West Virginia HFMA
Medicare Bad Debt Getting What is Owed
to You!
Brian J. Roers, CPA
Partner
Anderson & Roers CPAs, LLC
612.235.4412
brian.roers@andersonroers.com
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Anderson & Roers CPAs, LLC
Today’s Outline
Focus Today
1. Encapsulating process
2. Issues related to each class of
bad debt
3. Assuring a smooth audit
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Anderson & Roers CPAs, LLC
Process
Dream
Medicare bad debt logs created with
the push of a button, capturing all
eligible accounts, with zero audit
loss.
How will we accomplish this
Ensuring proper transactions are in
place and being used correctly,
policies followed with religious zeal,
and audits planned and executed.
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Anderson & Roers CPAs, LLC
Encapsulating Process
What Do You Need?
A. Patient responsibility
 Captured in PAS?
B. Amount paid toward patient responsibility
C. Amount of and type of write-off
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Anderson & Roers CPAs, LLC
Classes of Bad Debt
Medicaid Crossover Accounts
A. Proper Medicaid billing
 Billed regardless of collection expectation
 Coding denials to correct transaction
 Medicare repays – Medicaid re-billed for crossover
B. Specific transaction code for Medicare crossovers separate from
Medicaid contractual write-off
C. Medicaid payments are posted even if zero payments occur
D. Medicaid HMOs properly coded
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Anderson & Roers CPAs, LLC
Classes of Bad Debt
Charity Accounts (the current WV problem child)
A. Review your policy for compliance with CMS
(Palmetto) requirements

Collect income, expense, assets and liabilities

Document decision and approval process
B. Self audit applications for complete documentation
and authorizations
C. Analyze simplifying policy

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Presumptive charity?
Anderson & Roers CPAs, LLC
Classes of Bad Debt
Bankruptcy Accounts
A. Maintain policy and follow it
B. Confirm bankruptcy discharge
http://www.pacer.gov/psco/cgi-bin/links.pl
C. Write-off posted at bankruptcy discharge date, not
filing date
Deceased no Estate Accounts
A. Maintain policy and follow it
B. File claim with the estate or confirm no estate
C. Document confirmation
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Anderson & Roers CPAs, LLC
Classes of Bad Debt
Regular Bad Debt Accounts
A. Collection Policies

Careful consideration to length of time accounts
remain at collection agency before recall
 No set time limit
 Are allowed to discriminate against certain pools so long
as payer is not criteria (e.g. collectability)
 Ensure written policy is retained and periodically
reviewed by hospital and collection agency

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Create process for testing collection agencies’
compliance with stated policies
Anderson & Roers CPAs, LLC
Classes of Bad Debt
Regular Bad Debt (Continued)
B. Reasonable Collection Efforts

120 days from date of first bill or last payment

Consistency of efforts

Must be able to provide documentation of all attempted
calls, conversations, statements, bills, etc.. internally
and at collection agency

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Best practice is for hospital to maintain documentation of
collection efforts in house for closed accounts
Anderson & Roers CPAs, LLC
Classes of Bad Debt
Regular Bad Debt (Continued)
C.
Closeback

All collection efforts must be ceased


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Including credit bureau filings and liens
Identify reason for close – if indigence established,
might want to include on an indigent listing
Anderson & Roers CPAs, LLC
Assure A Smooth Audit
The Process
A. Create audit process plan
 Define departments and individuals involved
 Agree on priority level
 Identify audit manager
 Compile all policies
B. Execution of plan
 Evaluate $$$ impact of each sample & communicate
 Start immediately
 Assign list of needed documents to planned parties
 Anticipate documents auditor will need that were not
requested
C. COMPILE AUDIT DOCUMENTATION
 One week
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Anderson & Roers CPAs, LLC
Assure A Smooth Audit
Final Packet
1. Cover Letter
 Hospital general information
 Explain contents
 Disclose expected audit adjustments
2. Original sample request with self-audit findings noted
3. Patient Documentation
 Tab for each patient
 Consistent documentation organization
 Highlight information to simplify auditor’s review
4. Additional support requested
 Policies
 Sample statements
 Contracts with collection agencies
5. Maintain copy for yourself
 Reference during audit
 Training for staff
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Anderson & Roers CPAs, LLC
Assure A Smooth Audit
Other Potential Audit Items
A. Examples of collection letters and bills
B. Contract between collection agencies and
hospital
C. Written confirmation from collection agency that
closed accounts will NEVER be collected upon
D. Collection or charity information on nonMedicare accounts
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Anderson & Roers CPAs, LLC
Assure A Smooth Audit
Rules of Engagement
1. Collaborate with & respect auditors

Disclose EVERYTHING – gain credibility

Don’t be a stranger – meet in person
2. Organization – Be the easiest audit

Pre-audit your packet

Support arguments with:

Statutory/regulatory authority

Fact pattern

Mission of hospital
3. Be firm with bullies
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
Openly reveal – “We will appeal!”

No (maybe), No (maybe), NO (NO)
Anderson & Roers CPAs, LLC
Recap
Main Points From Today
A. Process – Transactional Based Supported by Policies
B. Each Class of Bad Debt – Policy, Document and Monitor
C. Assure a Smooth Audit – Plan, Provide, Follow-up
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Anderson & Roers CPAs, LLC
Contact Information
Brian Roers
Anderson & Roers CPAs, LLC
11316 86th Ave North
Maple Grove, MN 55369
Phone: (612) 235 – 4400
www.andersonroers.com
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Anderson & Roers CPAs, LLC