Review Medicare Bad Debt Listing

Review Medicare Bad Debt Listing
Identifying Non-Allowable Fee Schedule Services
Fee Schedules Included in Bad Debt Policy
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Review Medicare Bad Debt Listing

Medicare bad debts are unrecovered costs due to uncollectible Medicare Part A deductible and coinsurance amounts. Allowable Medicare bad debt for cost reporting purposes only applies to services paid under reasonable cost (or developed from reasonable cost, such as a PPS). Refer to Section 1861 (v)(1)(a) of the Social Security Act, as implemented in the regulations at 42 CFR Section 413.89. Also refer to CMS Publication 15-1, Provider Reimbursement Manual - Part 1, Chapter 3 for more details.

Medicare bad debts are reimbursable through the Medicare cost report. If claimed on the cost report, the provider must prepare and submit a detailed Medicare bad debt listing that corresponds to each Medicare bad debt line on the cost report (Where an amount is reported). This is a requirement when submitting a Medicare cost report to the MAC in accordance with 42 CFR 413.24.

The Medicare bad debt listing, must include all columns with data as specified in the cost report instructions at CMS Publication 15-2. Please refer to the applicable chapter’s instructions for each provider type. For example, if filing a hospital cost report (Form 2552-10), the instructions for a Medicare bad debt listing are referenced in CMS Publication 15-2 Chapter 40 (Specifically in the Worksheet S-2 Part II Questionnaire at section 4004.2).

Bad debts applicable to Medicare Advantage and Medicare HMO claims do not qualify for Medicare bad debt reimbursement on the cost report. These are private commercial plans covered under Medicare Part C. Medicare bad debt reimbursement on the cost report is only applicable to uncollectible Medicare part A deductible or coinsurance. Do not include Medicare Advantage or Medicare HMO amounts on the Medicare bad debt lines of the cost report. Also do not include these on the supporting Medicare bad debt listing.

Medicare bad debts for uncollected deductible and coinsurance amounts relating to outpatient services that are reimbursed under a fee schedule payment are not allowable for Medicare cost reporting purposes.

When determining “allowable” Medicare bad debt for cost reporting, it is essential that you be able to differentiate between deductibles and coinsurance related to outpatient services paid according to a fee schedule, and other non-fee schedule services as reflected in FISS.

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Identifying Non-Allowable Fee Schedule Services

The following information describes how providers can identify fee schedule services in the FISS system. This outline presumes the provider has access to the FISS/DDE online system.

If you use the FISS/DDE online system you can review the following screens to verify whether a service was paid on a fee schedule and whether there was coinsurance or deductible applied. In the inquiry mode, locate the claim in question

Go to Claim Page 02 (MAP 1712) to see the revenue/HCPCS codes that were billed. Usually, but not always, you will notice a rate filled in the rate column when a service has had a fee schedule applied.
Go to MAP 171A (press from Claim Page 02 to view this MAP) to review each line in the claim. The provider can access the line specific information by paging up (F5) or down (F6) within the line item detail view.
Locate any lines that have a status indicator “A.” Identify any coinsurance or deductible associated with this line as belonging to fee schedule service.
Do not include those amounts on your bad debt log.

Use the following FISS screen examples as a resource for determining allowable/non-allowable bad debts:

The first MAP 171A screen example shows that the service has a status indicator “A,” which would be paid on a fee schedule. However, since it is a clinical diagnostic laboratory service, there would be no deductible or coinsurance reflected on the line item.

This second MAP 171A screen example shows the line item deductible and coinsurance amounts, however, the service has a status indicator “X” indicating that it was not paid on a fee schedule and therefore may be eligible for bad debt.

For providers to properly claim a bad debt and be reimbursed under the Medicare Program, you must follow all of the Criteria for Allowable Bad Debt set out at 42 CFR. §413.89(e) For clarification of Medicare bad debt policy related to accounts at a collection agency see MLN Matters article SE0824.

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Fee Schedules Included in Bad Debt Policy

CMS uses different fee schedules for various provider types. If you are generally reimbursed under the OPPS, refer to Addendum B of the Federal Register Final Rule (published annually by CMS) for a list of services that are paid with a status indicator “A” (denoting fee schedule services).

Services that may be paid on a fee schedule (depending on your provider type) include:

Ambulance
CORF outpatient rehabilitation facility
MPFS
DMEPOS
Certain drugs
Certain clinical diagnostic laboratory
Certain screening services

If you provide services reimbursed under any of these fee schedules, please ensure that bad debts are not claimed for any unpaid deductible and coinsurance.

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Review Medicare Bad Debt Listing

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