CMS guidance now specifies that uncollected amounts must be charged to an expense account for uncollectible accounts (bad debt); whereas previously, many hospitals wrote these amounts off as a contractual adjustment. This was particularly true in the case of crossover claims (where a patient was eligible for both Medicare and Medicaid), and patient accounting systems automatically wrote off unpaid amounts as accounting adjustments.
Below are some helpful links to CMS guidance on the issue:
CMS provided clarification through a Medicare Learning Network article titled “Medicare-Medicaid Crossover Bad Debt Accounting Classification,”
CMS Provider Reimbursement Manual, Chapter 3
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929
Additional information can be found in the 2021 Inpatient Prospective Payment System (IPPS) Final Rule
https://www.cms.gov/medicare/acute-inpatient-pps/fy-2021-ipps-final-rule-home-page
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