CBISA Financial Defaults and the IRS 990 Schedule

CBISA Financial Defaults and the IRS 990 Schedule

CBISA Financial Defaults and the IRS 990 Schedule H A resource for Finance For any CBISATM questions, contact Customer Support: (419)-885-4593 or [email protected] Use enter on your keyboard, or click your left mouse button to move through the screens 1

2 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. 3 Planning for Community Benefit

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 Planning for Community Benefit

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? Lyon Software 2013 Planning for Community Benefit 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. Lyon Software 2013 Planning for Community Benefit 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. Lyon Software 2013 Planning for Community Benefit 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.

Lyon Software 2013 Planning for Community Benefit 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 Source: Catholic Health Association Guide for Planning & Reporting Community Benefit 2012 Edition

9 Planning for Community Benefit 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 hospitals 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 care Source: Catholic Health Association Guide for Planning & Reporting Community Benefit 2012 Edition 10 Planning for Community Benefit

Financial Assistance, at cost A. Community Health Improvement B. Health Professions Education Medicaid C. Subsidized Health Services Other MeansTested Government Programs

D. Research E. Financial & In-kind Contributions F. Community Building Activities G. Community Benefit Operations Categories A-G Lyon Software 2013 11 Planning for Community Benefit

Financial Assistance, at cost Medicaid Other MeansTested Government Programs 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. Categories A-G Lyon Software 2013 12

Financial Defaults The information provided in this presentation does not constitute legal or tax advice. The material is provided for informational/educational purposes only. 13 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 Hint: To access the Reporting Unit/Financial page, choose Options/Org Defaults. Highlight the reporting unit, and click on Edit Lyon Software 2013 14 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. Lyon Software 2013 15 Financial Defaults: Indirect Method After entering the indirect cost method percentages: 1. The Administrator/Coordinator will set the default method at the Program level

Lyon Software 2013 16 Financial Defaults: Indirect Method 2. Select the applicable method of calculation for each occurrence Hint: The Occurrence indirect cost will default to the method chosen on the Program/General screen, but may be changed, as needed.

Lyon Software 2013 17 Financial Defaults: Salary Defaults/Group Rates Enter the salary defaults Reporting Unit-wide average fringe benefit percent. Applied to all Occurrences that are added AFTER the percent is entered and the form is saved.

Defined in Custom Terms Lyon Software 2013 Reporting Unit-wide average hourly pay rate. Used on Occurrences when department is left at none apply 18 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. Lyon Software 2013 19

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. Lyon Software 2013

20 Financial Defaults: Salary Defaults/Dept. Rates 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). Lyon Software 2013 21 Financial Defaults: Fringe Percent Enter the appropriate date range, the new Fringe percent, then

apply. 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. 22 Lyon Software 2013 IRS 990 Schedule

H Part I The information provided in this presentation does not constitute legal or tax advice. The material is provided for informational/educational purposes only. 23 IRS 990H Who Must File? 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 24 IRS 990H Part I Financial Assistance Questions Source: 2013 Schedule H (Form 990) Hospitals 25 CBISA Screen: IRS Questions/Part I 1a-6b Choose Add to activate the

question page 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 Lyon Software 2013 26

IRS 990H Part I #7 Table of Quantifiable Community Benefit Report on the Table (lines 7a-7k) at cost, the organizations financial assistance and certain other community benefits. Use the organizations most accurate costing methodology (cost account system, cost-to-charge ratio, or other) to calculate the amounts reported on the table. Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals 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) Lyon Software 2013 27 IRS 990H Part I #7 Table of Quantifiable Community Benefit 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 programdoes not include restricted or unrestricted grants or contributions that the organization uses to provide a community benefit. Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals 28 IRS 990H Part I #7 Table of Quantifiable Community Benefit 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%). Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals 29 IRS 990H Part I #7

Table of Quantifiable Community Benefit Financial Services Programs/Occurrences Source: 2013 Schedule H (Form 990) Hospitals 30 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 Lyon Software 2013 31

CBISA Screen: Financial Assistance, at Cost 1. Click Add 2. Enter Data 3. Click Save Lyon Software 2013 32 CBISA Screen: Medicaid, Net Costs 1. Click Add

2. Enter Data 3. Click Save Lyon Software 2013 33 CBISA Screen: Means Tested Programs, Net Costs 1. Click Add 2. Enter Data

3. Click Save Lyon Software 2013 34 Joint Ventures Enter Qualifying Joint Ventures Lyon Software 2013 35

Programs and Occurrences Enter Category A & G Programs Data is entered by Coordinators and Reporters Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Lyon Software 2013

36 Programs and Occurrences Enter Category B Programs Data is entered by Coordinators and Reporters Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Lyon Software 2013

37 Programs and Occurrences 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 Lyon Software 2013 38 Programs and Occurrences Enter Category C Programs Data is entered by Coordinators and Reporters

Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Lyon Software 2013 39 Programs and Occurrences 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.

Lyon Software 2013 40 Programs and Occurrences Enter Category D Programs Data is entered by Coordinators and Reporters Attach Statistical Occurrence forms capturing Persons Served, Expenses,

and Offsets Lyon Software 2013 41 Programs and Occurrences Specific Offset for Category D Programs Lyon Software 2013 42

Programs and Occurrences Enter Category E Programs Data is entered by Coordinators and Reporters Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Lyon Software 2013 43

Programs and Occurrences Enter Donation or Grant Money in Other Lyon Software 2013 44 CBISA Reports & Listings Reports to complete each applicable section of the IRS Form 990

Schedule H and the corresponding supporting worksheet. Lyon Software 2013 45 CBISA Worksheet 2 Ratio of Patient Care Cost to Charges Lyon Software 2013 46

CBISA Worksheet 1 Financial Assistance Lyon Software 2013 47 CBISA Worksheet 3 Medicaid Lyon Software 2013

48 CBISA Worksheet 3 Other Means-Tested Government Programs Lyon Software 2013 49 CBISA Worksheet 4 Community Health Improvement Services & Community Benefit Operations

Lyon Software 2013 50 CBISA Worksheet 5 Health Professions Education Lyon Software 2013 51 CBISA Worksheet 6 Subsidized Health Services

Includes Physicians Clinic Designation and Summary Report Lyon Software 2013 52 CBISA Worksheet 7 Research Lyon Software 2013 53

CBISA Worksheet 8 Cash and In-Kind Contributions for Community Benefit Lyon Software 2013 54 IRS 990 Schedule H Part II Part III and Part VI

The information provided in this presentation does not constitute legal or tax advice. The material is provided for informational/educational purposes only. 55 IRS 990H Part II: Community Building Activities (F) Programs/Occurrences Source: 2013 Schedule H (Form 990) Hospitals 56

IRS 990H Part II Community Building Activities 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 Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals 57

Programs and Occurrences Enter Category F Programs Data is entered by Coordinators and Reporters Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Lyon Software 2013

58 IRS 9990H Part III: A, B, and C Source: 2013 Schedule H (Form 990) Hospitals 59 CBISA Screen: Bad Debt 1. Choose your method 2. Add to activate the data entry screen

3. Enter the data and Save the record Lyon Software 2013 60 CBISA Screen: Medicare 1. Add to activate the data entry screen 2. Enter your data

3. Save the record Lyon Software 2013 61 CBISA Screen: IRS Questions for Bad Debt, Medicare, Collection Practices Add activates the data entry screen Lyon Software 2013

Choose Yes or No from the dropdown or for question 8, choose the appropriate answer by clicking on the correspond

-ing radio button. 62 CBISA Worksheet C Medicare Lyon Software 2013 63 IRS 9990H Part VI: Supplemental Questions

Source: 2013 Schedule H (Form 990) Hospitals 64 CBISA Screen: IRS Questions Supplemental Questions Add activates the data entry screen Enter text into each free form description box

Lyon Software 2013 65 Summary The information provided in this presentation does not constitute legal or tax advice. The material is provided for informational/educational purposes only. 66 Summary: Numbers of Community Benefit

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 Dont offset by restricted contributions Use proportionate share for qualifying joint ventures Lyon Software 2013 Summary: Team Members Duties

Community Benefit Professional 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) Lyon Software 2013 68 Summary: Team Members Duties

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) Lyon Software 2013

69 Summary: Team Members Duties 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) Lyon Software 2013 70

Lyon Softwarestriving to make social accountability reporting a streamlined process 71

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