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Title: Section 442.29 - Periodic interim payments

442.29 Periodic interim payments. (1690) (a) Periodic interim payments are made biweekly to a hospital on the PIP program and are based on the hospital's estimate of applicable Medicare reimbursement for the current cost report period. When such payments are received, a cash account in the Unrestricted Fund is debited and a PIP Clearing Account (account 1051) is credited for the amount of the payment. When applicable Medicare charges are billed to the intermediary, the PIP Clearing Account is debited and patient accounts receivable is credited. At year-end, adjustments must be made to eliminate any remaining balance in the PIP Clearing Account and to reflect the amount receivable from, or due to, the Medicare intermediary.

(b) To illustrate these entries, assume the following facts:

(1) PIP payments during the year totaled $100,000, and applicable Medicare charges billed during the year were as follows:

Total charges $98,000

Noncovered charges 4,000

Deductibles and coinsurance 8,000


(2) Applicable unbilled Medicare charges and in-house patient balances were as follows at year-end:

Total charges $10,000

Noncovered charges 500

Deductibles and coinsurance 1,200


(3) Applicable reimbursable costs per the Medicare cost report prepared for the year were $92,000.

(c) In summary form, the accounting entries necessary to properly reflect the above transactions would be:

Account Dr. Cr.

(1) Cash 1010 $100,000

PIP Clearing Account 1051 $100,000

To record the receipt of PIP

payments during the year.

(2) Inpatient Receivables--

Discharged & Unbilled 1032 108,000

Various Revenue Accounts 108,000

To record applicable Medicare revenue for the year.

(3) PIP Clearing Account 1051 86,000

Inpatient Receivables--Other 1035 12,000

Inpatient Receivables--

Discharged & Unbilled 1032 98,000

To record the billing of Medicare charges to the intermediary ($86,000) and to Medicare patients for noncovered charges and deductibles and coinsurance ($12,000).

(4) PIP Clearing Account 1051 8,300

Inpatient Receivables--

Discharged & Unbilled 1032 8,300

To transfer the amount of applicable unbilled Medicare receivables at year-end to the PIP Clearing Account

($10,000 - $500 - $1,200).

(5) PIP Clearing Account--Medicare 1051 5,700

Contractual Adjustments--

Medicare 5910 5,700

To transfer the balance in the PIP Clearing Account at year-end to the Contractual Adjustments account (the PIP Clearing Account must be zero at year-end).

(6) Contractual Adjustments

Medicare 5910 17,200

Reimbursement Settlement 2071

Due--Medicare $17,200

To record the amount of cost report reimbursement settlement due, based upon cost report filed (total PIP payments of $100,000 and deductibles/coinsurance in the amount of $9,200, less $92,000 reimbursable inpatient costs per the cost report).

(d) Although the preceding illustration reflects year-end adjustments, similar entries should be made at the end of each month in order to properly reflect the amount of contractual adjustment during the year. In order to do this, cost reimbursement settlement must be estimated. When done at month-end, entries 4-6 would be reversed at the beginning of the next month.

(e) The above example adheres to the principle that, at year-end, the entire amount receivable from or payable to the intermediary by a provider under the PIP program must be reflected in account 1052.00 or 2061.00. There are no receivables "in-transit" under the PIP program. Although more complex systems of accounting for periodic interim payments and related billings are permissible--such as establishing separate subaccounts for: (1) PIP cash received; (2) Medicare PIP billings, including amounts unbilled at year-end; and (3) PIP contractual allowances--this basic principle must be followed.


VOLUME C (Title 10)