IRS rolls out not-for-profit reporting rules

Like it or not, it seems that new IRS rules on not-for-profit reporting are about to arrive. The rules, which will go into effect this year and next, will force not-for-profit hospitals to provide a great deal more information on their governance structure, executive pay and perks and perhaps most controversially, how much subsidized and free care they provide. The reporting will be detailed in a supplement (Schedule H) to the IRS's Form 990, which is used both in and outside healthcare by not-for-profits to report revenue and expenses. The idea is to make sure that hospitals report their financial policies and condition, and justify their tax-exemption, on a uniform basis.

While many industry organizations are comfortable with the new requirements, some are upset that bad debt and Medicare losses, while listed, are not counted as community benefits. Not only that, hospitals aren't pleased that if they want to claim bad debt or Medicare losses, they must disclose the method they used to come up with this estimate. 

Perhaps the hottest potato of all is community benefit reporting. The new form breaks down such reporting into eight expenses, including charity care, cash and in-kind contributions to community groups, community health improvement, professional education, research, subsidized health services, un-reimbursed Medicaid and other public, means-tested programs and a catch-all "other benefits" category. Some industry players complain that comparing community benefit from one organization to another could be problematic, given how differently they may be structured. Maybe future IRS form adjustments will address this--but it looks they'll have to live with things as is for the time being. Time for some creative accounting, folks?

To learn more about the rules:
- read this Modern Healthcare article (reg. req.)

Related Articles:
AHA makes headway on community benefit reporting. Report
AHA charity proposal draws Congressional criticism. Report
IRS says 'uncompensated care' definition is dicey. Report
IRS to investigate nonprofit hospitals. Report
Proving community benefit by reducing sickness. Report
A critical time to prove community benefit. Report
A new standard for voluntary hospitals? Report
VHA: Charity policy must come from the top. Report

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