Medicare Bad Debts

Since the inception of the Medicare program, few reimbursement or cost reporting issues have been as debated or as meaningful as the allowability of bad debts.  The topic is at least as relevant today as in the past, due largely to the fact that Medicare bad debts continue to be settled on the cost report while most other items of cost are not.

For a claimed bad debt to be deemed allowable, applicable regulations require that:

  • The bad debt must be for deductibles and/or coinsurance relating to Medicare covered services.
  • The provider must be able to show that it made reasonable collection efforts and is applied uniformly to all payors.
  • The debt must be actually uncollectible when claimed as worthless.
  • Sound business judgment must establish that there is no likelihood of recovery.
While seemingly straightforward, these basic requirements are deceptively complex.  They have often been the subject of clouded interpretations, mixed rulings by boards and courts and shifting documentation requirements of Medicare Administrative Contractors (MACs).  A provider should expect to navigate an often cumbersome path to a successful claim for Medicare bad debt reimbursement.  Issues likely to be pointedly reviewed or contested by MACs include strict patient-by-patient documentation requirements, the comparative reasonableness of collection efforts, claims for bad debts relating to indigent patients and the timing, rigor and duration of collection efforts.

SRG has considerable experience assisting hospitals to navigate these and other issues surrounding Medicare bad debts.  Our experience with a range of MACs provides us with valuable insight into the often unique requirements of each one.  At your request, SRG stands ready and able to assist your institution with perfecting your legitimate and fully documented claim for Medicare bad debt reimbursement.
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