The Difference between Charity Care and Bad Debit
Stacey Smith
ACC281: Accounting Concepts for Healthcare professionals
Instructor Givens
August 17, 2015
Hospitals report care provided to the uninsured in two different categories one being charity care, and the other being bad credit. Charity care is defined as care provided to patients who are identified as not being able to pay for their medical services they receive. This determination is usually made during the time care is provided, and also as specified by the State Statute, which also requires considerable documentation. Charity Care is also audited very closely to make sure it is accurate, because this information is used in the state’s determination of disproportionate share payments. Bad debit is usually identified after the care has been provided. Bad credit includes amounts of money that are not recovered from patients who are considered “self-pay”, and also amounts of money that are not fully recovered from insured patients (Martin, 2012).
When it comes to determining which category the uncollectible account should be placed in, the financial services personnel assist by looking at the accounts from individuals. They would see who are unable to access entitlement programs, which have limited financial resources, and look at the accounts that are considered “self-pay”. Then they have to decide which accounts would be eligible for free or discounted health care services based on that established criteria, which is also based upon the federal poverty guidelines. These guidelines are updated annually in conjunction with the published updates by the United States Department and the Health and Human Services.
Normally, after receiving all necessary documentation the patients who are without insurance, or entitlement programs, and have limited financial resources get logged into the Charity Care, and then those who have been found able to pay in full, or able to pay a...