Hospitals need to submit Medicare bad debt lists on their cost reports.

I was working on a project recently, reviewing bad Medicare debts for a client. I noticed a reduction for a code I do not see a lot on a claim with Medicare primary and Medicaid secondary. It was code 66: “blood deductible.” 

Most often, the Medicare deductible amount for inpatient claims equals the Medicare deductible published in the Federal Register for the year. 

What happened? Medicare Part A will help cover the cost of blood that patients get in a hospital as an inpatient. In most cases, a hospital will get blood for free, from a blood bank. If this is the case, patients are not responsible for replacing it or paying for it. If the hospital must purchase it, patients must have the blood donated, or pay the hospital for the first three units of blood they get within a calendar year.

Hospitals report red blood provided using revenue code 381, and whole blood using revenue code 382. One of the problems for hospitals is that since they only receive a fixed payment under the Medicare prospective payment system, they do not get extra payments for blood transfused to patients.  If the patient does not pay, the hospital must collect the blood deductible from the patient.

Adding to the complication is the fact that the hospital usually has no idea if the patient has met their calendar limit for blood deductibles.  The patient may have even received blood at another hospital.

Unless the accounting department catches the unpaid deductible, patient financial services does not even know to collect it. Often, Medicare blood deductible amounts are simply written off to contractual allowance.

So, what can you do? Well, first make sure patient financial services tracks all claims billed with revenue codes 381 and 382. When payments are received, make sure that collectible amounts for blood deductibles are properly posted to accounts. You should also make sure that for Medicare patients also covered by Medicaid, Medicaid takes the blood deductibles into account when computing cost-sharing amounts.

Finally, hospitals need to make sure that when they submit Medicare bad debt lists on their cost reports, the person preparing the cost report does not remove the blood deductible as an error when making the list of Medicare bad debt claims.

Programming Notes:

Listen to Tim Powell’s live reports every Tuesday during Talk Ten Tuesdays, 10-10:30 a.m. EST.


Timothy Powell, CPA

Timothy Powell is a nationally recognized expert on regulatory matters, including the False Claims Act, Zone Program Integrity Contractor (ZPIC) audits, and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) compliance. He is a member of the RACmonitor editorial board and a national correspondent for Monitor Mondays.

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