Appeals court denies Medicare reimbursement to nursing homes for bad debt

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An appeals court has upheld a decision denying Medicare reimbursement to 21 skilled nursing facilities for bad debt related to services rendered to dual-eligible beneficiaries, according to news reports.

The case, Abington Crest Nursing and Rehabilitation Center v. Sebelius, concerned bad debt incurred by the facilities in 1999. The SNFs argued that Medicare should reimburse the facilities for the debt because, under Medicare law, costs of services reimbursable under Medicare cannot be borne by non-beneficiary recipients of SNF services, the Bureau of National Affairs reported. Such cross-subsidization of services would clearly violate title 42 of the U.S. Code, which encompasses a number of hospital and skilled nursing regulations, the SNFs said. Dual eligibles are beneficiaries who quality for Medicare and Medicaid.

The appeals court, however, ruled that the the interpretation of the regulation from the secretary of the Department of Health and Human Services Secretary was correct. Reimbursement for bad debt is justifiable only under reasonable cost systems, not the prospective payment system that the SNFs were using, the court ruled. One judge noted that there may be some credibility to the claims made by the SNFs, but if so, the case should be taken up with Congress, not the secretary of HHS, BNA reported.