Reporting Bad Debts

1. Reporting Bad Debts HomeTown Health University Module Four Presented by: Draffin & Tucker, LLP It’s not enough that we do our best; sometimes we have to do what’s required. Sir Winston Churchill

2. Reporting Bad Debts • In accordance with PRM 314, uncollectible deductibles and coinsurance amounts are recognized as allowable bad debts in the reporting period in which the debts are determined to be worthless. • An amount should not be claimed as a bad debt until it is written off of the provider’s books.

3. Reporting Bad Debts • The bad debt listing that supports the bad debts claimed on your Medicare cost report must contain ALL of the following information: • Beneficiary name • Beneficiary HIC number • Beneficiary Medicaid # (if applicable) • Date(s) of service • Medicare deductible amount • Medicare coinsurance amount Continued on next page

4. Reporting Bad Debts Continued from previous page • Medicare Remittance Advice Date • Date first bill sent to beneficiary • Total payments received on Deductible and Coinsurance amounts • Date of last payment • Amount of bad debt (unpaid deductible and coinsurance amount) Continued on next page

5. Reporting Bad Debts Continued from previous page • Indigence determination (yes/no) • Medicaid Remittance Advice Date • Date of write-off • For Medicaid patients this must be the same date as the Medicaid Remittance

6. Reporting Bad Debts • The bad debt listings should not contain any amounts related to non-covered services. • Bad debts for inpatient and outpatient services, should be reported on separate schedules for each category. • Separate listings should be maintained for each provider component (i.e., subprovider) bad debts.

7. Managing Bad Debts

8. OIG Risk Areas • Lack of sufficient collection efforts • Bad debt claims for non-covered services • Inadequate documentation • Clerical and accounting errors • Duplicate claims • Erroneous bad debt logs • Failure to offset recoveries on previously written-off bad debts

9. Fiscal Intermediary Risk Areas • Not meeting the 120 day write-off requirement • Date of first bill sent to FI • Date of last payment received • All payments, including those to collection agency. • Claiming bad debt for account that is at collection agency • Collection agency must provide hospital with a detailed listing of accounts it is releasing and no longer pursuing.

10. Fiscal Intermediary Risk Areas • Lack of documentation of indigence determination • Failure to claim dual-eligible Medicaid accounts in the same year that the Medicaid remittance advice was received

11. Revise Bad Debt Listings • Consider withdrawing any bad debt lists that have not yet been audited by the FI • Recall all patient accounts that are at a collection agency that can be deemed worthless, and then claim these accounts as bad debts in the year that they are returned by the collection agency. • Apply the same standards to Medicare and non-Medicare accounts

12. Summary • Medicare Bad Debt can play a role in your facility’s financial success. Recovery of these amounts is necessary to ensure that you are paid accurately by Medicare. • It is important to ensure that claims written off as bad debts have met all of the Medicare requirements. • However, it is better to collect an account rather than to claim it as a bad debt!

13. Managing Medicare Bad Debts HomeTown Health University Module Four: Reporting Bad Debts Presented by: Draffin & Tucker, LLP If you have any questions or concerns regarding this course, please contact Cindy Dupree at cdupree@draffin-tucker.com.