Impact of the Elimination of Medicare Bad Debt on Rural Prospective Payment System (PPS) Hospitals

NORC completed a rapid response project examining the impact the phase-out of Medicare bad debt reimbursement might have on rural prospective payment system (PPS) hospitals, a proposed component of the President’s 2007 Fiscal Year (FY) budget.  By comparing hospitals’ 2005 total Medicare reimbursement to estimates of reimbursement if the bad debt policy had not been in place, NORC was able to calculate the percentage change in total Medicare reimbursement.  The quantitative analysis was coupled with the interviews in order to assess how the loss of Medicare bad debt reimbursement might affect and change rural PPS hospitals. The study concluded that the elimination of Medicare bad debt reimbursement likely would impact rural hospitals adversely. 

This project was conducted as part of the Rural Health Research and Policy Center.

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