charity care

ASC 310-954 governs how health care entities recognize, measure, present, and disclose receivables, principally amounts due from patients and third-party payors (Blue Cross, Medicare, Medicaid, HMOs, workers' compensation). Contractual adjustments and discounts are treated as variable consideration under ASC 606 (606-10-32-5 through 32-14 and 32-42 through 32-45), while an allowance for credit losses is measured under Topic 326. Charity care is never recognized as a receivable, and amounts due from third-party payors for retroactive adjustments such as final settlements or appeals must be reported separately.

After ASU 2014-09 superseded most of its content, ASC 605-954 retains only two pieces of health care recognition guidance: charity care and distributions from financially interrelated fundraising (recipient) entities. Charity care is never recognized as revenue, and distributions from a related fundraising foundation are generally a reduction of the health care entity's interest in that recipient entity rather than contribution revenue. Revenue from contracts with patients and other customers is now governed by Topic 606.