Introduction to Medicare Bad Debt-Medicare Advantage:
Q&A with Joe Gumbert, HPS Director of Client Development
While Medicare Reimbursable Bad Debt (MBD) is an established revenue source for many hospitals, MBD from private Medicare Advantage plans (MBD-MA) is a reimbursement opportunity that hospitals access less frequently. As a leading provider of MBD services for hospitals across the United States, Healthcare Payment Specialists (HPS) has been working with a growing number of hospitals to identify and realize MBD-MA opportunities.
Provided below is a transcript of a recent Q&A session that HPS did with Joe Gumbert regarding MBD-MA. Joe is the Director of Client Development at HPS and has worked with hospitals on a wide range of MBD and MBD-MA projects. His perspective provides a helpful introduction to MBD-MA for hospitals missing out on this revenue source.
Q: To set a context, would you provide a brief overview of Medicare Reimbursable Bad Debt?
J: Medicare Reimbursable Bad Debt (MBD) is a component of the Medicare program that allows hospitals to collect reimbursement for deductible and copayment amounts that are incurred by Medicare beneficiaries and are unpaid and uncollectable. For many hospitals, MBD is a significant revenue source. Hospitals can receive 65% of the eligible amount of MBD they incur. The key term here is “eligible.” Medicare has very specific guidelines that define the eligibility of an account to be claimed as MBD.
Identifying the full amount of MBD that a hospital is entitled to receive is complex because it requires the aggregation, integration and analysis of different data elements from different systems. We’ve done a number of projects with hospitals looking back at submissions for prior fiscal years, and we are usually able to find MBD reimbursement that has been missed due to data issues. A key point is that hospitals have previously been able to go back and claim this reimbursement. However, we’ve found that MACs are getting more restrictive regarding this practice, so getting it right the first time is more important than ever.
Q: What is Medicare Reimbursable Bad Debt for Medicare Advantage (MBD-MA)?
J: MBD-MA is the analog of MBD for private Medicare Advantage (MA) plans. It’s a mechanism for hospitals to obtain reimbursement for unpaid and uncollectable deductibles and co-payments incurred by MA members. Over 17 million Medicare beneficiaries are enrolled in a MA plan, which is approximately 31% of all Medicare beneficiaries, so MBD-MA is a potentially significant revenue opportunity for those hospitals that see a lot of these patients. [NOTE: More information on MA enrollment can be found here.]
Q: What are the similarities and differences between MBD and MBD-MA?
J: There are definite similarities between the two programs from a regulations perspective. For example, the “must bill” policy applies to both. Hospitals have to wait 120 days before they deem an account uncollectable and return accounts from collection agencies. They need to have established and documented write-off procedures and be able to show that they’ve consistently followed these procedures.
MBD-MA adds another level of complexity because you’re dealing with multiple MA plans, and these plans do not administer MBD-MA consistently. MA plans are not required to offer MBD-MA; some plans offer it and some do not. Among the plans that do offer MBD-MA, the percentage of bad debt reimbursed varies. Many plans reimburse at the 65% level used by Medicare, but that’s not always the case. Also, hospitals send their detailed listings to the MA plan, and the specific rules by which those listings are accepted vary across plans.
Q: From a process perspective, what makes MBD-MA difficult to manage?
J: Some of the challenges with MBD-MA are similar to the ones that hospitals experience with MBD. It’s complicated to piece together the multiple, disparate data sets that you need in order to put together a listing. In many cases, you’re looking at data from multiple systems covering accounts that may have discharges that occurred across multiple years. MBD-MA adds to that complexity because you need to identify and track accounts for members enrolled in specific MA plans across specific enrollment dates and to present listings in the specific format required by each MA plan.
Q: How can a hospital identify its MBD-MA opportunity and make sure that it fully realizes that opportunity?
J: If a hospital isn’t collecting MBD-MA, it should start by assessing its current MA membership base. While 31% of Medicare beneficiaries are enrolled in MA plans, the distribution of those members is clearly not uniform across the country — some areas have very high rates of MA plan penetration, others have very low rates. The second step is to review the hospital’s MA plan contracts. As previously noted, MA plans have different policies regarding MBD-MA. In the work we’ve done with hospitals, we’ve identified significant differences across MA plans that impact a hospital’s MBD-MA opportunity, so contract review is needed. If a hospital hasn’t collected MBD-MA in the past, I’d strongly recommend taking these two steps. We’ve worked with hospitals that never looked at MBD-MA because they didn’t think there was much opportunity and ended up being very surprised at the size of the available reimbursement.
If a hospital is collecting MBD-MA, the challenge is ensuring that all of the accounts eligible for reimbursement are identified and that the listings being produced are compliant with MA plan requirements. As very few MA plans allow for retrospective reviews, it’s really important to get these listings right the first time.
Q: How does HPS help hospitals with MBD-MA?
J: We’ve developed a strong set of tools to help hospitals navigate the complex data aggregation, integration and analysis associated with MBD and MBD-MA. For most hospitals, that’s the biggest area where reimbursement is sub-optimized. Our ability to automate these processes produces listings that are complete, accurate and in the form required by CMS or an MA plan.
Contact us to learn more about how HPS can help your hospital with MBD-MA.
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- Introduction to Medicare Bad Debt-Medicare Advantage - February 22, 2017