What to do Before Declaring Medicare “Bad Debt”
By
David Barmak, JD CEO
A healthcare provider must make reasonable efforts to collect Medicare co-payments before labeling the co-payments “bad debt” and, where appropriate, submitting bad debt for reimbursement to the government. A hasty approach to labeling copayments bad debt may also run afoul of anti-kickback regulations as enticements to a referring physician, for example, to refer patients to a particular healthcare provider whom the physician knows will not pursue her patients for Medicare co-payments.
Before Medicare co-payments may be labeled bad debt, the provider must show that it made reasonable efforts to collect the moneys owed, that the debt was uncollectible when the provider deemed it as worthless, and that there was no likelihood of future recovery. The provider should have in place and adhere to a written policy and procedure that details the proper and full process for collecting Medicare co-payments. (Reminder: Medicare patients are to be treated exactly the same as private-pay patients.) The policy should detail exactly when a debt is deemed uncollectible. That, along with documented actual collection efforts, should counter the government allegation that the debt was never really determined to be uncollectible and there are unlawful reasons (e.g., kickbacks to referral sources) for the lack of effort at collecting the bad debt.
Consult Centers for Medicare & Medicaid Services for specific time periods regarding bad debt. Keeping a bad debt log can also be helpful in proving that a full effort was made to collect outstanding debts.