Association Comments on Accounting Standards Affecting Supplemental Payments

On April 27, the association commented on proposed guidance from the Governmental Accounting Standards Board (GASB) that reclassifies supplemental payments as subsidies instead of reimbursement for services.  

These changes, detailed in the Exposure Draft, Proposed Implementation Guide on Financial Reporting Model Improvements-Subsidies, would reduce operating revenue for essential hospitals. The association urged GASB to withdraw the guidance related to supplemental payments, stating:

• Medicaid does not involve a contractual relationship between a patient and a government for health care coverage.
• Supplemental payments are payments for services governed by agreements between states and state-contracted managed care organizations.
• Medicaid supplemental payments do not meet the definition of "subsidies" under GASB guidance.
• The guidance is inconsistent with our understanding of historical and current practice under the GASB and financial accounting standards board.

Contact Director of Policy Rob Nelb, MPH, at [email protected] or 202.585.0127 with questions.