Bad Debt

80 - Bad Debt (Rev. 13599, Issued: 01-30-26, Effective: 05-01-26, Implementation: 05-01-26) In accordance with 42 CFR §§ 413.89 and 413.178, bad debt payments are made for unpaid Medicare deductibles and co-insurance amounts for only those items and services associated with the composite rate that was in effect prior to the implementation of the ESRD PPS on January 1, 2011. That is, only the bad debt amounts associated with the composite rate portion of the single ESRD PPS bundled payment will be used to determine an ESRD facility’s allowable bad debt payments. The composite rate portion of the ESRD PPS payment includes drugs, biological products, and laboratory tests that were included in the composite rate and their substitutes which would have been included. A facility-specific composite cost percentage will be applied to the total bad debt amount associated with the ESRD PPS payment to compute the bad debt amount for only the composite rate services. Effective January 1, 2013, the cap on bad debt reimbursement is no longer applied. General requirements and policies for payment of bad debts attributable to unpaid Medicare deductibles and co-insurance are found in chapter 3 of the Provider Reimbursement Manual, Part 1(PRM) (CMS Pub. 15-1) and cost reporting worksheets and instructions in the PRM Part 2 (CMS Pub. 15-2).