their Medicare cost-sharing obligations. Nothing in the Medicare program rules or regulations prohibit such discounts.

In fact, Medicare’s fraud investigation unit, the Offce of the Inspector General (OIG), has never brought a case against a hospital for discounting of bills for patients of limited means. The waiving of part or all of the Medicare cost liability of the patient may be acceptable for a “fnancially needy benefciary” that can include “any reasonable measure of fnancial hardship.”

The original law only meant to prohibit hospitals from using the Medicare coinsurance or deductible waivers exclusively to “drum up” new business. Basically, they cannot take out an ad in the paper that says “Seniors Welcome, We’ll Waive Your Copays!” The only major stipulation is that hospitals may not use the waived copay or waived deductible as a write- off for bad debt.12

If your account was already sent to collections before you opened this book, please read the rest of this chapter frst. You need to understand billers to do what I am about to explain. Let’s review anyway.

Billers send accounts to collections only if they believe the patient is able, but not willing to pay. This means that they have given up hope on being able to collect the account themselves, yet they have no basis to waive any of the balance. They have no evidence that the patient is unable to pay, they just know that the patient has made little or no effort.
When this happens, they will classify the account as “bad debt.” I will try not to be too technical, but when an account becomes bad debt, it changes from what accountants call an accounts receivable asset to a bad debt expense. They do this so they can clean up their accounts receivable books and so they can take advantage of the tax beneft of expensing the bad debt expense.
  1. 12 Unintended Consequences: How Federal Regulations and Hospital Policies Can Leave Patients in Debt, The Common Wealth Fund, June 2003
58 // The Medical Bill Survival Guide