Worksheet 1

Charity Care at Cost (Part I, Line 7a)

Refer to instructions to Part I for the definition of charity care.

Line 1. Enter the gross patient charges written off to charity care pursuant to the organization's charity care policies. "Gross patient charges" means the total charges at the organization's full established rates for the provision of patient care services before deductions from revenue are applied.

Line 3. Multiply line 1 by line 2, or enter estimated cost based on the organization's cost accounting. Organizations with a cost accounting system or a cost accounting method more accurate than the ratio of patient care cost to charges from Worksheet 2 may rely on that system or method to estimate charity care cost.

Line 4. Enter the Medicaid/provider taxes paid by the organization, if payments received from an uncompensated care pool or DSH program in the organization's home state are intended primarily to offset the cost of charity care. If such payments are primarily intended to offset the cost of Medicaid services, then report this amount on Worksheet 3, line 4, column (A). If the primary purpose of such taxes or payments has not been made clear by state regulation or law, then the organization may allocate portions of such taxes or payments proportionately between Worksheet 1, line 4, and Worksheet 3, line 4, column (A) based on a reasonable estimate of which portions are intended for charity care and Medicaid, respectively. "Medicaid provider taxes" means amounts paid or transferred by the organization to one or more states as a mechanism to generate federal Medicaid DSH funds (the cost of the tax generally is promised back to organizations either through an increase in the Medicaid reimbursement rate or through direct appropriation).

Line 6. "Revenue from uncompensated care pools or programs" means payments received from a state, including Medicaid DSH funds, as direct offsetting revenue for charity care or to enhance Medicaid reimbursement rates for DSH providers. If such payments are primarily intended to offset the cost of Medicaid services, then report this amount on Worksheet 3, line 7, column (A). If the primary purpose of such payments has not been made clear by state regulation or law, then the organization may allocate portions of such payments proportionately between Worksheet 1, line 6, and Worksheet 3, line 7, column (A) based on a reasonable estimate of which portions are intended for charity care and Medicaid, respectively.

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