Medicare Cuts to SNF Bad Debt Payments are Unsustainable, says Alliance

The Obama Administration’s proposal to cut Medicare bad debt payments for skilled nursing facility (SNF) care is “unfair and unsustainable” according to the Alliance for Quality Nursing Home Care, as 85% of that bad debt is unrecoverable thanks to Medicaid’s inability or unwillingness to pay Medicare co-payments for dual eligible payments.

Medicare currently reimburses SNFs for 100% of bad debt from dual eligibles because SNFs are prevented by federal law from collecting these payments from beneficiaries, most of whom do not have the means to pay. However, the law fails to then require state Medicaid programs to make these payments.

“The Administration’s bad debt proposal disregards the fact that Medicaid programs are the primary source of SNF bad debt,” said Alan G. Rosenbloom, President of the Alliance, a coalition of 12 leading post-acute and long term care organizations providing SNF care in approximately 1,400 facilities in 44 states nationwide. “SNFs cannot as a matter of federal law collect any bad debt associated with care for dual eligible patients — but Medicaid doesn’t pay these bills either. Therefore, if the Administration’s proposal becomes policy, SNFs would be left ‘holding the bag’ for these unpaid bills.”


Unlike other health care providers when it comes to bad debt, 85% of SNF bad debt is attributable to federal policies regarding duals, compared to 55% of hospital bad debt, Rosenbloom notes.

Additionally, SNFs cannot refer a state Medicaid program to a collection agency, and lowering Medicare bad debt payments to 25% “will not spur SNFs to be more aggressive in their debt collection efforts,” he continued.

“The simple fact is that bad debt attributable to Medicaid non-payment is truly uncollectible,” said Rosenbloom.


Medicare funding for SNF care has been cut by $65 billion over the next decade, and conditions are worsening as state budget problems are forcing most states to cut or freeze Medicaid payments for nursing home care.

Written by Alyssa Gerace