Medicare Compliance & Reimbursement

Nursing homes stand to lose thousands of dollars on reimbursement for Medicare bad debt.

At the root of bad-debt concerns is the move by the Centers for Medicare & Medicaid Services to phase out payments to skilled nursing facilities for bad debt associated with Part A claims. But there's more threatening the revenue source than the proposed rule published in the Federal Register on Feb. 10, 2003 (http://cms.hhs.gov/providerupdate/regs/cms1126p.pdf). CMS and its fiscal intermediaries aren't waiting for a final rule. They're limiting bad debt reimbursement now by tightening up how claims are handled under the existing regs, insiders note.

Case in point: "We recently became aware of a facility that had $60,000 of bad debt disallowed because the FI claimed the facility hadn't documented its efforts to collect the debt from other payers," reports certified public accountant Dawn Segler, a consultant with Moore Stephens & Lovelace in Tallahassee, FL.

The good news: CMS has indicated that it may "delay indefinitely" a final rule, according to Jeff Moore, a partner with Hansen, Hunter & Company, a firm of CPAs and long-term care consultants in Beaverton, OR.

To save themselves from denied claims, nursing homes should ensure their debt documentation can stand up to the added scrutiny.

For purposes of Medicare, the source of bad debt comes on day 21 of a Part A stay. That's when Medicare stops footing the full bill for care and passes on a coinsurance amount to the resident. If a resident is indigent and the facility can't collect the coinsurance, then the amount in question can be claimed on the cost report as bad debt, explains Segler.

Providers court trouble if they fail to make full efforts to recoup the bad debt amount from other payers before asking Medicare to ante up, cautions Segler. Nursing homes should "be sure the amounts [they] submit are eligible for reimbursement and the proper documentation has been maintained," she stresses.

Nursing homes should diligently try to collect - and should document their efforts. "The intermediaries are asking for stricter adherence to the guidelines," observes Moore. First, SNFs should be sure they exhaust all other potential third-party payers, from Medicaid to private insurance. All legitimate payers must be ruled out before Medicare will reimburse bad debt costs, reminds Segler.

Next, SNFs should document each and every step, down to the last phone call. More FIs are subjecting claims to focused review, as opposed to the less stringent but more typical desk review.

When submitting a claim to Medicare, SNFs must be thorough. One key piece of information, according to Segler: the Medicare remittance advice date and number to establish that Medicare covered the program portion of the claim. Also include the patient's name, health insurance number, dates of services to which the claim relates, billing date, write-off date and the amount of the claim.

If that information sits well with the FI, the claim will be subjected to scrutiny on the following points: