CBISA™ Financial Defaults
and the IRS 990 Schedule H
A resource for Finance
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Planning for
Community Benefit
The information provided in this presentation does not
constitute legal or tax advice. The material is provided
for informational/educational purposes only.
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Planning for Community Benefit
How does Finance help in the planning for
Community Benefit?
 Review/explain the financial assistance policy
 Establish standardized methods and policies
 Develop average rates for salaries and indirect
costs
 Advise and provide oversight and support (what
counts and how to count it)
©Lyon Software 2013
Planning for Community Benefit
 Review/explain the financial assistance policy
Community benefit professionals and reporters need
to understand the financial assistance policy.
Who will be reporting on the program? Finance (if the
program is part of the financial assistance program,
i.e., charity care) or the community benefit team?
©Lyon Software 2013
Planning for Community Benefit
 Establish standardized methods and policies
When policies and procedures are in place, the job of
collecting, reporting and tracking community benefit
becomes much more efficient. Finance can help set
some standardized practices and policies.
©Lyon Software 2013
Planning for Community Benefit
 Develop average rates for salaries and indirect
costs
CBISA uses average salary rates for departments and
up to four (4) group rates plus indirect cost
percentages for programs that take place in the
hospital (or facility) and those that take place in the
community.
©Lyon Software 2013
Planning for Community Benefit
 Advise and provide oversight and support
(what counts and how to count it)
Community benefit programs or activities provide
treatment and/or promote health and healing as a
response to identified community needs.
©Lyon Software 2013
Planning for Community Benefit
For a program to “count”:
1. It must address a documented community need, and
2. It must have at least one of these community benefit
objectives:
a) Improve access to health care services
b) Enhance health of the community
c) Advance medical or health care knowledge
d) Relieve/reduce the burden of government/other
community efforts
Source: Catholic Health Association Guide for Planning & Reporting Community Benefit 2012 Edition
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Planning for Community Benefit
A program does not count as community benefit, if:

The program is primarily for marketing purposes

The program or donation is unrelated to health or the hospital’s mission

An objective “prudent layperson” would question whether the program truly
benefits the community (the program benefits, or appears to benefit, the
organization more than the community)

The program represents a community benefit provided by another entity or
individual

Access to the program is restricted to employees or physicians affiliated
with the hospital

The activity represents a normal “cost of doing business” or is associated
with the current standard of care
Source: Catholic Health Association Guide for Planning & Reporting Community Benefit 2012 Edition
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Planning for Community Benefit
Financial
Assistance,
at cost
A. Community Health Improvement
B. Health Professions Education
Medicaid
Other MeansTested
Government
Programs
C. Subsidized Health Services
D. Research
E. Financial & In-kind Contributions
F. Community Building Activities
G. Community Benefit Operations
Categories A-G
©Lyon Software 2013
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Planning for Community Benefit
Financial
Assistance,
at cost
Medicaid
Other MeansTested
Government
Programs
Subsidized Health Services
Finance specifically provides the
numbers (persons served, expenses
and offsetting revenue) for Financial
Assistance, Medicaid and Other
Means-Tested Programs. Also,
because those three costs may also
be included in Subsidized Health
Services (Category C), Finance
must remove any double counting
entries and determine whether the
service is still subsidized.
Categories A-G
©Lyon Software 2013
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Financial Defaults
The information provided in this presentation does not
constitute legal or tax advice. The material is provided
for informational/educational purposes only.
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Financial Defaults: Fiscal Year
Select the active fiscal year from the
dropdown list
Enter in the applicable fiscal year starting and
ending dates on the Reporting Unit/Financial
information page
Hint: To access the Reporting
Unit/Financial page, choose
Options/Org Defaults.
Highlight the reporting unit,
and click on “Edit”
©Lyon Software 2013
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Financial Defaults: Expenses, Revenues & Indirect %’s
Enter total functional expenses (for IRS 990H reporting), operating expenses
and revenues, and indirect cost factors
Hint: The amounts entered at the beginning of the year will be estimates. You will want
to update the dollar amounts with final audited numbers prior to running your community
benefit reports and 990H reports.
©Lyon Software 2013
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Financial Defaults: Indirect Method
After entering the indirect cost method percentages:
1. The Administrator/Coordinator will set the default method at the Program level
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Financial Defaults: Indirect Method
2. Select the applicable method of calculation for each occurrence
Hint: The Occurrence
indirect cost will default
to the method chosen on
the Program/General
screen, but may be
changed, as needed.
©Lyon Software 2013
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Financial Defaults: Salary Defaults/Group Rates
Enter the salary defaults
Reporting Unit-wide average fringe
benefit percent. Applied to all
Occurrences that are added AFTER
the percent is entered and the form is
saved.
Defined in
Custom Terms
©Lyon Software 2013
Reporting Unit-wide average hourly
pay rate. Used on Occurrences when
department is left at “none apply”
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Financial Defaults: Salary Defaults/Group Rates
Define up to four
standard salary
group rates
Hint: To access Custom Terms, choose Options/Edit
Defaults. Open Custom Terms by clicking on the tab.
Highlight each Average Hourly Pay Rate term, click
“Edit,” enter in a “substitution” (named standard group)
and “Save”. Administrators/Coordinators have access to
Edit Defaults.
©Lyon Software 2013
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Financial Defaults: Salary Defaults/Dept. Rates
Update the average rate for each department
Hint: You may highlight multiple
departments at one time (use the
“control key” or “shift key”) and
update the rate information for
each department that has the
same average rate. Finance
users may only update rates.
©Lyon Software 2013
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Financial Defaults: Salary Defaults/Dept. Rates
Hint: At the beginning
of a new fiscal year, you
may choose to “bring
forward” the average
salary rates from the
previous year. You may
bring forward one, more
than one, or all rates by
using the multi-select
option (control key or
shift key).
©Lyon Software 2013
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Financial Defaults: Fringe Percent
Enter the
appropriate date
range, the new
Fringe percent, then
apply.
CBISA will let you know
how many records were
updated.
Hint: If you enter occurrences into a fiscal year BEFORE you set the Fringe percent default, you
will want to use this tool to update those records. Occurrences entered AFTER the default is set
will automatically use the correct Fringe percent entered on the Reporting Unit Financial page.
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©Lyon Software 2013
IRS 990 Schedule H
Part I
The information provided in this presentation does not
constitute legal or tax advice. The material is provided
for informational/educational purposes only.
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IRS 990H Who Must File?
“An organization that answered “Yes” on Form
990, Part IV, line 20a must complete and attach
Schedule H to Form 990.”
Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals
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IRS 990H Part I Financial Assistance Questions
Source: 2013 Schedule H (Form 990) Hospitals
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CBISA Screen: IRS Questions/Part I 1a-6b
Choose “Add” to activate the
question page
To answer the
questions on Part I of
the IRS 990H (lines
1a-6b), access the
Financial Services
Module and choose
IRS 990 Questions,
Part I tab
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IRS 990H Part I #7
Table of Quantifiable Community Benefit
Report on the Table (lines 7a-7k) at cost, the organization’s
financial assistance and certain other community benefits.
Use the organization’s most accurate costing methodology (cost
account system, cost-to-charge ratio, or other) to calculate the
amounts reported on the table.
Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals
CBISA™ gives you the systematic methodology to collect and
complete the data for lines 7a-7k in:
Financial Services Module (lines 7a-7c)
Programs Module with Occurrences (lines 7e-7i)
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IRS 990H Part I #7
Table of Quantifiable Community Benefit
Columns (a) “Number of activities or programs” and (b) “Persons
served” are optional
Column (c) “Total community benefit expense” means the total
gross expense of the activity incurred during the year… includes
both direct costs and indirect costs.
Column (d) “Direct offsetting revenue” means revenue from the
activity during the year that offsets the total community benefit
expense of that activity... includes any revenue generated by the
activity or program…does not include restricted or unrestricted
grants or contributions that the organization uses to provide a
community benefit.
Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals
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IRS 990H Part I #7
Table of Quantifiable Community Benefit
Column (e) “Net community benefit expense” is Total community
benefit expense” (column c) minus “Direct offsetting revenue”
(column d). If the calculated amount is less than zero, report such
amounts as a negative number.
Column (f) “Percent of total expense” is the “net community benefit
expense” in column (e) divided by the sum of the amount on Form
990, Part IX, line 25, column (A)…Report the percentage to two
decimal places (x.xx%).
Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals
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IRS 990H Part I #7
Table of Quantifiable Community Benefit
Financial Services
Programs/Occurrences
Source: 2013 Schedule H (Form 990) Hospitals
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CBISA Screen: Ratio of Patient Costs to Charges
Choose “Add” to activate the
date entry page
To calculate a ratio of
patient care costs to
charges, access the
Financial Services
Module and choose
Ratios screen
©Lyon Software 2013
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CBISA Screen: Financial Assistance, at Cost
1. Click “Add”
2. Enter Data
3. Click “Save”
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CBISA Screen: Medicaid, Net Costs
1. Click “Add”
2. Enter Data
3. Click “Save”
©Lyon Software 2013
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CBISA Screen: Means Tested Programs, Net Costs
1. Click “Add”
2. Enter Data
3. Click “Save”
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Joint Ventures
Enter Qualifying Joint Ventures
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Programs and Occurrences
Enter Category A & G Programs
Data is entered by
Coordinators and Reporters
Attach Statistical Occurrence
forms capturing
Persons Served, Expenses,
and Offsets
©Lyon Software 2013
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Programs and Occurrences
Enter Category B Programs
Data is entered by
Coordinators and Reporters
Attach Statistical Occurrence
forms capturing
Persons Served, Expenses,
and Offsets
©Lyon Software 2013
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Programs and Occurrences
For category B “Health Profession Education” programs, make any
offsetting adjustments on the occurrence screen.
Step 1: Choose the
Program from the
browse box on the
control panel
Step 2: Open the
Occurrence screens by
clicking on the link
Step 3: Choose the
applicable occurrence
from the browse box
Step 4: Enter any
applicable offsets
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Programs and Occurrences
Enter Category C Programs
Data is entered by
Coordinators and Reporters
Attach Statistical Occurrence
forms capturing
Persons Served, Expenses,
and Offsets
©Lyon Software 2013
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Programs and Occurrences
For category C “Subsidized Health Services” programs, make any
offsetting adjustments on the occurrence screen.
Step 1: Choose the
Program from the
browse box on the
control panel
Step 2: Open the
Occurrence screens by
clicking on the link
Step 3: Choose the
applicable occurrence
from the browse box
Step 4: Make any
necessary edits to avoid
“double counting”
issues.
©Lyon Software 2013
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Programs and Occurrences
Enter Category D Programs
Data is entered by
Coordinators and Reporters
Attach Statistical Occurrence
forms capturing
Persons Served, Expenses,
and Offsets
©Lyon Software 2013
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Programs and Occurrences
Specific Offset for Category D Programs
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Programs and Occurrences
Enter Category E Programs
Data is entered by
Coordinators and Reporters
Attach Statistical Occurrence
forms capturing
Persons Served, Expenses,
and Offsets
©Lyon Software 2013
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Programs and Occurrences
Enter Donation or Grant Money in “Other”
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CBISA™ Reports & Listings
Reports to complete each applicable
section of the IRS Form 990
Schedule H and the corresponding
supporting worksheet.
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CBISA Worksheet 2
Ratio of Patient Care Cost to Charges
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CBISA Worksheet 1
Financial Assistance
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CBISA Worksheet 3
Medicaid
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CBISA Worksheet 3
Other Means-Tested Government Programs
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CBISA Worksheet 4
Community Health Improvement Services & Community Benefit Operations
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CBISA Worksheet 5
Health Professions Education
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CBISA Worksheet 6
Subsidized Health Services
Includes Physician’s Clinic Designation and Summary Report
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CBISA Worksheet 7
Research
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CBISA Worksheet 8
Cash and In-Kind Contributions for Community Benefit
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IRS 990 Schedule H
Part II
Part III
and
Part VI
The information provided in this presentation does not
constitute legal or tax advice. The material is provided
for informational/educational purposes only.
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IRS 990H Part II: Community Building Activities (F)
Programs/Occurrences
Source: 2013 Schedule H (Form 990) Hospitals
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IRS 990H Part II Community Building Activities
“An organization that reports information in this Part must describe,
in Part VI how its community building activities promote the health of
the communities it serves.”
Physical improvements and housing
Economic development
Community support
Environmental improvements
Leadership development and training for community members
Coalition building
Community health improvement advocacy
Workforce development
Source: 2012 Instructions for Schedule H (Form 990) Instructions, Hospitals
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Programs and Occurrences
Enter Category F Programs
Data is entered by
Coordinators and Reporters
Attach Statistical Occurrence
forms capturing
Persons Served, Expenses,
and Offsets
©Lyon Software 2013
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IRS 9990H Part III: A, B, and C
Source: 2013 Schedule H (Form 990) Hospitals
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CBISA Screen: Bad Debt
1. Choose your method
2. “Add” to activate the
data entry screen
3. Enter the data and
“Save” the record
©Lyon Software 2013
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CBISA Screen: Medicare
1. “Add” to activate the
data entry screen
2. Enter your data
3. “Save” the record
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CBISA Screen: IRS Questions for Bad Debt, Medicare,
Collection Practices
“Add” activates the data
entry screen
©Lyon Software 2013
Choose
“Yes” or
“No” from
the
dropdown
or for
question 8,
choose the
appropriate
answer by
clicking on
the
correspond
-ing radio
button.
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CBISA Worksheet C
Medicare
©Lyon Software 2013
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IRS 9990H Part VI: Supplemental Questions
Source: 2013 Schedule H (Form 990) Hospitals
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CBISA Screen: IRS Questions Supplemental Questions
“Add” activates the data
entry screen
Enter text into each free form
description box
©Lyon Software 2013
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Summary
The information provided in this presentation does not
constitute legal or tax advice. The material is provided
for informational/educational purposes only.
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Summary: Numbers of Community Benefit
Some basics about the numbers of community benefit
 Measured on the basis of cost (actual financial, not
opportunity)
 Avoid double-counting
 Include indirect costs
 Use the most accurate cost-accounting methods
 Don’t offset by restricted contributions
 Use “proportionate share” for qualifying joint
ventures
©Lyon Software 2013
Summary: Team Members’ Duties
Community Benefit Professional
Community Health Improvement Services (Part I, 7e)
Research (Part I, 7h)
Cash Contributions (Part I, 7i)
In-kind Contributions (Part I, 7i)
Community Benefit Operations (Part I, 7e)
Community Building Activities (Part II)
Case for Community Building as Community Benefit (Part VI)
©Lyon Software 2013
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Summary: Team Members’ Duties
Finance
Ratio Patient & Costs to Charges (IRS Worksheet 2)
Financial Assistance (Part I, 7a)
HFMA Statement 15 Applicability
Medicaid (Part I, 7b)
Other Means-Tested Public Programs (Part I, 7c)
Health Professions Education-costs & offsets (Part I, 7f)
Subsidized Health Services-costs & offsets (Part I, 7g)
Double Count Adjustments (Part I, 7f, 7g)
Bad Debt (Part III, Section A)
Medicare (Part III, Section B)
©Lyon Software 2013
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Summary: Team Members’ Duties
Others
Financial Assistance Policy Questions (Part I & Part VI)
Financial Assistance Policies & Billing Directives Questions
Definition of Community (Part VI)
Collection Practices (Part III, Section e)
©Lyon Software 2013
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Lyon Software…striving to make social
accountability reporting a streamlined
process…
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