Medicare bad debt for uncollectable copays and deductibles can be claimed for reimbursement on the Medicare cost report.   Our experience shows that fiscal intermediaries are now auditing the submitted Medicare bad debt based upon these criteria, and cost report preparers should therefore ensurethat the Medicare bad debt meet the criteria. The following is summarized from Riverbend’s Flash 05-04, distributed in March 2005. It is recommended to read the full text.

a) The amount of bad debt should be claimed in the period that it is written of the provider’s books.

b) A bill must first be deemed uncollectible and only after reasonable collection efforts, and would therefore be premature to write off unless collection efforts have been pursued at least 120 days (since the first bill).

c) While a bill is being pursued still through a collection agency, it is premature to write it off.

d) Reasonable collection efforts may be waived for indigent patients.

e) To the extent that Medicaid is the responsible party for the copay, even where you know that Medicaid will not pay, you must demonstrate that you billed Medicaid, and Medicaid refused to pay.

f) No Medicare bad debt may be claimed for Part B therapies.