Three Strategies to Shrink Bad Debt: Presumptive Charity Care, Propensity to Pay and Partner Management

Bad Debt is Not Going Away. 

Despite the advances of the Patient Protection and Affordable Healthcare Act (ACA) related to patient debt (establishing maximum out-of-pocket expenses and other protections), most healthcare finance analysts believe bad debt will increase over the coming years.

In this free whitepaper, sponsored by LexisNexis, you’ll discover best practices from a wide range of healthcare providers who have managed to stem the tide of bad debt increases.

from the whitepaper:

Pinpoint charity care

Conventional wisdom in healthcare provider revenue cycle circles is that 20 percent to 30 percent of patients who end up in bad debt could have qualified for charity care, but somehow slipped through. The IRS wants to know how providers missed these individuals.

Healthcare providers, specifically those under not-for-profit status, are under pressure from the IRS to provide more community benefit and more charity. Non-profit hospitals must report all of their community benefit activities to the IRS under 501(r). For non-profit healthcare providers, the importance of identifying charity care accounts from bad debt appears in Part III on Form 990 Schedule H: “Bad Debt, Medicare, & Collection Practices.” Question 3 asks:

Enter the estimated amount of the organization’s bad debt expense attributable to patients eligible under the organization’s financial assistance policy.

The next question on Schedule H asks non-profits to “describe the costing methodology used in determining the amounts reported … and rationale for including a portion of bad debt amounts as community benefit.”