IRS Form 990 Schedule H - Are You Equipped to Gather this Information?

June 2008 News Release

This article is directed at hospitals required to file Form 990 Schedule H (community benefit information). Its purpose is to alert hospitals to the need to implement a tracking and reporting mechanism as soon as possible. The new Schedule H involves considerably more substance than simply charity care and means-tested programs such as Medicaid. Much of the buzz so far concerns charity care and bad debt and whether to follow the guidelines of HFMA Statement 15. Although charity care and public program shortfalls are very significant numbers reported in Schedule H, they are not the only numbers.

The international law firm of McDermott Will & Emery recently published a white paper entitled "IRS Releases Draft Instructions to Revised Form 990" (April 22, 2008, page 5) in which they stated:

"The IRS's draft instructions form 990 Schedule H serve as a stark reminder that many (if not all) hospitals and health care systems are ill equipped at the present to completely and accurately gather the information required to complete the full Schedule H when due in tax years starting in 2009. It is strongly recommended that hospitals use Schedule H and its draft instructions as...an immediate reality check on the current information-gathering systems in place and their ability to accurately gather and collect the significant volume of data required to complete Schedule H." (To read the entire text, click here.)

Hospital finance staffs are already equipped to report numbers for charity care, for unpaid costs of Medicaid and other means-tested public programs, and even for bad debt and the limited Medicare information reported in Part III. The net costs of these programs are some of the largest community benefit costs reported in Schedule H, but they generally constitute a small number of programs. Finance staffs already have processes in place to track these programs for cost reporting and financial reporting reasons.

For the remaining information in Schedule H, however, a new record keeping system will need to be implemented to track the programs and services in the six community benefit categories reported in Part I and the nine community building categories reported in Part II. There are hundreds of the community programs - in some cases nearly a thousand - in a typical not-for-profit hospital. The good news is that such a proven record keeping system already exists - Lyon Software's CBISA Online™ subscription software.

Lyon Software invites all hospital finance professionals to learn more about CBISA™. You are encouraged to attend our upcoming comprehensive workshop - CBISA™ and the IRS 990 Schedule H. To obtain additional information about CBISA™ or the educational workshops, visit our website at www.lyonsoftware.com or contact Heidi Kuester at hkuester@lyonsoftware.com (phone: 419-882-7184).

Douglas P. Lyon, CPA
President
Lyon Software
Sylvania, OH