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Reduction in Medicare Bad Debt for Skilled Nursing Facilities (SNF) and Critical Access Hospitals (CAH)

Section 3201 of The Middle Class Tax Extension and Job Creation Act of 2012 requires reductions in bad debt reimbursement to all providers, supplies and other entities eligible to receive bad debt reimbursement. This will especially affect Skilled Nursing Facilities and Critical Access Hospitals. The overall reductions are as follows:

  • Payment of allowable bad debt to hospitals for cost reporting periods beginning during fiscal year 2013 and subsequent fiscal years would be reduced by 35 percent.
  • Payment of allowable bad debt to SNFs and swing bed hospitals for cost reporting periods beginning during fiscal year 2013 or a subsequent fiscal year would be reduced by 35 percent for coinsurance amounts for services furnished to a beneficiary who is not a dual eligible individual.
  • Payment of allowable bad debt to SNFs and swing bed hospitals for coinsurance for services furnished to a beneficiary who is a dual eligible individual would be:
    For cost reporting periods beginning during fiscal year 2013, reduced by 12 percent;
    For cost reporting periods beginning during fiscal year 2014, reduced by 24 percent and;
    For cost reporting periods beginning during fiscal year 2015, reduced by 35 percent.

You may find a more detailed description in the Federal Register

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