Ask the Experts: Medicare Small Balance Payments

Are we violating the Medicare anti-kickback statute with the following approach to small balance adjustments? We adjust any balance under $19.99. Although some copayments fall under that amount, we still collect them. However, if the copayment falls under this amount, is there any concern if it is written off?

Answer 1: The Centers for Medicare & Medicaid Services indicated in change request 2174 that some hospitals have a policy of writing off small debt balances in patient accounts receivable. Realizing that it is unproductive for the Medicare program to expend audit resources to examine these policies for consistent treatment among all classes of payers, it determined that contractors should forgo reviewing providers’ policies for debt balances under $10.

Hospitals, however, must continue to follow their policies, which require that collection efforts be followed prior to writing off small debt balances, and contractors are authorized to disallow any bad debts that were written off, regardless of the amounts, if providers fail to bill the Medicare patient for the deductible/coinsurance amounts. In addition, any small debt balances remaining on larger Medicare deductible and coinsurance amounts must comply with reasonable collection efforts (120-day rule applies).

This question was answered by: Caswell Samms, III, vice president and CFO, WellStar Kennestone.

Answer 2: Regarding the small balance adjustments, it sounds as if you continue to try and collect them at the point of service, but when evaluating balances to bill, you may sometimes decide to write them off because the cost to collect exceeds the return. I am not a lawyer, but that is likely not a problem. We, as revenue cycle leaders, are allowed to decide how much, and what type of effort to make to collect patient balances. We can’t go without making any effort, but precisely how much of an effort is up to us. The best thing to do is to experiment and track results and adjust.

This question was answered by: Ruth Landé, senior vice president, patient revenues, Memorial Sloan-Kettering Cancer Center, and a member of HFMA’s Metropolitan New York Chapter.

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