[Anonymous]

When calculating for the Net Patient Service Revenue, from the Gross amount, you take out the Charity Care and the third party contractual adjustments. But do you also take out the Bad Debt Expense???

[Anonymous]

One more thing: I'm asking this because Becker says one thing and Ninja plus videos says the other. This is what I have down according to the Becker materials but correct me if I'm wrong.

Donated Services are Non Operating Revenue
Donated Supplies and Equipment are Other Operating Revenue.

[PTBP2018]

Oooh I think I can help with this one. So, for Charity care, it doesn't get recorded as a receivable or a revenue. We don't expect a payment or anything.

Gross Patient Services
(Charitable services)
= Patient Service Rev
Then we take out any deductions, remember that Bad Debt is an EXPENSE (*NOT* a contra-revenue!!). It doesn't get recorded as bad debt!

Does this help?

[PTBP2018]

Donated Services are Non Operating Revenue
Donated Supplies and Equipment are Other Operating Revenue

Above is what I have in my notes too. I am using Becker…soo…I don't know! Someone help!

[Anonymous]

@yackemo17 So does that mean from the Patient Service Revenue, you don't take out the Bad Debt Expense but take out the allowance? and if that's the case, under the GAAP method, if there is 500 BDE wouldn't there also be 500 ADA. So regardless of whether it's BDE or ADA you take out the 500 from the Patient Service Revenue?

[PTBP2018]

So, for Charitable services – the whole amount is just deducted from the Gross Rev account. Bad debt isn't considered at all.

Bad debt on non-charitable (regular patient services) is recorded one of two ways. If the patient was screens and marked as “this joker can pay us, but didn't” – it's a Bad Debt Expense under operating.
If there are a bunch of items that are not collectible – and the hospital never bothered to assess the patients' ability to pay (like at the ER), then the amount would be a deduction from Revenue. I think that's because…they are going to treat you, whether you have been assessed or not. They won't just leave you bleeding to death on the waiting room floor (but you never know at some places I've been to). Eventually they will treat you…but if they didn't do a credit check, then it's hard to consider it a bad debt, I suppose.

I wouldn't get toooooo hung up on it. Bigger fish to fry!!! I have lots of fish to fry before Saturday lol!

[PTBP2018]

I just looked at my notes. It's all pretty vague. Above is how I understood it. The hardest thing about FAR is that there are so many details. People keep telling me to stop getting hung up on the minuscule deets, but it's so hard not to.

[Anonymous]

@yackemo17 Haha very true, thanks for the help! Do you have the Final Becker Review? Also, are you just reviewing your notes at this point and do you plan on reviewing even on the day before the exam?

[MeanJoe]

I can help with this one.

To arrive at net patient service revenue you start with the gross patient service revenue which usually includes an amount of charity care.

Reduce the gross patient patient revenue by charity care. Then subtract out (where applicable) bad debt, contractual adjustments & policy discounts.

Example

1 million Gross patient revenue (includes 150k of charity care services)
20k bad debt
100k contractual adjustments
60k policy discounts

1 million gross patient service rev
<150k> Charity care
<20k> Bad debt
<100k> contractual adj
<60k> policy discounts
________
670,000 net patient service rev

[Anonymous]

@MEANJOE Thanks! I hope that's right, because that's what I thought initially but on Becker, it didn't subtract out the BDE and ADA. But when I was doing Ninja Materials it was different.

[MeanJoe]

No problem. Also sitting 12/9

If ur really curious look at page 6/21 “Main Provisions”

(https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176158037540&acceptedDisclaimer=true)

It's called Provision for Bad Debt

[Anonymous]

Thank you! Will you be studying a lot tomorrow as well or just lightly review? What do you recommend

[MeanJoe]

I had planned on taking it easy but probably not going to happen.

[jeff]

This may help: https://www.another71.com/cpa-exam-forum/topic/is-ninja-or-becker-correct-ninja-far-question-1352/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Author]

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