Medicare bad Debts A Better Way - Florida Chapter of HFMA

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Medicare bad DebtsA Better Way


Course Description

Since the creation of Medicare in 1966, the reporting of Medicare bad debts has been a difficult task. Bad debt logs originally were compiled on paper. Logs were supported by copies of the supporting documentation carefully cross indexed by hand.

Electronic billing and the rise of computers has revolutionized the world, but the rules around Medicare bad debt reporting have lagged behind. We are going to talk about the requirements of bad debt reporting and how to use technology to help providers accurately report and be reimbursed for their bad debts.


Learning Objectives

• What can providers claim as Medicare bad debts.

• What documentation is required and how that documentation has changed form.

• What “dual eligible” bad debts are and changes to the reporting requirements effective October 1, 2019.

• How you can use technology to solve your bad debt documentation issues and increase your recovery of bad debts.



Bad Debts – What Can You Claim?

A provider's bad debts resulting from Medicare deductible and coinsurance amounts that are uncollectible from Medicare beneficiaries are considered in the program's calculation of reimbursement to the provider if they meet the following :

• The debt must be related to covered services and derived from deductible and coinsurance amounts.

• The provider must be able to establish that reasonable collection efforts were made.

• The debt was actually uncollectible when claimed as worthless.

• Sound business judgment established that there was no likelihood of recovery at any time in the future.


Quiz #1 – What Can’t You Claim?

You can claim bad debts for claims written off to charity:

• Yes of course you can.

• You can only claim bad debts on charity claims that meet all other bad debt rules.

• You can never claim charity claims as bad debts.


Bad Debts – What Can’t You Claim?

According to 42 CFR 413.89(b) (2) charity allowances are reductions in charges made by the provider because of the indigence or medical indigence of the patient. Cost of free care (uncompensated services) furnished under a Hill-Burton obligation are considered charity allowances. Under Medicare, costs of covered services furnished to beneficiaries are not to be borne by individuals not covered by the Medicare program, and conversely, costs of services provided for other than beneficiaries are not to be borne by the Medicare program as indicated at 42 CFR 413.89(d) PRM 15-1, Chapter 3, Section 328 clarifies that charity care, courtesy, and third-party payer allowances are not reimbursable Medicare costs and cannot be claimed as Medicare bad debts.


Quiz #2 – What Can’t You Claim?

• I can claim only inpatient and outpatient accounts.

• I can claim inpatient, outpatient and renal dialysis accounts.

• I can claim inpatient, outpatient, renal dialysis accounts and outpatient lab accounts.

• I can claim inpatient, outpatient, renal dialysis outpatient laboratory, and professional accounts.


Bad Debts – What Can’t You Claim?

There is no payment for bad debts (unrecovered costs attributable to uncollectible deductible and coinsurance arising from covered services to beneficiaries considered in calculating payment to providers reimbursed on the basis of reasonable cost) with respect to services paid under the Medicare physician fee schedule. This includes clinical laboratory fee schedule payments.


When Can You Claim Bad Debts?

42 CFR 413.89(f) requires that the uncollectible Medicare deductible and coinsurance be charged off as bad debts in the accounting period when the bad debt is determined to be worthless. For example, a bad debt that is properly written off the providers’ books as a bad debt after the providers current Medicare fiscal year end cost report must be claimed on the next Medicare cost report even if the provider has not filed their most recent cost report because it is not yet due. Bad debts may only be claimed on a provider’s cost report after all collection effort has ceased, including efforts made by an external collection agency.


When Can You Claim Bad Debts?

The general rule for Medicare bad debts is that you must show the following:

• The debt remains unpaid more than 120 days from the date the first bill is mailed to the beneficiary.

• The patient was sent collection letters and received calls in an attempt to collect similar to other non Medicare patients.

• The claims were placed with a collection agency in a manner similar to other patients.

• The collection agency had returned the account to the provider as uncollectible.


Bad Debts General Checklist

• Ensure that you do not include accounts that were claimed in prior years. Also ensure that the logs do not contain duplicate accounts for the current year (this could occur if a claim is cancelled and subsequently re-billed).

• Ensure the bad debt relates to unpaid Medicare deductible and coinsurance only.

• Ensure the bad debt is net of any payments received from the beneficiary or other third party payers. Be able to provide third party remittance advices or proof that deductible/coinsurance is not covered.

• Ensure that coinsurance related to physician Part B professional services or outpatient fee-based services (e.g. therapy services and screening mammography services) is not included.

• Ensure that indigent bad debt claims are fully documented with respect to the determination of the beneficiary's total resources.

• For non-indigent accounts ensure that collection activity is documented in the file. If accounts are sent to a collection agency, be able to provide clear evidence that accounts were returned from collection.


What About Dual Eligible?

Dual eligible bad debts are from persons who qualify for both Medicare and Medicaid coverage. Medicare covers their acute care services, while Medicaid covers Medicare premiums and cost sharing and long term care services. Medicare beneficiaries can qualify for Medicaid if they meet certain income and resource requirements or have high healthcare bills. Each state has its own eligibility standards and determines the scope of benefits provided to Medicaid beneficiaries, within federal guidelines. For these patients they are deemed as indigent when the provider receives a secondary payment back from Medicaid.


Dual Eligible – You Have to Bill

With the exception of Puerto Rico providers and IMD (Institution of Mental Disease) patients ages 21 – 64, before a “dual-eligible” bad debt can be claimed, CMS requires the provider to bill a patient or entity legally responsible for the patient’s bill with respect to those deductibles and coinsurance owed by “dual-eligible” patients. Title XIX eligible bad debts are commonly classified as “crossovers” or “dual-eligibles”. This type of bad debt pertains to a patient that has Medicaid and Medicare eligibility.


Dual Eligible – You Have to Bill

Section 1905(p) (3) of the Social Security Act imposes liability for cost-sharing amounts for “dual-eligibles”. It allows the State to limit the cost-sharing if the Medicaid rate is lower than what Medicare would pay for the service. However, whether the State owes part or none of the deductible or coinsurance, a bad debt cannot be claimed for reimbursement until the provider bills the State and the State refuses payment (with a State Remittance Advice).


Dual Eligible – Write Off Delema

Providers claiming Medicare bad debt must meet 42 CFR 413.89 in conjunction with all requirements set forth in CMS Pub. 15-1, Chapter 3. The unpaid deductible and coinsurance amounts for Medicare-Medicaid crossover claims must be classified correctly in providers’ accounting records pursuant to CMS Pub. 15-1, Chapter 3. These Medicare bad debt amounts must not be written off to a contractual allowance account but must be charged to an expense account for uncollectible accounts (bad debt). Effective for cost reporting periods beginning on or after October 1, 2019, providers must comply with these longstanding Medicare bad debt requirements.


Dual Eligible – Write Off Delema

Providers claiming Medicare bad debt must meet 42 CFR 413.89 in conjunction with all requirements set forth in CMS Pub. 15-1, Chapter 3. The unpaid deductible and coinsurance amounts for Medicare-Medicaid crossover claims must be classified correctly in providers’ accounting records pursuant to CMS Pub. 15-1, Chapter 3. These Medicare bad debt amounts must not be written off to a contractual allowance account but must be charged to an expense account for uncollectible accounts (bad debt). Effective for cost reporting periods beginning on or after October 1, 2019, providers must comply with these longstanding Medicare bad debt requirements.


The Problem with “Duals”

– Providers start from the bad debt listing from their internal system (If they used the wrong code on write off – its not on the list see October 1, 2019 changes).

– You must find a copy of the Medicare remittance advice for each patient on the list.

– You must match it to the Medicaid remittance advise (Again if you can find it).

– Very labor intensive and prone to error.


The Solution-EDI

Dual Eligible Bad Debt Reviews with EDI:

– More accurate.

– Cheaper-uses existing technology available.

– More efficient-less staff hours.

– Recovers more money by making sure all paid accounts included.

– Easier to support at audit.


Lets Look at a Medicare ClaimISA*00* *00* *ZZ*133052274 *ZZ*943077240 *140217*2216*U*00401*000446449*0*P*:~GS*HP*133052274*943077240*20140217*2216*1*X*004010X091A1~ST*835*0001~BPR*H*0*C*NON************20140217~TRN*1*359375322*1205296137*SMNJ0~REF*EV*0926398~DTM*405*20140217~N1*PR*NOVITAS SOLUTIONS, INC.~N3*PO BOX 3031~N4*MECHANICSBURG*PA*170551803~REF*2U*SMNJ0~PER*CX**TE*8772358073~N1*PE*ABC Hospital*XX*999999999~N3*PO BOX 6040~N4*BELLMAWR*NJ*080996040~REF*TJ*221773439~LX*1~CLP*86656618*19*236102.08*7209.07*3290*MA*21711701475007NJA*11*1**637*1.3567*1~CAS*CO*167*225455.89**253*147.12~CAS*PR*2*3290~NM1*QC*1*SMITH*FRED****HN*99999999A~NM1*TT*2*NJ DEPT. OF HUMAN SERVICES*****PI*000070079~MIA*0***10646.19*MA02*276.05**793.38*661.87**40.57**90.94**15*8197.34**1224.13**MA18~REF*EA*1345373~DTM*232*20170406~DTM*233*20170421~DTM*050*20170427~AMT*AU*236102.08~QTY*CA*15~QTY*CD*10~GE*1*1~IEA*1*000446449~


Lets Look at a Medicare Claim

CLP*86656618*19*236102.08*7209.07*3290*MA*21711701475007NJA*11*1**637*1.3567*1~CAS*CO*167*225455.89**253*147.12~CAS*PR*2*3290~NM1*QC*1*SMITH*FRED****HN*99999999A~NM1*TT*2*NJ DEPT. OF HUMAN SERVICES*****PI*000070079~MIA*0***10646.19*MA02*276.05**793.38*661.87**40.57**90.94**15*8197.34**1224.13**MA18~REF*EA*1345373~DTM*232*20170406~DTM*233*20170421~DTM*050*20170427~AMT*AU*236102.08~QTY*CA*15~QTY*CD*10~


Medicaid Pays Secondary ClaimISA*00* *00* *ZZ*133052274 *ZZ*943077240 *181121*2221*^*00501*003850093*0*P*:~GS*HP*133052274*943077240*20181121*2221*1*X*005010X221A1~ST*835*0006~BPR*H*0*C*NON************20181121~TRN*1*20181120120000110EZPS0*1222651245~REF*EV*133052274~DTM*405*20181120~N1*PR*HORIZON HEALTHCARE OF NEW JERSEY INC.~N3*PO BOX 24077~N4*NEWARK*NJ*071010406~REF*2U*22326~REF*EO*3404028~PER*CX*PROVIDER SERVICES*EM*N/A*TE*8006829091~PER*BL*PROVIDER SERVICES*EM*N/A*TE*8006829091~N1*PE*ABC HOSPITAL*8888888888~N3*PO BOX 6040~N4*BELLMAWR*NJ*080996040~REF*TJ*221773439~REF*PQ*60400165~LX*0~CLP*86656618*2*236102.08*1717.88**MC*17D661148600*11*1**566~CAS*OA*23*7209.07~CAS*CO*45*87619.05**97*139556.08~NM1*QC*1*SMITH*FRED****MI*777777777~DTM*232*20170406~DTM*233*20170421~AMT*AU*8926.95~GE*1*1~IEA*1*003850093~


Quiz #3 Why Was The Cross Over Claim Initially Denied?

• It was billed to the wrong payer.

• The patient was not dually eligible.

• The patient was not eligible for Medicaid.


Quiz #3 Why Was The Cross Over Claim Initially Denied?

Answer: The claim was paid by a Medicaid HMO and not NJ Medicaid.


Claim Status Codes

–1 (Processed as Primary)

–2 (Processed as Secondary)

–3 (Processed as Tertiary)

–4 (Denied as patient is not active on DOS)

–19 (Claim Received)

–22 (Reversal of Previous Payment).


Medicaid Pays Secondary Claim

CLP*86656618*2*236102.08*1717.88**MC*17D661148600*11*1**566~

CAS*OA*23*7209.07~

CAS*CO*45*87619.05**97*139556.08~

NM1*QC*1*SMITH*FRED****MI*777777777~

DTM*232*20170406~

DTM*233*20170421~

AMT*AU*8926.95~



CAS CODE 45:

Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement. Usage: This adjustment amount cannot equal the total service or claim charge amount; and must not duplicate provider adjustment amounts (payments and contractual reductions) that have resulted from prior payer(s) adjudication. (Use only with Group Codes PR or CO depending upon liability)


Medicaid Secondary Denied Claim

CLP*86656618*4*236102.08***MC*17D661148600*11*1**566~

CAS*OA*23*7209.07~

CAS*CO*31*87619.05**97*139556.08~

NM1*QC*1*SMITH*FRED****MI*777777777~

DTM*232*20170406~

DTM*233*20170421~

AMT*AU*8926.95~



CAS Code 31

“Patient cannot be identified as our insured.”


HEAT MapINCREMENTAL PROJECTS A B C D Total XX - Next 6 Yrs

Bad Debts Project

Bad Debts Project - Forecast -$

Bad Debts Project - Actual 460,068$ 672,539$ 1,009,765$ 212,663$ 2,355,035$ 14,130,208

STATUS 11/02/18 11/16/18 10/12/18 11/02/18

Note 3. Note 4. Note 1. Note 2.

Bad Debts Project - Actual 112,230$ 1,370,763$ 1,482,993$ 8,897,958

STATUS 01/11/19 01/11/19

Note 6. Note 5.

Bad Debts Project - Actual 1,185,404$ 1,185,404$ 7,112,424

STATUS 03/29/19

Note 7.

AVAILABLE BED Project

Available Bed Project - Forecast -$

Available Bed Project 2018 Rollforward - Actual 832,274$ 301,000$ 1,133,274$ 6,799,644

Available Bed Project 2019 Reduction - Actual -$

STATUS WIP WIP WIP WIP WIP

Total Pickup $1,273,000

Other

Other - Forecast

(XXXX MCAID

Secondary O/P Billing)

$304,568 No Forecast Amount

(XXXXXX Bad Debts)

$92,400 -$ -

Other - Actual 304,568$ 83,300$

Increased Cash Flow

from PIP - 7 Mos.

$362,256 387,868$ 2,327,208

STATUS WIP WIP WIP WIP

Total Validated 876,866$ 1,588,113$ 3,866,932$ 212,663$ 6,544,574$ 32,155,018

*XX/XXX INCREMENTAL PROJECTS COMPLETED AND VALIDATED BY GE/VMG

Note 1: This is CYE 2015 Crossover Bad Debts for the 2015 CR Audit (I/P $1,056,144 + O/P $497,341) x 0.65 = $1,009,765.

Note 2: This is FYE 2018 Crossover Bad Debts for the 2018 Cost Rpt. filed 10/12/18 (I/P $178,434 + O/P $327,714) x 0.65 = $212,663.

Note 3: This is FYE 2018 Crossover Bad Debts for the 2018 Cost Rpt. (I/P $526,280 + O/P $181,517) x 0.65 = $460,068.

Note 4: This is FYE 2018 Crossover Bad Debts for the 2018 Cost Rpt. (I/P $625,947 + O/P $408,727) x 0.65 = $672,538.

Note 5: This is FYE 2016 Crossover Bad Debts for the 2016 CR Audit (I/P $835,838 + O/P $1,273,028) x 0.65 = $1,370,763.

Note 6: This is [FYE 2016 Crossover Bad Debts for the 2016 CR Audit (I/P $117,068 + O/P $222) x 0.65 = $76,238] + [FYE 2015 Bad Debts for Reopening (I/P $55,248 + O/P 124) x 0.65 = $35,992] = $112,230.

Note 7: This is FYE 2018 Crossover Bad Debts for the 2018 CR Audit (I/P $1,199,206.77 + O/P $624,491.30) x 0.65 = $1,185403.75.

BUDGET VS ACTUAL FY 2019

Lou Incognitos FY 19 Budget at 100% 400,000$ 500,000$ 1,395,000$ 1,200,000$ 3,495,000$ Lou verified on 3/2919 x 3

Total Cost Reports Actual 876,866$ 1,588,113$ 3,866,932$ 212,663$ 6,544,574$ Exceeding Budget by:

DIFFERENCE 476,866 1,088,113 2,471,932 (987,337) 3,049,574$ 87.26%


Conclusions

• You can have bad debts on inpatient, outpatient, renal dialysis claims, and MDCR Part A Units.

• You must make sure you are correctly writing off your accounts, especially after 10/1/2019.

• Electronic data can help you make sure you can claim and document your Medicare bad debts.

• You must make sure you bill dual eligible claims including following up on denials.


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Medicare bad Debts A Better Way - Florida Chapter of HFMA