On July 11, 2012, the U.S. Department of Health and Human Services (HHS) published a codifying the Medicare bad debt provisions in Section 3201 of The Middle Class Tax Extension and Job Creation Act of 2012, which became effective earlier this year.

Under the rule, by fiscal year 2015, allowable bad debt amounts will decrease to 65 percent for many providers, including hospitals, skilled nursing facilities, critical access hospitals, federally qualified health centers, and rural health clinics.  HHS notes that the new bad debt provisions will save the Medicare program $10.9 billion over the next ten years.