Healthcare Financial Management Association Revises Accounting Guidance Related to Uncompensated Care
Washington, D.C., June 24, 2019 (GLOBE NEWSWIRE) — The Healthcare Financial Management Association (HFMA) has published a revised version of Statement 15, “Valuation and Financial Statement Presentation of Charity Care, Implicit Price Concessions and Bad Debts through Institutional Healthcare Providers,” to mirror adjustments in horrific debt reporting as a result of the Financial Accounting Standards Board (FASB) Accounting Standards Update 2014-09, “Revenue from Contracts (Topic 606),” a go-enterprise update.
Reporting modifications include the addition of implicit rate concessions as a new category, at the side of charity care and gross debt, within uncompensated care. Implicit price concessions occur when an organization determines that it will, or is possible to, well known a reduction or accommodations to standard pricing for an individual affected person or portfolio of sufferers before a credit danger evaluation can be made.
“Rigorous separation of charity care from horrific debt and implicit price concessions is crucial for many reasons,” stated HFMA Senior Vice President, Healthcare Financial Practices Richard L. Gundling, FHFMA. “Appropriate type and reporting of charity care, awful debts, and implicit price concessions are often harsh. The urgency of a few treatments, in addition to specific federal regulations, usually requires the provision of the carrier without attention to the capacity to pay. Statement 15 seeks to carry clarity to these problems.
While there are a wide range of coverage and enterprise approaches worried about reporting charity care, terrible debt, and implicit rate concessions, the scope of Statement 15 is especially to endorse excellent accounting and financial reporting practices for these uncompensated care.
Published with the aid of HFMA’s Principles and Practices Board, this 18-web page assertion consists of sections on the importance of nicely reporting charity care; implicit charge concessions and lousy debt; criteria for charity care; timing of charity care eligibility determinations; recordkeeping for charity care; valuation of charity care; disclosure of charity care; recordkeeping for bad debts and implicit fee concessions; popularity and exposure of horrific money owed; reputation and disclosure for implicit charge concessions; type of receipts regarding charity care; and type and disclosure of payment shortfalls. The position assertion can be regarded right here.
Hospitals are the maximum excessive-profile vendors of charity care. In addition to hospitals, those guidelines apply to all taxable and tax-exempt institutional healthcare carriers, including skilled nursing centers, subacute care centers, multispecialty clinics, freestanding ambulatory centers, and persevering with care retirement groups. This steering does no longer follow centers beneath the Governmental Accounting Standards Board.
HFMA posted extra steering in this subject matter in January 2019 in a problem evaluation, “Revenue Recognition, Including Implicit Price Concession and Bad Debt Considerations, for Healthcare Organizations: Accounting Issues and Trends.”
Statement 15 changed into at the beginning published in December 2006 and turned into revised in December 2012. The records of HFMA’s Principles and Practices Board’s steerage of approximately uncompensated care date back to 1978. It first issued Statement No. 2, which supplied a foundation for differentiating between charity care and terrible debts.
Before issuance, a proposed function statement follows an intensive due manner. A publicity draft is launched for public comment for at least 60 days. These remarks are analyzed and reviewed with HFMA’s Principles & Practices Board. Additional interpretive steering may be found as situations evolve. Consultation on these subjects with independent auditors is reasonably endorsed.
With more than forty-two 000 participants, the Healthcare Financial Management Association (HFMA) is the kingdom’s ideal club agency for healthcare finance leaders. HFMA builds and supports coalitions with different healthcare institutions and industry companies to obtain consensus on answers for the U.S. Healthcare system’s challenges. Working with an extensive move-segment of stakeholders, HFMA identifies gaps at some point in the healthcare shipping system and bridges them via the established order and sharing of expertise excellence practices. The Association enables healthcare stakeholders to reap the most reliable results by creating and providing education, analysis, and practical tools and answers. Its challenge is to guide the monetary management of fitness care.
About the Principles and Practices Board.
HFMA’s Principles and Practices Board works with the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, and the Governmental Accounting Standards Board to address healthcare agencies’ precise financial reporting desires and enhance consistency in accounting and financial reporting exceptional possession kinds. The Principles and Practices Board publishes trouble analyses to provide brief-term practical help on rising issues in healthcare financial control. Since 1977, the Board has additionally posted function statements, which might be released for public remark. The 2018-19 Principles and Practices Board is chaired by Brian P. Conner, Partner, Moss Adams LLP, and contains 12 individuals with giant accounting enjoy in provider corporations, accounting corporations, and rating agencies.