Clearing More Medicare 120 Day Rule Confusion

The Centers for Medicare and Medicaid Services (CMS) 120 Day Rule continues to cause healthcare providers and systems to question how the rule impacts their procedures. Though CMS released the IPPS 2021 Final Rule in late 2020, there are still areas that are not as clear as they could be.

The 120 Day Rule Question

One question that is often asked revolves around the 120 Day Rule and listing accounts with a collections partner. In a previous article, we tackled what happens when a patient makes a payment within the 120 day period, and now we’ll delve deeper into the listing question and when healthcare providers are allowed to list Medicare patients.

The Answer

The short answer is you can send a patient to collections at any time, as long as it is in accordance with your organization’s financial policy.

The 120 Day Rule has no effect on when you can list an account with a collection agency because it  deals with when you can claim an account as bad debt on the Medicare Cost Report. The CMS guidelines actually state that you must treat a Medicare patient the same as you would any other patient, which means you should follow a standard policy for listing all patients with a collections agency, and in accordance with your financial assistance policy.

The CMS guidance does not specify a minimum time to list accounts with collections. At Americollect, the majority of our clients do list all accounts at day 120, but this is more so a function of giving their patients the opportunity to pay before sending their account to collections. There are also 501(r) implications that push many of our non-profit organizations to the 120 day mark, though there are some non-profit organizations that list accounts as soon as  60 or 90 days.

For 501(r) non-profit hospitals, per the 501(r) regulations, they must ensure that all “reasonable efforts” to determine whether a patient is eligible for their financial assistance policy have been completed prior to pursuing Extraordinary Collections Activities (ECAs). For most hospitals this means waiting 120 days from the date of the first post-discharge bill.

The act of listing an account is not an ECA, so accounts can be listed at any point. Certain steps that an agency takes, like listing with a credit bureau, are ECAs. For our clients that have informed us that they are a 501(r) facility, we have built in safeguards to prevent ECA’s from occurring before this interval. That way, even if they list accounts earlier with us, our system will keep them 501(r) compliant.

Staying in the know

Although CMS has released clarification on the 120 Day Rule, there can still be confusion when it comes to sending Medicare patients to a collection agency. Americollect will continue to help clear up this confusion to make sure that your facility is correctly listing with your agency partners. If you have questions, we are always happy to help!