The first round of Form 990 submissions can be confusing with the vague definitions of what is considered charity care or community benefit, according to presenters at a pre-conference session at the Healthcare Financial Management Association’s ANI.
The Sunday session featured tips on how to fill out the revised IRS Form 990 and walked attendees through the steps of filling it out.
“I think this form is requiring a community needs assessment,” said presenter Keith Hearle of Verite Healthcare Consulting.
The original documents were drafted over twenty years ago, but hospitals still aren’t required to file anything but Part V and pieces of Part VI in most states. Only 15 states actually require the filing, while 23 others have a voluntary filing program for IRS Form 990.
“I feel like I’m filling out something that will get ignored,” said one skeptical attendee.
Charity care, covered under Line 7 of Part I of the form is defined as “free or discounted health services provided to persons who meet the organization’s criteria for financial assistance and are thereby deemed unable to pay for all or a portion of the services. Three states, Texas, Pennsylvania and Utah have minimum requirements to the amount of charity care each hospital must administer in a year.
Hearle’s co-presenter, Julie Troccio of the Catholic Health Association warned hospitals to be careful only to report charity care that lines with their charity care policies.
Hearle admitted that the subtotal row in Line 7 “made him nervous.”
The first introduction of Form 990 came after states had problems with tax exemptions in hospitals. In the mid-1980s, a Utah referendum on whether hospitals should be tax exempt or not failed because the general public didn’t know the difference between for-profit and not-for-profit hospitals. In the late 1980s, Pennsylvania had issues with hospitals behaving badly on affairs surrounding charity care and other topics. In Texas, Methodist Hospital, a highly regarded teaching and heart facility, argued that it “didn’t have to serve the poor," and the Attorney General changed the law to require all Texas hospitals to match 5 percent of their revenue in charity care, making it the toughest state law on the matter.
Hearle finished out the session by walking attendees through the forms and "into the “Nuances of the 990," covering the "unexplained things."