Crossover Bad Debts

Medicare Crossover Bad Debts

There continues to be changes in Medicare reimbursement for crossover bad debts.  In previous newsletters, we discussed the new MAC requirements for documenting accounts with a potential share of cost, the emerging concerns about obtaining actual hard-copy Medicare and Medicaid Remittance Advices to support MAC audits and documenting the actual write-off date for crossover bad debt claims.

Now as part of the Middle Class Tax Extension and Job Creation Act of 2012 hospital reimbursement for bad debts will decrease from 70% to 65% effective for cost reporting periods beginning during Federal fiscal year 2013.

Unbilled Crossover Bad debts

On August 23rd and 24th  the Provider Reimbursement Review Board (PRRB) heard group appeal case #98-0212G .presented by A. Carlson  The case involved inpatient and outpatient Medicare/Medi-Cal crossover bad debt claims for accounts that remained unprocessed by the Medicaid (Medi-Cal) program and that were subsequently disallowed by the Intermediary.

The automatic crossover process between Medicare and Medi-Cal is not always complete.  This could be the result of retroactive eligibility, improper or incomplete eligibility data furnished by Medi-Cal or maintained by Medicare, hospital information not reported properly to Medicare or a hospital’s failure to follow-up on queries or denials from Medi-Cal.

A key issue for the hearing was whether alternative documentation besides a Medi-Cal remittance advice (RA) could be used to support the cutback for Medicare bad debt reimbursement.  The cost reporting periods covered in this case were those that were subject to the CMS Form 339 instructions issued in November 1995.  Based on those instructions a hospital was able to use alternative documentation as long as it was supported by adequate (auditable) records.

In 2005 CMS rescinded the 1995 bad debt instructions stating that they violated the 1987 bad debt Moratorium.  The 2005 instructions specifically prohibited any use of alternative data and instituted a “must bill” policy.  What is ironic is the pre-Moratorium regulations did not require a claim to be processed by Medi-Cal in order to claim it as a crossover bad debt.  If this case holds that there was no must bill policy prior to the 1987 Moratorium, then the 1995 339 instruction was rescinded under false assumptions.  Further, if the 1995 instructions did not violate the Moratorium, then the 2005 CMS Form 339 instructions did violate it because they now prohibit a bad debt from being claimed in a manner that was never specifically prohibited prior to the Moratorium.

Complicating the case for CMS is that CMS held the hospitals harmless that relied upon using the alternative data criteria and whose fiscal intermediaries allowed the alternative calculations of crossover bad debts.  In instances where the MAC refused to implement the 1995 CMS Form 339 instructions, the audit disallowances stood.  Stated differently, the MAC’s were not compelled by CMS to allow the alternative documentation during the period from 1995 to 2005, even though such audit decisions by the MAC were in direct contradiction to the CMS instructions contained in the Form 339 for that same period.

The pivotal issue in this case is whether the 1995 CMS Form 339 instructions that allow alternate crossover bad debt documentation violated the August 1987 Moratorium for documenting Medicare Bad Debts.

Recommendation:  Keep protesting unbilled crossover bad debts and amend cost reports that do not have this issue protected if you want a place-holder pending the outcome of this PRRB Case.  If the Board agrees that there was no must-bill policy subject to the Moratorium prior to changing the CMS Form 339 Instructions, then it is only logical that unbilled crossover claims should be reimbursed using alternative methods of documentation (other than a RA) to perfect a claim for unbilled deductibles and coinsurance.

For more information please contact Joseph Fass or Cheryl Joneson (818) 841-2824.

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