The complexities of charity care policies and the difficult task of documenting charity care qualification have generally resulted in many charity care patients being classified as bad debt. The practice of reporting bad debts at gross charge also has led to reported bad debts trends often significantly above both revenue or expense growth. HFMA's Principles and Practices (P&P) Board has updated its guidance on how to address these issues. Statement 15: Valuation and Financial Statement Presentation of Charity Care and Bad Debt by Institutional Healthcare Providers was published in the January 2007 Healthcare Financial Management magazine. View Statement 15.

This Audio Webcast will outline the guidance put forth in Statement 15, including how to significantly change bad debt disclosure so it reflects only those amounts initially expected to be collected with an offsetting reduction in revenue in most hospital financial statements. While the effect on the financial statement's bottom line will be negligible, the ability to distinguish true bad debt and revenues will be improved. The guidance also addresses the host of grey areas when making charity care determinations, including the time period for eligibility, how to make a determination in the absence of patient-provided financial information, and what constitutes a reasonable expectation of payment.