The OIG Plans to Audit Hospital Bad Debt

The OIG updated their Work Plan this week.  Through the update, they announced they will be conducting audits of hospital bad debt.  Specifically, the OIG will be conducting audits to determine whether hospitals applied reasonable efforts to collect beneficiary coinsurance and deductible portions. 

Reasonable collection efforts include sending bills, follow-up letters, phone calls and personal contact.  These efforts, however, must be well documented to establish that the debt was uncollectible and there is no likelihood of future recovery. 

The OIG plans to select a random sample of hospitals and review the policies and procedures they have in place for collecting coinsurance and deductibles, offering financial assistance, identifying bad debt, and accounting for the receipt of previously reimbursed bad debt. 

The OIG also plans to select a judgment sample of claims with high dollar bad debt amounts and determine how the hospitals adhered to the Federal criteria in treating these bad debts.

We recommend reviewing your bad debt collection policies and procedures and consider conducting internal audits of bad debt adjustments in order to evaluate compliance with applicable state and federal law. 

HBE’s team of revenue cycle and compliance experts is available to assist you with external audits of your revenue cycle process.  We are also available to provide reviews of your revenue cycle policies and procedures as well as provide assistance with other documentation, coding and compliance needs.  

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