Hospitals should disclose uncompensated care, HFMA urges

There are three types of uncompensated care hospitals and healthcare facilities should separately account for and disclose, according to a new industry guidance on revenue recognition cited by Bloomberg Tax.

In an updated guidance from the Healthcare Financial Management Association, the organization included language from new revenue recognition rules affecting hospitals. The changes involve rules to calculate revenue. They also affect the assessment of bad debt, which is money owed to hospitals that can't be recovered.

When reporting three types of uncompensated care — charity care, bad debt and implicit price concessions — HFMA said, "Providers will be expected to disclose significant judgments made in applying the guidance and will be expected to disaggregate revenue recognized sufficiently to 'depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors,'" according to the report. "Healthcare entities may disclose revenue by major payer type, by geographical area, by service line or in other categories, as appropriate. Entities also will disclose contract assets and liabilities if they are significant."

In addition, HFMA said while there is no requirement to disclose implicit price concessions, hospitals and other healthcare facilities should consider if a disclosure could be useful to readers.

To read the full guidance, click here.

More articles on healthcare finance:
Trump demands transparency on healthcare costs: 7 things to know
Philadelphia hospital to close: 5 things to know
Trump order on healthcare price transparency coming next week, Wall Street Journal says

© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.


Featured Webinars

Featured Whitepapers