Bad Debt Policy
Molina Healthcare of Illinois (MHIL) will allow Eligible Providers that are requesting Bad Debt relief to submit the necessary documentation to the MHIL Provider Contracting Department for consideration of rate changes for prospective reimbursements on covered services.
The MHIL Bad Debt Policy is effective 10/13/2014.
CMS policy does not require Managed Care Organizations (MCO) to resolve Bad Debt. However, where Illinois Medicaid does not fully pay for dually eligible beneficiaries’ cost sharing, MHIL will permit Eligible Providers to request a review of the difference from Original Medicare reimbursement for a potential Bad Debt negotiation on prospective payments for MHIL members in the Medicare-Medicaid Alignment Initiative (MMAI).
In order for Eligible Providers to properly establish Bad Debt with MHIL, Eligible Providers must follow all of the criteria for allowable bad debt as described in CMS guidelines.
- "Bad Debts” are defined as amounts considered to be uncollectible from accounts and notes receivable that were created or acquired in providing medically necessary covered services
- "Accounts receivable” and “notes receivable” are designations for claims arising from the furnishing of medically necessary covered services in accordance with MHIL prior authorization policies
- "Eligible Providers” that qualify for Bad Debt are in-network fee for service Hospital and Non-Hospital Providers who bill Medicare Fiscal Intermediaries (FIs) or Part A/B Medicare Administrative Contractors (A/B MACs) and are eligible to claim Bad Debt for MMAI beneficiaries. To ensure proper and appropriate establishment of Bad Debt, Eligible Providers will need to supply MHIL with the current year rates from the Fiscal Intermediary/MAC and submit the rate letter (or the equivalent) along with any applicable encounter data for review.
Eligible Providers requesting Bad Debt rate changes will be obligated to make the formal request to MHIL in writing within 30 (thirty) days after their Medicare cost report is filed. Eligible providers and MHIL will review the submitted data and work in good faith to negotiate rate changes relative to Bad Debt for future reimbursements on covered services rendered.
Eligible Providers will need to supply MHIL with the current year rates from the Fiscal Intermediary/MAC and submit the rate letter (or the equivalent) along with any applicable encounter data for review. Bad Debt establishment requests will also need to contain all necessary information to determine if Bad Debt was incurred.
Encounter data must show a minimum of five (5) documented attempts to collect outstanding liability amount from the member. This must include copies of letters and/or communication sent to member showing dates. Documents should also include a spreadsheet showing the following elements:
- Patient Name and HIC Number
- Begin Date of Service
- End Date of Service
- Date Billed to Molina
- Total Billed Amount
- Total Molina Paid Amount (Medicare)
- Total Molina Paid Amount (Medicaid)
- Molina Claim Number
- Coinsurance and Deductible Amounts
- Identification of Indigent Bad Debt
- Date of Write-off
A dated copy of the communication when the account was sent for outside collection efforts as well as date agency ceased collection efforts.
Within 90 (ninety) days of the formal request, MHIL Finance will review the submitted documentation to determine if Bad Debt exists. If the Eligible Provider and MHIL are able to agree upon the establishment of Bad Debt after the MHIL review, starting on a mutually agreed upon date, a Bad Debt rate change will be negotiated with the Eligible Provider for prospective covered services rendered.