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Industry Insights

FY21 OIG Workplan Addition: Hospital Collection Effort for Medicare Bad Debt Basic Health Program Eligibility Determinations

OIG FY21 Workplan addition

In July, 2020, the OIG released an addition to their FY21 workplan to include Medicare Bad Debt.  The OIG’s summary reads as follows –

“Medicare allows providers to claim reimbursement for a portion of these uncollectible deductibles and coinsurance (known as “bad debt”) once the provider establishes that reasonable collection efforts were made, that the debt was uncollectible, and that there was no likelihood of future recovery based on sound business judgment. Reasonable collection efforts can include billings, followup letters, phone calls, and personal contact. We plan to select a random sample of hospitals and review the policies and procedures in place related to collecting deductibles and coinsurance, offering financial assistance, identifying bad debt, and accounting for the receipt of previously reimbursed bad debt. In addition, we will select a judgmental sample of claims with high-dollar bad-debt amounts (coinsurance or deductible) and determine how the hospitals adhered to Federal criteria in treating these bad debts. Our audit will determine whether hospitals’ policies and procedures for collecting Medicare deductible and coinsurance amounts from beneficiaries are in compliance with Federal regulations for the reimbursement of bad debt.”

Items to Review in Advance to Prepare –

  • Policies and procedures related to “normal” reasonable collection efforts and meeting a minimum 120-day collection cycle;
  • Dual-eligible crossover billing and remittance advice procedures;
  • Application based charity procedures;
  • “Presumptive charity” procedures occurring before or after 120-day collection efforts;
  • Collection agency policies and procedures and “treating all payers similarly” regulations;
  • Procedures to process and record instances of deceased no estate and bankruptcy;
  • Procedures to identify and report recoveries on Medicare bad debt.


About F2 Healthcare  

F2 Healthcare uses proprietary, best in class methodology and technology to provide Net Revenue Analytics, Recovery and Reporting for enterprising healthcare organizations to maximize net revenue.

F2 works with over 200 healthcare organizations across the country in the area of Medicare Bad Debt.  For more information on the FY21 OIG workplan, questions/discussion on entity specific policies and procedures, FI viewpoints around the country, and readiness discussion utilizing best practices and other, please contact us to discuss!

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