Uncompensated Care

1. Law
2. Tennessee Code
3. Health, Safety and Environmental Protection
4. Department of Health
5. General Provisions
6. Uncompensated Care

Each hospital shall apply and use the definitions  in subdivisions (1) and (2) when reporting on the joint annual reports to the department of health, center for health statistics. The center for health statistics and comptroller of the treasury's office shall use and apply the definitions when auditing or compiling statistics based on the reports or for any related reports or statistics:

1. “Bad debts” means amounts considered to be uncollectible from accounts and notes receivable that are created or acquired in providing services. “Accounts receivable” and “notes receivable” are designations for claims arising from rendering services and are collectible in money in the relatively near future;
   1. A debt must meet these criteria:
      1. The provider must be able to establish that reasonable collection efforts were made;
      2. The debt was actually uncollectible when claimed as worthless;
      3. Sound business judgment established that there was no likelihood of recovery at any time in the future; and
      4. Accounts turned over to a collection agency should be classified as bad debt;
   2. 1. If after reasonable and customary attempts to collect a bill, the debt remains unpaid more than one hundred twenty (120) days from the date the first bill is mailed to the patient, the debt may be deemed uncollectible;
      2. Bankrupt accounts shall be considered bad debts, unless there is documented evidence that the medical bill caused bankruptcy. Such accounts would then be counted as charity; and
2. “Charity care” means reductions in charges made by the provider of services because of the indigence or medical indigence of the patient.
   1. The provider should apply the following guidelines for making a determination of indigence or medical indigence:
      1. The patient's indigence must be determined by the provider, not by the patient; i.e., a patient's signed declaration of the patient's inability to pay the patient's medical bills cannot be considered proof of indigence;
      2. The provider should take into account a patient's total resources, which include, but are not limited to, an analysis of assets, only those convertible to cash and unnecessary for the patient's daily living, liabilities, and income and expenses. Indigence income is determined by the provider's posted charity care policy as required by § 68-11-268. Medical indigence is a status reached when a person uses or commits all available current and expected resources to pay for medical bills and is not limited to a defined percent of the federal poverty guidelines. In making this analysis, the provider should take into account any extenuating circumstances that would affect the determination of the patient's indigence;
      3. The provider shall determine that no source other than the patient is legally responsible for the patient's medical bill; e.g., Title XIX, local welfare agency or guardian; and
      4. The patient's file should contain documentation of the method by which indigence was determined, in addition to all backup information to substantiate the determination.
   2. If indigence is determined and the provider concludes that there had been no improvement in the beneficiary's financial condition, then the hospital may deem uncollectible the debt, or the portion of the debt, determined to be charity care without having to apply the bad debt collection criteria.

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