A providerís bad debts resulting from Medicare deductible and coinsurance amounts which are not collectable from Medicare beneficiaries are considered in the programís calculation of reimbursement to the provider.
Allowable Medicare bad debt must meet the following criteria:
The debt must be related to Medicare covered services and derived from Medicare deductible and coinsurance amounts.
The provider must be able to establish that reasonable collection efforts were made. Providers must issue bills, collection letters and telephone calls or personal contacts which constitute a genuine, rather than token, collection effort.
If the providerís policy is to refer non-Medicare accounts to a collection agency, Medicare accounts must also be referred to a collection agency in order to qualify as an allowable Medicare bad debt.
The debt must actually be uncollectible when claimed as worthless. If after the provider applied reasonable and customary attempts to collect a bill, the bill remains unpaid more than 120 days from the date the first bill is mailed to the beneficiary, the debt may be deemed uncollectible.
However, unpaid deductible and coinsurance amounts cannot be claimed as a Medicare bad debt until all collections have ceased including the use of a collection agency. An unpaid account cannot be claimed as a Medicare bad debt until all collections have been exhausted and the account has been returned from the collection agency.
When a provider claims Medicare bad debts in 120 days or less from the first bill, the provider must be prepared to demonstrate that the debts were ďactually worthless.Ē The provider, in all cases, must be able to support that it pursued reasonable collection efforts.
A debt is not deemed uncollectible if the beneficiary is currently making payments on the account, or has currently promised to pay the debt.
It is perfectly acceptable for a provider to establish a policy for determining a patientís indigence before discharge. This policy may include a Medicare beneficiary. Indigence must be determined by the provider, not by the patient. The patientís file must document the method utilized to determine indigence.
Uncollectible deductible and coinsurance amounts are recognized as allowable bad debt in the reporting period in which the debts are determined to be worthless.
Amounts included in allowable bad debt in a prior year might be recovered in a later reporting period. Any such recovery arising out of reimbursed prior year bad debt must be netted against current year Medicare bad debt before claiming in the cost report.
Services Offered By Linville Management Services, Inc.
Linville Management Services, Inc. (LMS) will act upon your remittance advice from Medicare and manage each account with a deductible and/or coinsurance amount. LMS will submit claims to the 2nd and tertiary carriers if the beneficiary has coverage in addition to Medicare. If no other insurance is present, LMS will initiate collection procedures described under patient billing.
Insurance Claim Submission
A UB-04 and copy of the Medicare EOB will be sent to the 2nd carrier.
Follow-up will begin 30 days after claim submission for all claims with no response. Follow-up will continue until the claim is paid or denied. This process will be repeated if the beneficiary has other insurance.
After all insurance has been paid or denied, LMS will bill the patient for all unpaid Deductibles, Coinsurance and non-covered services that are the beneficiaryís responsibility. Collections will continue for 120 days.
All accounts unpaid after billing for 120 days will be forwarded by LMS to Account services, Inc. (ASI). ASI is our collection agency, which collects Medicare and non- Medicare accounts alike.
Collection efforts will be consistent with non- Medicare accounts and meet all Medicare requirements for inclusion on your Medicare bad debt log.
Collection efforts will include, but not limited to, bills mailed, phone calls and or auto dial calls. Collection efforts will continue until all reasonable efforts have been made and the debt is deemed worthless.
Medically Indigent patients will be handled in accordance with the facilityís charity policy.
LMS and ASI must have access to the providerís Medicare Remittance Advices and the facilityís patient accounting computer system.
All collection notes will be entered into the providerís computer system. The facility will have immediate access to all collection efforts by LMS and ASI.
Option 1: Accounts would be placed at the time Medicare remit is received by the facility.
Option 2: Accounts can be placed 30,60 or 90 days after Medicare has paid.
Option 3: Accounts can be placed when transferred to an outside collection agency.
Close and Return
Worthless Medicare Bad Debts will be returned to the facility for the purpose of claiming the bad debt on the cost report. Bad debts should be claimed in the year the debt was determined to be worthless.
For the complete package, insurance billing, patient billing and collection agency, the fee will be:
Amounts paid by insurance____%
Amounts paid by beneficiary ____%
Amount filed on cost report0%
For collection agency services and maintaining Medicare bad debt information for the cost report.