1. CBISA™ Financial Defaults and the IRS 990 Schedule H A resource for Finance Use “enter” on your keyboard, or click your left mouse button to move through the screens 1 For any CBISA TM questions, contact Customer Support: (419)-885-4593 or support@lyonsoftware.com

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3. 3 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.

4. 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) Planning for Community Benefit ©Lyon Software 2013

5.  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? Planning for Community Benefit ©Lyon Software 2013

6.  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. Planning for Community Benefit ©Lyon Software 2013

7.  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. Planning for Community Benefit ©Lyon Software 2013

8.  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. Planning for Community Benefit ©Lyon Software 2013

9. 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 9 Source: Catholic Health Association Guide for Planning & Reporting Community Benefit 2012 Edition Planning for Community Benefit

10. 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 10 Planning for Community Benefit Source: Catholic Health Association Guide for Planning & Reporting Community Benefit 2012 Edition

11. 11 Financial Assistance, at cost Medicaid Other Means- Tested Government Programs Categories A-G A.Community Health Improvement B.Health Professions Education C.Subsidized Health Services D.Research E.Financial & In-kind Contributions F.Community Building Activities G.Community Benefit Operations Planning for Community Benefit ©Lyon Software 2013

12. 12 Financial Assistance, at cost Medicaid Other Means- Tested Government Programs Categories A-G Subsidized Health Services Planning for Community Benefit ©Lyon Software 2013 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.

13. 13 Financial Defaults The information provided in this presentation does not constitute legal or tax advice. The material is provided for informational/educational purposes only.

14. 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 14 ©Lyon Software 2013 Hint: To access the Reporting Unit/Financial page, choose Options/Org Defaults. Highlight the reporting unit, and click on “Edit”

15. 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. 15 ©Lyon Software 2013

16. Financial Defaults: Indirect Method 16 After entering the indirect cost method percentages: 1. The Administrator/Coordinator will set the default method at the Program level ©Lyon Software 2013

17. 17 2. Select the applicable method of calculation for each occurrence Financial Defaults: Indirect Method ©Lyon Software 2013 Hint: The Occurrence indirect cost will default to the method chosen on the Program/General screen, but may be changed, as needed.

18. Financial Defaults: Salary Defaults/Group Rates 18 Enter the salary defaults ©Lyon Software 2013 Defined in Custom Terms Reporting Unit-wide average fringe benefit percent. Applied to all Occurrences that are added AFTER the percent is entered and the form is saved. Reporting Unit-wide average hourly pay rate. Used on Occurrences when department is left at “none apply”

19. Financial Defaults: Salary Defaults/Group Rates 19 ©Lyon Software 2013 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.

20. Financial Defaults: Salary Defaults/Dept. Rates 20 ©Lyon Software 2013 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.

21. Financial Defaults: Salary Defaults/Dept. Rates 21 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

22. Financial Defaults: Fringe Percent 22 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. Enter the appropriate date range, the new Fringe percent, then apply. ©Lyon Software 2013

23. IRS 990 Schedule H Part I 23 The information provided in this presentation does not constitute legal or tax advice. The material is provided for informational/educational purposes only.

24. IRS 990H Who Must File? 24 “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

25. IRS 990H Part I Financial Assistance Questions 25 Source: 2013 Schedule H (Form 990) Hospitals

26. CBISA Screen: IRS Questions/Part I 1a-6b 26 ©Lyon Software 2013 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 Choose “Add” to activate the question page

27. IRS 990H Part I #7 Table of Quantifiable Community Benefit 27 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) ©Lyon Software 2013

28. IRS 990H Part I #7 Table of Quantifiable Community Benefit 28 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

29. IRS 990H Part I #7 Table of Quantifiable Community Benefit 29 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

30. IRS 990H Part I #7 Table of Quantifiable Community Benefit 30 Source: 2013 Schedule H (Form 990) Hospitals Financial Services Programs/Occurrences

31. CBISA Screen: Ratio of Patient Costs to Charges 31 ©Lyon Software 2013 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

32. CBISA Screen: Financial Assistance, at Cost 32 ©Lyon Software 2013 2. Enter Data 3. Click “Save” 1. Click “Add”

33. CBISA Screen: Medicaid, Net Costs 33 ©Lyon Software 2013 2. Enter Data 1. Click “Add” 3. Click “Save”

34. CBISA Screen: Means Tested Programs, Net Costs 34 ©Lyon Software 2013 3. Click “Save” 2. Enter Data 1. Click “Add”

35. Joint Ventures 35 ©Lyon Software 2013 Enter Qualifying Joint Ventures

36. 36 Programs and Occurrences Enter Category A & G Programs Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Data is entered by Coordinators and Reporters ©Lyon Software 2013

37. 37 Programs and Occurrences Enter Category B Programs Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Data is entered by Coordinators and Reporters ©Lyon Software 2013

38. 38 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 ©Lyon Software 2013

39. 39 Programs and Occurrences Enter Category C Programs Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Data is entered by Coordinators and Reporters ©Lyon Software 2013

40. 40 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

41. 41 Programs and Occurrences Enter Category D Programs Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Data is entered by Coordinators and Reporters ©Lyon Software 2013

42. 42 Programs and Occurrences Specific Offset for Category D Programs ©Lyon Software 2013

43. 43 Programs and Occurrences Enter Category E Programs Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Data is entered by Coordinators and Reporters ©Lyon Software 2013

44. 44 Programs and Occurrences Enter Donation or Grant Money in “Other” ©Lyon Software 2013

45. CBISA™ Reports & Listings 45 ©Lyon Software 2013 Reports to complete each applicable section of the IRS Form 990 Schedule H and the corresponding supporting worksheet.

46. CBISA Worksheet 2 46 ©Lyon Software 2013 Ratio of Patient Care Cost to Charges

47. CBISA Worksheet 1 47 ©Lyon Software 2013 Financial Assistance

48. CBISA Worksheet 3 48 ©Lyon Software 2013 Medicaid

49. CBISA Worksheet 3 49 ©Lyon Software 2013 Other Means-Tested Government Programs

50. CBISA Worksheet 4 50 ©Lyon Software 2013 Community Health Improvement Services & Community Benefit Operations

51. CBISA Worksheet 5 51 ©Lyon Software 2013 Health Professions Education

52. CBISA Worksheet 6 52 ©Lyon Software 2013 Subsidized Health Services Includes Physician’s Clinic Designation and Summary Report

53. CBISA Worksheet 7 53 ©Lyon Software 2013 Research

54. CBISA Worksheet 8 54 ©Lyon Software 2013 Cash and In-Kind Contributions for Community Benefit

55. IRS 990 Schedule H Part II Part III and Part VI 55 The information provided in this presentation does not constitute legal or tax advice. The material is provided for informational/educational purposes only.

56. IRS 990H Part II: Community Building Activities (F) 56 Source: 2013 Schedule H (Form 990) Hospitals Programs/Occurrences

57. IRS 990H Part II Community Building Activities 57 “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

58. 58 Programs and Occurrences Enter Category F Programs Attach Statistical Occurrence forms capturing Persons Served, Expenses, and Offsets Data is entered by Coordinators and Reporters ©Lyon Software 2013

59. IRS 9990H Part III: A, B, and C 59 Source: 2013 Schedule H (Form 990) Hospitals

60. CBISA Screen: Bad Debt 60 ©Lyon Software 2013 3. Enter the data and “Save” the record 2. “Add” to activate the data entry screen 1. Choose your method

61. CBISA Screen: Medicare 61 ©Lyon Software 2013 1. “Add” to activate the data entry screen 2. Enter your data 3. “Save” the record

62. CBISA Screen: IRS Questions for Bad Debt, Medicare, Collection Practices 62 ©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. “Add” activates the data entry screen

63. CBISA Worksheet C 63 ©Lyon Software 2013 Medicare

64. IRS 9990H Part VI: Supplemental Questions 64 Source: 2013 Schedule H (Form 990) Hospitals

65. CBISA Screen: IRS Questions Supplemental Questions 65 ©Lyon Software 2013 “Add” activates the data entry screen Enter text into each free form description box

66. 66 Summary The information provided in this presentation does not constitute legal or tax advice. The material is provided for informational/educational purposes only.

67. 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 Summary: Numbers of Community Benefit ©Lyon Software 2013

68. Community Benefit Professional Summary: Team Members’ Duties  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) 68 ©Lyon Software 2013

69. Finance Summary: Team Members’ Duties  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) 69 ©Lyon Software 2013

70. Others Summary: Team Members’ Duties  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) 70 ©Lyon Software 2013

71. 71 Lyon Software…striving to make social accountability reporting a streamlined process…