Question: We are working on our 2010 community benefit report and have a question related to "Unreimbursed Medicaid." Due to higher than normal UPL reimbursements, coupled with our having to record 18 months of UPL reimbursement in 2010, Medicaid was actually profitable for us in 2010. Should this profit be netted against our community benefit expense?
Recommendation: Page 147 of A Guide for Planning and Reporting Community Benefit (Guide) provides guidance on this question. The Guide states, "If revenue is greater than cost, then Worksheet 3 [of the Guide] will yield a negative net community benefit expense. This may occur for organizations with substantial amounts of Medicaid Disproportionate Share Hospital revenue or with significant prior-year revenue that can result from cost report settlements. To be consistent with Schedule H accounting, CHA recommends applying GAAP when accounting for prior-year revenue (i.e., recording the revenue when collection is reasonably assured). Including a footnote that describes the prior-year revenue is important, particularly if the amounts are material. Worksheet 3 thus includes a row for recording prior-year revenue."
This is in keeping with IRS Instructions.
(April 2011; updated November 2015)