First, we need to define our terms.
Medicare Bad Debt is derived from: Deductibles and Coinsurance amounts "uncollectible" from Medicare beneficiaries after reasonable collection efforts.
Medicare Bad Debt is not derived from: Uncollected deductibles and coinsurance amounts from private pay patients, or any other non-Medicare beneficiaries; Medicare Advantage patients; charity, courtesy or third-party allowances; nor uncollected amounts due from other payers including disputed Medicare claims.
Determining Indigent Patients. Dual eligible Medicare/Medicaid beneficiaries are automatically determined "indigent" (no collection effort necessary). However, you must bill Medicaid for proof of eligibility and offset Medicaid payments. Non-Medicaid indigence must be determined by the provider (not the patient). The provider must take into account the total resources available to the beneficiary that can be converted into cash and unnecessary to the patient's daily living. It is the provider's responsibility to determine that no source other than the patient would be legally responsible for the patient's medical bill, and the patient's file should have all back-up information to substantiate the determination.
Reasonable Collection efforts must be documented (e.g. collection letters, phone calls, collection agency efforts). The provider's "Collection Policy" must be consistent among all payer types. DO NOT INCLUDE A "MEDICARE COLLECTION SECTION WITHIN YOUR POLICY. This will indicate that you are not consistent in collections, and your Medicare bad debts may be disallowed at audit. If, after reasonable and customary attempts to collect a bill, and the debt remains more than 120 days from the date of the first bill, that bill may be deemed uncollectable.
Your audit documentation must include: (1) a description of how the "indigent" determination was made (Medicaid/Non-Medicaid); (2) copies of all related billing for the "indigent," and (3) a "Bad Debt Log" that includes:
For most hospitals, Medicare Bad Debt collection is incredibly resource intensive, and often the results hardly seem worth the effort. However, with the economy being what it is, very few providers can afford NOT to aggressively pursue the remedy. Attention to detail is critical, because CMS will look for errors or omissions in the report - so they may summarily dismiss as many appeals as possible.
The key is preparing an accurate Bad Debt Log that includes:
You should have software that bumps patient case histories against relevant databases to look for anomalies. You need to be able to work with your Medicare Administrative Contractor (MAC) to resolve issues. And obviously, you need to be able to reopen and appeal cost reports. If you lack the resources internally to cover all these bases, you should consider using a consultant that specializes in this kind of detective work.
Quality Reimbursement Services, Inc. has been consulting hospitals on matters dealing with Medicare and Medicaid reimbursements since 1994. We work primarily on a contingency basis, requiring no up-front or maintenance charges for our services. We would be happy to meet with you, and review your circumstances to see if we may be of service.