fbpx

< Back to Thought Leadership

CMS Updates Language on Medicare Bad Debt Crossover Write Off

Since the release of Centers for Medicare & Medicaid (CMS) final ruling, there has been a lot of confusion regarding the correct way to write off a bad debt crossover account.

For years it has been acceptable to write off a Medicare bad debt crossover account to a contractual allowance. But then in 2018 an article was released in MLN stating that crossover accounts need to be written off to an expense starting 10/1/2019. The same “expense” terminology was used in the proposed CMS regulations earlier this year.

By using the word “expense”, many felt this was a direct contradiction to ASU Topic 606. Therefore, putting providers in a position to choose between compliance with CMS or Generally Accepted Accounting Principles (GAAP). After reviewing the comments submitted to CMS, the final ruling made a slight update in the wording to read:

“…for cost reporting periods beginning on or after October 1, 2020, Medicare bad debts must not be written off to a contractual allowance account but must be charged to an uncollectible receivables account that results in a reduction in revenue.”

This is now in line with ASU Topic 606 and points the bad debt crossover write off to be a reduction in revenue. It is no longer acceptable to write off crossover accounts to a contractual allowance account.

Questions to Ask Yourself and Your Team About Medicare Bad Debt Crossover

  • What transaction codes are being used for Medicare bad debt crossover accounts?
  • Do you know where your Medicare bad debt crossover write off is directed to on the financial statements?
  • Is the write off routed to net patient revenue or operating expense?
  • Do you have a separate General Ledger (GL) account set up for these Medicare bad debt crossover accounts?
  • Will you be able to provide a detailed listing of all patient accounts that are hitting the GL?

If you have any questions regarding the latest ruling or how it may affect your organization, please contact your local Blue & Co. advisor

Blue & Co., LLC Announces New Partnership With Vsimple | Vsimple and Blue and Co logo

Blue & Co., LLC Announces New Partnership With Vsimple

CARMEL, Ind. (May 5, 2022) – Blue & Co., LLC is excited to announce our new partnership with Vsimple, a workflow management software company based in New Albany, IN.  Blue & Co and Vsimple will be working closely together to address the workflow and process improvement challenges of manufacturers throughout the Midwest. “At Blue & […]

Learn More
Proposed Rule FY 2023 for Skilled Nursing Facilities

Proposed Rule FY 2023 for Skilled Nursing Facilities

It is that time of year again! The Center for Medicare and Medicaid Services (CMS) has issued the proposed rule that would update Medicare payment policies and rates for the fiscal year (FY) 2023’s Skilled Nursing Facility (SNF) Prospective Payment System (PPS). The Patient Driven Payment Model (PDPM) was implemented on October 1, 2019. This […]

Learn More
Coverage Scheduling Solutions for Physician Practices and Hospital Systems

Scheduling Solutions for Clinician Work-Life Balance

One of the most challenging conversations in any multi-physician practice or specialty-based hospital employed group is about how to create a fair distribution of on-call and/or inpatient hospital service coverage while balancing the duties of an outpatient practice. The COVID-19 pandemic has contributed to clinician burnout, and physicians and Advanced Practice Providers (APPs) place significant […]

Learn More