Ask the Expert Answer: Fiscal Intermediary and Medicare Bad Debt

Q: Our FI is currently disallowing our Medicare bad debts which we claimed and wrote off in accordance with our charity care policy. We believe our Medicare deductible/copay amounts that we did not collect because the patient was indigent as determined by our hospital charity policy are allowable Medicare bad debts.

These bad debts were reviewed and allowed in previous years.

A: This is not my area of expertise but here goes. There are a host of Fiscal Intermediary and Medicare Administrative Contractor adjustments when bad debts for Medicare patients are not turned over to the collection agency similar to non Medicare. FIs and MACs are aggressively making these adjustments, and there are numerous PRRB decisions and court decisions generally uphoding the Medicare treatment of denying these bad debts if an adequate collection effort is not fully documented. These cases are generally fact specific depending on the individual collection policies and practices of the hospital and their documentation standards.