Fee schedule vs. a la carte hospital bills

When dining, one consideration in choosing a restaurant is the concept of “a la carte” dining, which means “from the menu.” When you order a la carte you are ordering individual items, rather than a complete meal. The opposite of a la carte is a “table d’hôte,” which is a meal served at a fixed price. Cheerful couple with menu in a restaurant making orderThe total cost of a meal consisting of several la carte items tends to be much more expensive than that of a fixed price full meal.

A similar concept exists in health care. Someone might receive care at a hospital and then gets an itemized bill for each service provided. This is a la carte care and anyone who has gotten a hospital bill knows this tends to be very expensive. But health care has its own version of table d’hôte called the fee schedule. Fee schedules exist for such things as laboratory, therapies, and ambulance services to name just a few. And just like fine dining, fee schedule health care services are a fixed price.

When a Medicare beneficiary does not pay their responsibility for fee schedule amounts, Medicare has taken the position that since the items are a fixed price, there is no unrecovered cost attributable to uncollectible deductible and coinsurance arising from covered services.

Tip #25:

Bad Debts that arise under a fee schedule are not reimbursable on the Medicare cost report.

Guidance can be found on the Centers for Medicare and Medicaid Services (CMS) website. In addition, each MAC may have supplemental guidance on this issue.

Medicare Intermediary Manual – Transmittal 1872

Questions? Please contact Marie White at 612.253.6546 or mewhite@eidebailly.com.


Death, Taxes and Medicare Bad Debt

Past DueCompleting a task every day is generally pretty easy—the routine is familiar, so we accomplish it quickly.  But those things that we only do once a month, or worse once a year, tend to be overwhelming. An example is filing your income taxes—the government recognizes the difficulty, so we have until April 15—nearly four months, to comply.

A similar challenge presents itself with the claiming of Medicare bad debt on your Medicare cost report.

Deductibles and coinsurance amounts not paid by Medicare beneficiaries can be claimed as allowable bad debts. The general rules for what can be claimed, what constitutes reasonable collection efforts and timing are contained in Chapter 3 of the Provider Reimbursement Manual 15-1.

Chapter 3 also identifies some of the required elements that should be included on a bad debt log.

Tip #13:

Evaluate if bad debt logs comply with Medicare requirements (Pub. 15-1, §314)

In addition, each Medicare Audit Contractor (MAC) has guidance for the completion of bad debt logs and we encourage you to check out the MAC websites to ensure you are following any special direction that might be applicable to you.

The general guidance can be found on the Centers for Medicare and Medicaid Services (CMS) website:

Provider Reimbursement Manual 15-1

Questions? Please contact Marie White at 612.253.6546 or mewhite@eidebailly.com.