Opportunities related to Medicare bad debt reimbursement

Key considerations for skilled nursing facilities


Authored by RSM US LLP

Skilled nursing facilities (SNFs) are often missing out on additional Medicare reimbursement due to a lack of resources, time and accurate record keeping. Typically, providers are reimbursed 65% of their Medicare bad debts that are filed on the annual Medicare cost report. In order to identify and report these Medicare bad debts, there are steps SNFs should take, including:

  1. Summarize Medicare bad debts for deductibles and coinsurance, excluding deductibles and coinsurance for physicians’ professional services and net of bad debt recoveries. This can be done by comparing a detailed provider statistical and reimbursement report to your records.

  2. Proper collection must be followed and documented in the resident file.

    a. Traditional Medicare bad debts must have attempted collection efforts for a minimum of 120 days, beginning on the date the first bill is sent to the resident. If the resident submits a payment, the 120-day period will restart. When a provider uses a collection agency, they cannot be written off as bad debt until returned from the collection agency as uncollectible.

    b. Medicare/Medicaid crossover bad debts must bill Medicaid and wait for a remittance advice documenting payment, prior to writing off the bad debt.

  3. Medicare bad debts can be claimed on your annual Medicare cost report, based on the actual write-off date. The write off date must be within the cost reporting period for the Medicare cost report being filed.

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