Is it Bad Debt?

September 1, 2004

Should insurance write-offs due to untimely filing be included in management reports as bad debt?

Question: Should insurance write-offs due to untimely filing be included in management reports as bad debt?

Answer: There's no rule per se, but write-offs due to time-of-filing are normally included as bad debt. For example, the Medical Group Management Association includes the following in its definition for bad debt:

  • Losses on settlements for less than the billed amount.
  • Accounts written off as not collectible (this includes timely filing denials).
  • Accounts assigned to collection agencies.
  • In the case of accrual accounting, the provision for bad debts.