HCA Holdings 2012 Annual Report Download - page 123

HCA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Financial Instruments (continued)
(loss), and subsequently reclassified to earnings to offset the impact of the forecasted transactions when they
occur. In the event the forecasted transaction to which a cash flow hedge relates is no longer likely, the amount in
other comprehensive income (loss) is recognized in earnings and generally the derivative is terminated. Changes
in the fair value of derivatives not qualifying as hedges, and for any portion of a hedge that is ineffective, are
reported in earnings.
The net interest paid or received on interest rate swaps is recognized as interest expense. Gains and losses
resulting from the early termination of interest rate swap agreements are deferred and amortized as adjustments
to interest expense over the remaining term of the debt originally associated with the terminated swap.
Electronic Health Record Incentive Payments
The American Recovery and Reinvestment Act of 2009 provides for Medicare and Medicaid incentive
payments for eligible hospitals and professionals that adopt and meaningfully use certified electronic health
record (“EHR”) technology. We recognize income related to Medicare and Medicaid incentive payments using a
gain contingency model that is based upon when our eligible hospitals have demonstrated meaningful use of
certified EHR technology for the applicable period and the cost report information for the full cost report year
that will determine the final calculation of the incentive payment is available.
Medicaid EHR incentive calculations and related payment amounts are based upon prior period cost report
information available at the time our eligible hospitals adopt, implement or demonstrate meaningful use of
certified EHR technology for the applicable period, and are not subject to revision for cost report data filed for a
subsequent period. Thus, incentive income recognition occurs at the point our eligible hospitals adopt, implement
or demonstrate meaningful use of certified EHR technology for the applicable period, as the cost report
information for the full cost report year that will determine the final calculation of the incentive payment is
known at that time.
Medicare EHR incentive calculations and related initial payment amounts are based upon the most current
filed cost report information available at the time our eligible hospitals demonstrate meaningful use of certified
EHR technology for the applicable period. However, unlike Medicaid, this initial payment amount will be
adjusted based upon an updated calculation using the annual cost report information for the cost report period
that began during the applicable payment year. Thus, incentive income recognition occurs at the point our
eligible hospitals demonstrate meaningful use of certified EHR technology for the applicable period and the cost
report information for the full cost report year that will determine the final calculation of the incentive payment is
available.
We recognized $336 million ($247 million Medicare and $89 million Medicaid) and $210 million
($123 million Medicare and $87 million Medicaid) of electronic health record incentive income during the years
ended December 31, 2012 and 2011, respectively. At December 31, 2012 and 2011, we had $113 million and
$134 million, respectively, of deferred EHR incentive income, which represent initial incentive payments
received for which EHR incentive income has not been recognized.
Noncontrolling Interests in Consolidated Entities
The consolidated financial statements include all assets, liabilities, revenues and expenses of less than 100%
owned entities that we control. Accordingly, we have recorded noncontrolling interests in the earnings and equity
of such entities.
F-15