FASTEN YOUR SEATBELTS!: RECENT TRENDS IN MEDICARE BAD DEBT AUDITS

As if it wasn’t already difficult enough, fiscal intermediaries across the country are finding more ways to disallow more of our Medicare Bad Debt claims on audit.  The biggest change in recent times was effected by the CMS joint signature memorandum issued on 5/2/08.  This document prohibits all providers from claiming Medicare/self pay bad debt until all collection efforts have been exhausted by the final collection agency and the account has been deemed worthless, regardless of the Provider’s ability to qualify previously under the MCBD moratorium.  Regardless of challenges that are being or will be made to this ruling, the fiscal intermediaries are auditing according to its dictates.  If your facility has been recognizing Medicare Bad Debt at the time balances are referred to outside collection, then you will have to change your policy – a complex and troublesome process at best.

In addition to this enormous change in the way fiscal intermediaries approach field audits of Medicare Bad Debt claims, here are some other trends we have seen in various jurisdictions.

Payments within 120 days.  Fiscal intermediaries are disallowing accounts claimed for Medicare Bad Debt if there has been a patient payment on the account within 120 days of the write-off date, regardless of the payment amount.  For instance, if a patient makes a $5 payment on a $1,000 balance, then the date of that payment starts the 120-day clock ticking all over again, and you may not claim the $995 balance on your Medicare Bad Debt claim.

Estate account review.  The auditors are requiring documentation proving that estate accounts have been pursued for collection of balances owed by deceased patients. 

Charity care asset test.  Many auditors are now requiring (as opposed to suggesting) that providers perform an asset test in addition to income test when qualifying patients for charity care.   In general, the charity care portion of the claim, given fairly short shrift in the past, is now receiving detailed scrutiny in many jurisdictions. 

RAC audit take-backs.  Some auditors are applying RAC take-back items to the MCBD error rate. 

And there’s more . . .  We will be discussing this topic in detail at the HFMA Philadelphia Chapter Fall Institute scheduled for September 25, 2008.

Mike Rossi
Dana Keefer