method


Hint: The Occurrence indirect cost will default to the method chosen on the Program/General screen, but may be changed, as needed.

Financial Defaults: Salary Defaults/Group Rates

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Enter the salary defaults


Defined in Custom Terms

Reporting Unit-wide average fringe benefit percent. Applied to all Occurrences that are added AFTER the percent is entered and the form is saved.

Reporting Unit-wide average hourly pay rate. Used on Occurrences when department is left at “none apply”

Financial Defaults: Salary Defaults/Group Rates


Define up to four standard salary group rates

Hint: To access Custom Terms, choose Options/Edit Defaults. Open Custom Terms by clicking on the tab. Highlight each Average Hourly Pay Rate term, click “Edit,” enter in a “substitution” (named standard group) and “Save”. Administrators/Coordinators have access to Edit Defaults.

Financial Defaults: Salary Defaults/Dept. Rates


Update the average rate for each department

Hint: You may highlight multiple departments at one time (use the “control key” or “shift key”) and update the rate information for each department that has the same average rate. Finance users may only update rates.

Financial Defaults: Salary Defaults/Dept. Rates

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Hint: At the beginning of a new fiscal year, you may choose to “bring forward” the average salary rates from the previous year. You may bring forward one, more than one, or all rates by using the multi-select option (control key or shift key).


Financial Defaults: Fringe Percent

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CBISA will let you know how many records were updated.

Hint: If you enter occurrences into a fiscal year BEFORE you set the Fringe percent default, you will want to use this tool to update those records. Occurrences entered AFTER the default is set will automatically use the correct Fringe percent entered on the Reporting Unit Financial page.

Enter the appropriate date range, the new Fringe percent, then apply.


IRS 990 Schedule H Part I

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IRS 990H Who Must File?

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“An organization that answered “Yes” on Form 990, Part IV, line 20a must complete and attach Schedule H to Form 990.”

Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals

IRS 990H Part I Financial Assistance Questions

25Source: 2013 Schedule H (Form 990) Hospitals

CBISA Screen: IRS Questions/Part I 1a-6b


To answer the questions on Part I of the IRS 990H (lines 1a-6b), access the Financial Services Module and choose IRS 990 Questions, Part I tab

Choose “Add” to activate the question page

IRS 990H Part I #7 Table of Quantifiable Community Benefit

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Report on the Table (lines 7a-7k) at cost, the organization’s financial assistance and certain other community benefits.

Use the organization’s most accurate costing methodology (cost account system, cost-to-charge ratio, or other) to calculate the amounts reported on the table.


CBISA™ gives you the systematic methodology to collect and complete the data for lines 7a-7k in:

Financial Services Module (lines 7a-7c)

Programs Module with Occurrences (lines 7e-7i)



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Columns (a) “Number of activities or programs” and (b) “Persons served” are optional

Column (c) “Total community benefit expense” means the total gross expense of the activity incurred during the year… includes both direct costs and indirect costs.

Column (d) “Direct offsetting revenue” means revenue from the activity during the year that offsets the total community benefit expense of that activity... includes any revenue generated by the activity or program…does not include restricted or unrestricted grants or contributions that the organization uses to provide a community benefit.



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Column (e) “Net community benefit expense” is Total community benefit expense” (column c) minus “Direct offsetting revenue” (column d). If the calculated amount is less than zero, report such amounts as a negative number.

Column (f) “Percent of total expense” is the “net community benefit expense” in column (e) divided by the sum of the amount on Form 990, Part IX, line 25, column (A)…Report the percentage to two decimal places (x.xx%).




Financial Services

Programs/Occurrences

CBISA Screen: Ratio of Patient Costs to Charges


Choose “Add” to activate the date entry page

To calculate a ratio of patient care costs to charges, access the Financial Services Module and choose Ratios screen

CBISA Screen: Financial Assistance, at Cost


2. Enter Data

3. Click “Save”

1. Click “Add”

CBISA Screen: Medicaid, Net Costs


2. Enter Data

1. Click “Add”

3. Click “Save”

CBISA Screen: Means Tested Programs, Net Costs


3. Click “Save”

2. Enter Data

1. Click “Add”

Joint Ventures


Enter Qualifying Joint Ventures

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Programs and Occurrences

Enter Category A & G Programs

Attach Statistical Occurrence forms capturing

Persons Served, Expenses, and Offsets

Data is entered by Coordinators and Reporters


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Enter Category B Programs





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For category B “Health Profession Education” programs, make any offsetting adjustments on the occurrence screen.

Step 1: Choose the Program from the browse box on the control panel

Step 2: Open the Occurrence screens by clicking on the link

Step 3: Choose the applicable occurrence from the browse box

Step 4: Enter any applicable offsets


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Enter Category C Programs





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For category C “Subsidized Health Services” programs, make any offsetting adjustments on the occurrence screen.

Step 1: Choose the Program from the browse box on the control panel

Step 2: Open the Occurrence screens by clicking on the link

Step 3: Choose the applicable occurrence from the browse box

Step 4: Make any necessary edits to avoid “double counting” issues.


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Enter Category D Programs





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Specific Offset for Category D Programs


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Enter Category E Programs





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Enter Donation or Grant Money in “Other”


CBISA™ Reports & Listings


Reports to complete each applicable section of the IRS Form 990 Schedule H and the corresponding supporting worksheet.

CBISA Worksheet 2


Ratio of Patient Care Cost to Charges

CBISA Worksheet 1


Financial Assistance

CBISA Worksheet 3


Medicaid

CBISA Worksheet 3


Other Means-Tested Government Programs

CBISA Worksheet 4


Community Health Improvement Services & Community Benefit Operations

CBISA Worksheet 5


Health Professions Education

CBISA Worksheet 6


Subsidized Health Services

Includes Physician’s Clinic Designation and Summary Report

CBISA Worksheet 7


Research

CBISA Worksheet 8


Cash and In-Kind Contributions for Community Benefit

IRS 990 Schedule H Part IIPart III

andPart VI

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IRS 990H Part II: Community Building Activities (F)


Programs/Occurrences

IRS 990H Part II Community Building Activities

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“An organization that reports information in this Part must describe, in Part VI how its community building activities promote the health of the communities it serves.”

Physical improvements and housing Economic development Community support Environmental improvements Leadership development and training for community members Coalition building Community health improvement advocacy Workforce development


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Enter Category F Programs





IRS 9990H Part III: A, B, and C


CBISA Screen: Bad Debt


3. Enter the data and “Save” the record

2. “Add” to activate the data entry screen

1. Choose your method

CBISA Screen: Medicare


1. “Add” to activate the data entry screen

2. Enter your data

3. “Save” the record

CBISA Screen: IRS Questions for Bad Debt, Medicare, Collection Practices


Choose “Yes” or “No” from the dropdown or for question 8, choose the appropriate answer by clicking on the correspond-ing radio button.

“Add” activates the data entry screen

CBISA Worksheet C


Medicare

IRS 9990H Part VI: Supplemental Questions


CBISA Screen: IRS Questions Supplemental Questions


“Add” activates the data entry screen

Enter text into each free form description box

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Summary


Some basics about the numbers of community benefit

Measured on the basis of cost (actual financial, not opportunity)

Avoid double-counting

Include indirect costs

Use the most accurate cost-accounting methods

Don’t offset by restricted contributions

Use “proportionate share” for qualifying joint ventures

Summary: Numbers of Community Benefit


Community Benefit Professional

Summary: Team Members’ Duties

Community Health Improvement Services (Part I, 7e)

Research (Part I, 7h)

Cash Contributions (Part I, 7i)

In-kind Contributions (Part I, 7i)

Community Benefit Operations (Part I, 7e)

Community Building Activities (Part II)

Case for Community Building as Community Benefit (Part VI)


Finance


Ratio Patient & Costs to Charges (IRS Worksheet 2)

Financial Assistance (Part I, 7a)

HFMA Statement 15 Applicability

Medicaid (Part I, 7b)

Other Means-Tested Public Programs (Part I, 7c)

Health Professions Education-costs & offsets (Part I, 7f)

Subsidized Health Services-costs & offsets (Part I, 7g)

Double Count Adjustments (Part I, 7f, 7g)

Bad Debt (Part III, Section A)

Medicare (Part III, Section B)69


Others


Financial Assistance Policy Questions (Part I & Part VI)

Financial Assistance Policies & Billing Directives Questions

Definition of Community (Part VI)

Collection Practices (Part III, Section e)


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cbisa™ financial defaults and the irs 990 schedule h a resource for finance use “enter” on...

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