New rules affect bad debt, charity care reporting

Many healthcare organizations must change the way they report patient service revenue, following provisions in the American Institute of Certified Public Accountants' recently revised healthcare audit guide. The guide directs that bad debts should be reported as expenses and that charity care should be excluded from revenue and accounts receivable. As a result, hospital executives must ensure that criteria for differentiating charity care from bad debts are in place, understood, and properly carried out.