June 11, 2020

CMS Proposes to Clarify its Medicare Bad Debt Policies

In the hospital inpatient prospective payment system update published on May 29, CMS is proposing to “clarify, update and codify certain longstanding Medicare bad debt principles” for determining when a provider may claim bad debt as allowable. CMS notes these policies have been the subject of litigation and generated many questions from stakeholders. Allowable bad debt relates to uncollected deductible or coinsurance amounts due from Medicare beneficiaries. The requirements for a provider to seek reimbursement from CMS for allowable bad debt, such as using “reasonable collection efforts,” are found at 42 CFR § 413.89 and Chapter 3, Bad Debts, Charity and Courtesy Allowances, of the Provider Reimbursement Manual (CMS Pub. 15-1). CMS notes that, if codified, these clarifications will apply prospectively and retrospectively. The comment period for the Proposed Rule closes July 10.