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Medicare rules on blg pts for copays/ded

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PMRNC:
hmm this is definitely a question for an accountant.. however I did google. :)  what I read in a few different articles was that the only way they can write off bad debt ON TAXES (sorry I should have clarified that) is if they ANTICIPATED the income ahead of time and what I think that means is that they base their income using the Accrual method.. NOT cash.  From reading up on this there are two accounting methods you declare in beginning... base income on actual CASH coming IN or Accrual (money expected to come in). If you are on a cash basis it is not a bad debt because on a cash basis you do not recognize income until you receive it.

Bottom Line I would say this question has to go to the accountant.. the above is only what I learned by reading.

Pay_My_Claims:
Yes, and if it is counted as income it then becomes a tax deduction (consult your CPA). Profit & Loss is all a part of business. How can you not have the ability to w/o a bad debt? A business that is 20 years old would have an AR of xxxxxxx pages because of bad debt. Each business should have a bad-debt policy that is incorporated. We adjust off balances after 6 months of attempted collections (system auto posts the notes so we have documentation) if the balance is under xxx. If it is over xxx then it goes to collections. Your PM system has codes for w/o. Contractual, Provider, bad debt, denial can't bill client.

PMRNC:

--- Quote ---Yes, and if it is counted as income it then becomes a tax deduction (consult your CPA). Profit & Loss is all a part of business. How can you not have the ability to w/o a bad debt? A business that is 20 years old would have an AR of xxxxxxx pages because of bad debt. Each business should have a bad-debt policy that is incorporated. We adjust off balances after 6 months of attempted collections (system auto posts the notes so we have documentation) if the balance is under xxx. If it is over xxx then it goes to collections. Your PM system has codes for w/o. Contractual, Provider, bad debt, denial can't bill client.
--- End quote ---

Right I get that, but I don't want to confuse people.. we are talking about writing/off on Taxes.. they are different things.. adjusting and write off of debts within practice is one thing and then bad debt/write off for TAX purposes is another thing.
If the practice Chooses (ahead of time) an accounting system based on the Accrual method then there are OPTIONS (consult your accountant) to write off the bad debt, however if they are using the "cash" based accounting system than they cannot write off on their taxes because the cash method of accounting is based on actual income received.

I sent an email to my accountant who is also the accountant of a few doctors to see if I can get better clarification.. I'm willing to bet there are more variables involved. I AM JUST Curious. Taxes and accounting is SOOO not my thing!. <g>

Pay_My_Claims:
and that is why I asked that question. I don't think anyone is specifically concerned about how the MD does his taxes, but relative to if they can "legallY" w/o a bad debt in the system. when the comment came up about. not being able to do so that is IMO where the confusion started. I think the post started in reference to w/o the debt not from his taxes, but from his accounting system as a bad debt.

PMRNC:
No, I think we clarified when they could and couldn't write off. I'm the one that caused the confusion with this :


--- Quote ---I'm no tax expert and I certainly am no accountant but this sort of leads me to a question about that.. maybe someone knows. can doctors write off bad debt on their taxes?  I'm just curious!
--- End quote ---
 

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