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Payment Matters
April 19, 2012
Court Upholds "Must-Bill" Policy for Dual-Eligible Bad Debts, Remands on Prior Lack of Enforcement
By: Aaron Rabinowitz*
On March 26, 2012, the U.S. District Court for the District of Columbia upheld the application of the Department of Health and Human Services’ (HHS) “must-bill” policy to two long term care providers attempting to collect Medicare reimbursement for bad debts incurred as a result of treating certain dual-eligible patients. Cove Associates Joint Venture v. Sebelius, No. 1:10-cv-01316 (D.D.C. Mar. 26, 2012) [PDF]. Under the must-bill policy, a provider is required to bill its state Medicaid program for uncollectable coinsurance and deductible obligations associated with dual-eligibles before claiming payment for such costs as bad debt from Medicare. The policy also requires the provider to submit a state remittance advice as evidence that the state has refused payment. However, the court remanded the case to the CMS to determine whether the providers were justified in relying on CMS’ prior failure to enforce the must-bill policy with respect to dual-eligible reimbursement claims from non-participating Medicaid providers.
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CMS Reminds Providers of How Reasonable Cost Principles Apply to Provider Taxes
By: Thomas W. Coons
Under the Medicaid statute, states are permitted to generate revenue by imposing “healthcare-related taxes” on classes of healthcare providers and to use those tax revenues to pay for services provided under the Medicaid State Plan. 42 U.S.C. § 1396b(w)(3)-(4). Those taxes had long been treated by most Medicare intermediaries as Medicare reimbursable costs, consistent with PRM § 2122.1, under which taxes levied by the state are allowable costs. In its final IPPS rule issued on August 16, 2010, however, CMS “clarified” its payment policy regarding these taxes, stating that, while provider taxes are reimbursable as reasonable costs, the tax expense must be reduced by Medicaid payments that the provider received from the state that were “associated with the assessed tax.” Only this net amount, according to CMS, is reimbursable.
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