Many hospitals struggle to optimize Medicare Bad Debt (MBD) reimbursements because of the differences in billing processes across the three types of MBD. Fully understanding these differences can help your hospital identify all available MBD opportunities for maximum reimbursement, all while providing affordable, high-quality care to patients.
One type of MBD includes patients who are dually eligible for Medicare and Medicaid. A Medicare bad debt opportunity arises as Medicaid often will not cover the entire Medicare coinsurance or deductible. Since Medicaid is the payor of last resort and the hospital should not bill the patient, the balance becomes bad debt.
It’s crucial for crossover bad debts to be analyzed on a state-by-state basis since these bad debts follow state-specific rules. This means you need to understand how your state’s Medicaid program pays secondarily to Medicare.
If you’re not receiving correct explanation of benefits, or if you’re looking at a denial in terms of an adequate bad debt, you might be out of compliance for the crossover section.
Traditional or “valid effort” bad debt includes patients who have Medicare as their primary insurer, with no secondary insurer — and who may have been sent to a collection agency.
In valid effort cases, it’s crucial your organization’s collection policies and business office procedures are in lockstep with each other. If you aren’t closely following your policies, a Medicare Administrative Contractor (MAC) will likely notice issues as they review your MBD submission.
There are two important takeaways to remember when dealing with traditional bad debt cases:
Patients who simply cannot pay and are broadly referred to as charity, or indigent bad debts, are another type of MBD. There are three main subsections of indigent bad debt patients:
Learn how TransUnion Healthcare can help you maximize reimbursement across all three types of Medicare Bad Debt.
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