Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 10-28-2013, 05:18 PM   #41
Thinks s/he gets paid by the post
 
Join Date: Feb 2011
Posts: 1,629
Quote:
Originally Posted by explanade View Post
.......Then there have been articles about doctors owning a lot of these testing labs and facilities, which bill for the various tests.
This has been rather tightly regulated by the US Gov't for some years. With certain exceptions, docs (& hospitals) referring to facilities they own (or have significant investments in) is a criminal offense under anti-kickback laws.

Anti-Kickback Law - Stark Laws

But unfortunately there are criminals in every profession, inc medicine

And Moemg makes a great point that (in US at least) folks have rights to refuse medical tests/treatments if they wish. I agree 100% that trend in US is to do too many tests/treatments which do not really change patient outcomes. IMHO- Medical curiosity alone is not reason to justify cost (& sometimes risks) of medical testing.
__________________

__________________
ERhoosier is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-28-2013, 06:27 PM   #42
Full time employment: Posting here.
 
Join Date: May 2011
Location: Marco island
Posts: 813
Quote:
Originally Posted by 47Percent

As you mentioned padded up bills are the norm in healthcare. So, I really doubt they would be allowed to write off the difference betn. initial bill and actual as bad debt. If that's the case all bills paid by insurance companies would still result in millions of $ is deductions for the hospital.

More likely, they use what Medicare pays as the "imputed value" of the service, and they can only write off up to that amount. Although it all looks like black magic to us, there is an elaborate system of procedure codes, allowed rates, and equipment depreciation tables that go into the belly of the beast. There may be some shenanigans in that too, but that would be just pure garden variety fraud.

There is a possibility that IRS allows them to use a slightly higher number if they can reliably show some average number -- but somewhat less likely.
They can't write off bad accounts unless they were first declared as income. Who gave you the idea that healthcare providers use a different tax code than everyone else?
__________________

__________________
Gatordoc50 is offline   Reply With Quote
Old 10-28-2013, 06:44 PM   #43
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
Quote:
Originally Posted by Gatordoc50 View Post
They can't write off bad accounts unless they were first declared as income. Who gave you the idea that healthcare providers use a different tax code than everyone else?

For tax purposes it doesn't matter much if you call it $250K worth of revenue and $225K of bad debt, or $50K (the insurance company price) and 25K worth of bad debt. In either case the hospital/clinic would only pay taxes on the $25k less expenses and heck most of health care hospital are non profits like Kaiser and many Blue Cross affiliates .
Cause as you say everybody use the same tax codes.


It only matters when you are trying to collect data on the industry as whole. Then it does matter when calculating things like how much we spend in ER visits for the uninsured.
__________________
clifp is offline   Reply With Quote
Old 10-28-2013, 09:06 PM   #44
Recycles dryer sheets
 
Join Date: Oct 2013
Location: SF Bay Area
Posts: 85
Quote:
Originally Posted by Gatordoc50 View Post
They can't write off bad accounts unless they were first declared as income. Who gave you the idea that healthcare providers use a different tax code than everyone else?

As soon as a company bills you (legitimately) it becomes accounts receivable (AR) for them. Accounts receivable are same as revenue in corporate accounting.

They do not do cash basis accounting unlike individuals. That's why all the software companies madly try to sign deals towards the last day of the quarter.

If they habitually have problems collecting on AR , of course that also is considered a problem - but in a different way. It reflects on the company as an ongoing concern, and indicates a problem in pricing, target market etc. In any case they would have cash flow issues soon enough.

So when a company officially give up on an AR as uncollectable, the treatment is no different from a bad debt which you can write off on taxes. In fact, they are giving you credit when they perform services first and bill you for payment at a later time.
__________________
47 is offline   Reply With Quote
Old 10-28-2013, 10:07 PM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,295
Quote:
Originally Posted by W2R View Post
It does sound like you and she deserve a good explanation of why these tests were being done.

I can think of one possible reason in particular. When my mother was about that age, she had to have her legs amputated at the knee because of impending gangrene, due to low blood flow, threatening her life. We were told that these circulatory issues were due to her extreme old age causing her blood vessels to break down at that time. It took four more years before most of the rest of her organs failed due to her advanced age, almost simultaneously, and at that time she passed away at age 98 (well, two weeks short of 98).

She truly enjoyed her last four years of life, though, even without her legs.

Thanks for the response... I guess I can see that as a possibility.... I had not talked to my sister about this test...

I usually do not take her.... it is my oldest sister who is retired, so she knows what is happening more than me....
__________________
Texas Proud is offline   Reply With Quote
Old 10-28-2013, 10:09 PM   #46
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,295
Quote:
Originally Posted by Moemg View Post
The blood flow test may have been done in preparation for open heart surgery . The take vessels from the legs to use as grafts .My Mom is 97 and when they recommend tests to her she just nicely refuses .

My sister who works in a top hospital in the OR talked to heart surgeons... all said they would not do an operation on a 94 YO...

I think it was the blood flow that W2R mentioned....
__________________
Texas Proud is offline   Reply With Quote
Old 10-28-2013, 10:14 PM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,295
Just my 2 cents....

When they talk about health care spending... it is real spending... the accounting is not taken into account...
__________________
Texas Proud is offline   Reply With Quote
Old 10-29-2013, 12:22 AM   #48
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
Quote:
Originally Posted by Texas Proud View Post
Just my 2 cents....

When they talk about health care spending... it is real spending... the accounting is not taken into account...
Not arguing and I know you have a banking/finance background but I am curious in the example I gave.

Hospital list price is $250,000
Insurance company customary reimbursement payments would $50,000
the poor uninsured person ultimately agreed to pay $25,000 over 5 year.

How much did the country spend on health care in this hypothetical?
__________________
clifp is offline   Reply With Quote
Old 10-29-2013, 06:37 AM   #49
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,492
GAAP usually require that, for revenue to be recognized it must also be expected to be collected within the customary payment period. That means that, collectible or not, a hospital can't book as revenue more than it would customarily collect for similar services. If a service is known to be uncollectable when billed it does not meet GAAP criteria for revenue (in most cases)

Hospitals are free to adjust their prices across the board to reflect unpaid services, and clearly they do. In addition, however, to compensate for charity and other unreimbursed services, they receive higher rates from Medicare for doctor's services than the doctors receive when in private practice. For profit hospitals also receive tax credits.
__________________
MichaelB is offline   Reply With Quote
Old 10-29-2013, 07:07 AM   #50
Full time employment: Posting here.
 
Join Date: May 2011
Location: Marco island
Posts: 813
Quote:
Originally Posted by 47Percent

As soon as a company bills you (legitimately) it becomes accounts receivable (AR) for them. Accounts receivable are same as revenue in corporate accounting.

They do not do cash basis accounting unlike individuals. That's why all the software companies madly try to sign deals towards the last day of the quarter.

If they habitually have problems collecting on AR , of course that also is considered a problem - but in a different way. It reflects on the company as an ongoing concern, and indicates a problem in pricing, target market etc. In any case they would have cash flow issues soon enough.

So when a company officially give up on an AR as uncollectable, the treatment is no different from a bad debt which you can write off on taxes. In fact, they are giving you credit when they perform services first and bill you for payment at a later time.
As Michael states , only cash that is expected to be received would be declared as income. You had suggested that providers arbitrarily jacked up fees in order to increase write offs. That is incorrect as that would only hurt them financially. There is no advantage to them to overestimate income and in fact, a large disadvantage.
__________________
Gatordoc50 is offline   Reply With Quote
Old 10-29-2013, 08:37 AM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,498
When revenue is recognized there would be a corresponding charge for any amounts expected to not be collectible - usually based on historical experience - (or for returns in a retail setting) so in most cases the effect on earnings of the "sale" would be the amount of cash expected to be collected for the services provided during the period. Differences between what is estimated to be uncollectible and the ultimate uncollectible amounts would flow through to earnings as a change in estimate as better information on collectability becomes available.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 10-29-2013, 08:51 AM   #52
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
GAAP used to allow for "cash received" as the way to report income but it is very difficult to use in a larger business. Sending an invoice and setting it as the "income" is much easier and then uncollected debt is downgraded periodically to reduce net income.

As for the original post not accepting "exchange policies," that doesn't make sense. More information would be needed. I suggest asking them about specific plans they are on. It may be that they are backing out of most plans.

Even under the most optimistic of assumptions, the ACA exchanges will provide a relatively small percentage of insurance policies. The largest provider of plans will remain the corporate sector. Here the impact is the new "essential coverages" that have been added.

The biggest problem I see with the exchange plans is that they will still require a significant deductible and copays. In the case of a cancer treatment the deductible will probably be eaten up almost immediately. I have received a letter from my current primary care doctor that payment is expected at the time of service and it sounds like they are switching to a "before" mode rather than collecting on the way out.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 10-29-2013, 08:52 AM   #53
Full time employment: Posting here.
 
Join Date: May 2011
Location: Marco island
Posts: 813
Quote:
Originally Posted by pb4uski
When revenue is recognized there would be a corresponding charge for any amounts expected to not be collectible - usually based on historical experience - (or for returns in a retail setting) so in most cases the effect on earnings of the "sale" would be the amount of cash expected to be collected for the services provided during the period. Differences between what is estimated to be uncollectible and the ultimate uncollectible amounts would flow through to earnings as a change in estimate as better information on collectability becomes available.
The timing of declaration of income may be different per accounting. No disagreement there. The inference was made that an uncollected debt could be used to reduce other income unrelated to the debt. In other words, if I had a million in income I could simply charge a million bucks for my next exam and write that bad debt against the original million. Therefore, padded bills become a means to evade taxation. That is just nonsense.
__________________
Gatordoc50 is offline   Reply With Quote
Old 10-29-2013, 09:03 AM   #54
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,498
Quote:
Originally Posted by Gatordoc50 View Post
The timing of declaration of income may be different per accounting. No disagreement there. The inference was made that an uncollected debt could be used to reduce other income unrelated to the debt. In other words, if I had a million in income I could simply charge a million bucks for my next exam and write that bad debt against the original million. Therefore, padded bills become a means to evade taxation. That is just nonsense.
+1
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 10-29-2013, 09:14 AM   #55
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,498
Quote:
Originally Posted by 2B View Post
GAAP used to allow for "cash received" as the way to report income but it is very difficult to use in a larger business. Sending an invoice and setting it as the "income" is much easier and then uncollected debt is downgraded periodically to reduce net income.....
I guess I wanted to be clear that the process of recording sales and of recording estimated uncollectibles are typically separate. Each sale results in income and a receivable. Then a separate process of estimating uncollectible amounts occurs that results in an expense and an allowance for uncollectible accounts which reduces receivables to the amount ultimately expected to be collected. However, since both processes happen in the same accounting period the net effect is as if the estimated uncollectible is recorded when the sale is recorded.

GAAP has never really allowed for cash received as income (at least not in the last 40 years) since cash basis is not GAAP but rather is an OCBOA (other comprehensive basis of accounting).
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 10-29-2013, 09:35 AM   #56
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,492
Quote:
Originally Posted by pb4uski View Post
I guess I wanted to be clear that the process of recording sales and of recording estimated uncollectibles are typically separate. Each sale results in income and a receivable. Then a separate process of estimating uncollectible amounts occurs that results in an expense and an allowance for uncollectible accounts which reduces receivables to the amount ultimately expected to be collected. However, since both processes happen in the same accounting period the net effect is as if the estimated uncollectible is recorded when the sale is recorded.
Right. That means the revenue being discussed needs to meet two different accounting standards. First, it must be deemed revenue that is entirely collectable based on past billing experience. Then, when it moves to the balance sheet, the entire amount must be deemed collectable based on past collections experience. In either case not meeting the accounting (GAAP) standard would lead to misrepresentation of the financial statements.
__________________
MichaelB is offline   Reply With Quote
Old 10-29-2013, 10:25 AM   #57
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,295
Quote:
Originally Posted by clifp View Post
Not arguing and I know you have a banking/finance background but I am curious in the example I gave.

Hospital list price is $250,000
Insurance company customary reimbursement payments would $50,000
the poor uninsured person ultimately agreed to pay $25,000 over 5 year.

How much did the country spend on health care in this hypothetical?

Under this example, $25K...

Bad debts and discounts are a reduction of income and not an expense... IOW, the $250K might show up somewhere, but at the bottom of income only the $25K is left...
__________________
Texas Proud is offline   Reply With Quote
Old 10-29-2013, 10:31 AM   #58
Full time employment: Posting here.
 
Join Date: May 2011
Location: Marco island
Posts: 813
Since there are set reimbursement rates for each procedure there isn't any advantage to charging in excess of the stated rate. Any overcharge is useless which means there isn't such a thing as a " padded " bill. Those without insurance may pay higher fees but that isn't padding either. The only way for providers to milk the system would be by performing unnecessary procedures. But there are safeguards to prevent this with treatment ore-approvals and consumerism. Consumerism is enhanced with high company's and deductibles.
__________________
Gatordoc50 is offline   Reply With Quote
Old 10-29-2013, 10:33 AM   #59
Full time employment: Posting here.
 
Join Date: May 2011
Location: Marco island
Posts: 813
Quote:
Originally Posted by Gatordoc50
Since there are set reimbursement rates for each procedure there isn't any advantage to charging in excess of the stated rate. Any overcharge is useless which means there isn't such a thing as a " padded " bill. Those without insurance may pay higher fees but that isn't padding either. The only way for providers to milk the system would be by performing unnecessary procedures. But there are safeguards to prevent this with treatment ore-approvals and consumerism. Consumerism is enhanced with high company's and deductibles.
High copays.
__________________
Gatordoc50 is offline   Reply With Quote
Old 10-29-2013, 11:02 AM   #60
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by Gatordoc50 View Post
Consumerism is enhanced with high company's and deductibles.
Most people are not knowledgeable enough to question their doctor and the few that are generally won't. I suspect that people that can't afford the high deductibles and copays will decline services. Many of which will be needed.

I personally have a high deductible plan but I'm more interested in the PPO pricing for the medical costs. I'm amazed what the "list price" is for many of the procedures and office visits. It seems that a doctor or hospital should be happy to give people the most favorable prices up front if the person is paying at the time of service.

DW and I met our deductible this year for the first time in whenever. We did have his and hers colonoscopies which definitely pushed us to the limits.
__________________

__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 03:03 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.