Medi-Medi Bad Debts

Crossover bad debts will still exist even with the dual eligible demonstration projects. First, not all dual eligible beneficiaries will be moved to the demonstration project. Second, Medicare FFS patients enrolled in the demonstration project will be able to opt-out. There will still be plenty of bad debts to log, but the payoff will be less once the demonstration project is implemented in the eight counties selected.
Further Reduction in Bad Debts

In a final rule issued November 9, 2012, CMS implemented the across the board reductions to Medicare’s bad debt reimbursement percentages as prescribed by Sections 3201(a) and (b) of the Middle Class Tax Extension and Job Creation Act of 2012 (Pub. L. 112-96).  See 77 Fed. Reg. at 67518-519

(Nov. 9, 2012). Prior to the reductions, Medicare reimbursed hospitals 70 percent of the bad debt amounts associated with unpaid Medicare beneficiary deductibles or copayments and 70 percent of the bad debt associated with patients in skilled nursing facilities (SNFs) that were not dual eligible individuals.  Starting with cost reports beginning in Federal fiscal year 2013, Medicare will only reimburse 65 percent of these bad debt costs.  Bad debt reimbursement for all other entities eligible to receive bad debt payments, which formerly received 100 percent reimbursement, including critical access hospitals, rural health clinics, Federally qualified health centers, end stage renal disease (ESRD) facilities, and patients that are dual eligible individuals in SNFs, will be reduced by approximately 12 percent per year, starting with FY 2013, until reimbursement plateaus at 65 percent in 2015.

PFC can help. If you have any questions, please e-mail Cheryl Joneson (818-841-2824).

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