Every hospital that claims Medicare bad debt must support the claim with a listing. For cost reporting periods beginning on or after October 1, 2018, a cost report submitted without listings that correspond to the bad debt claimed is rejected (42 CFR 413.24(f)(5)). For periods beginning on or after October 1, 2022, the hospital listing uses Exhibit 2A (PRM-2 §4004.2).
The basics of Exhibit 2A
- Prepare separate exhibits for inpatient and outpatient bad debts, and separate exhibits for each CCN in a hospital health care complex.
- Header: provider name, CCN, subprovider CCN if any, cost reporting period dates, IP or OP, preparer, date prepared, the total of column 23, and the total of dual-eligible bad debts.
- Dates use MM/DD/YYYY. CMS publishes an optional Excel template and specification; files named starting with “MedicareBD” are recognized automatically on upload to MCReF.
- For each CCN, the column 23 totals must equal the bad debt claimed on the cost report (Worksheet E, Part A, line 64), and the dual-eligible total must equal line 66.
Column groups and the rules behind them
| Columns | What goes in | The rule auditors test |
|---|---|---|
| 1–6 | Patient name, dates of service, account number, MBI or HICN | Must tie to the Medicare claim and remittance. |
| 7, 10 | Medicaid number; Medicaid remittance advice date, or “AD” for alternate documentation | For dual-eligibles, the hospital must bill the state, obtain the Medicaid remittance, and deduct whatever the state is obligated to pay, whether or not it pays (42 CFR 413.89(e)(2)(iii)). If column 7 has an entry, column 10 must too. |
| 8 | Deemed indigent (Y/N) | Indigence can’t rest on the patient’s statement alone. It requires review of assets (only those convertible to cash and not needed for daily living) and income, confirmation that no other source is legally responsible, and a written indigence policy (42 CFR 413.89(e)(2)(ii)). |
| 9, 11 | Medicare remittance date; secondary payer remittance or denial date | These dates start the 120-day billing clock. |
| 12–13 | Beneficiary responsibility; date of first bill (or “QMB”) | For periods beginning on or after Oct 1, 2020, the first bill must be issued within 120 days of the latest of the Medicare remittance, the secondary payer remittance, or the secondary payer’s notice of non-coverage (42 CFR 413.89(e)(2)(i)(A)(3)). |
| 14–17 | A/R write-off; sent to and returned from collection agency; collection effort ceased; Medicare write-off date | Collection must continue at least 120 days, and a new 120-day period starts with each payment received. Accounts must be returned from the agency and all collection effort stopped before the debt is claimed (42 CFR 413.89(e)(2)(i)(A)(5), (B)(3)). |
| 18–19 | Recoveries and the fiscal year in which the debt was claimed | Recoveries of bad debt reimbursed in a prior period reduce reimbursable cost in the year recovered (42 CFR 413.89(f)). |
| 20–23 | Deductible, coinsurance, payments before write-off, allowable amount | Column 23 can’t exceed columns 20 + 21 less payments in columns 18 and 22. Report deductible and coinsurance only when the patient was billed with the expectation of payment. |
| 24 | Comments | Informational. |
The 120-day rule in plain terms
For a non-indigent beneficiary, the collection effort must be similar to what the hospital does for comparable non-Medicare balances; include follow-up such as additional bills, letters, calls, emails, texts, or personal contact; and last at least 120 days after the first bill, restarting with any payment. The hospital must keep its collection policy, the account history showing each collection action, and copies of the bills and notices (42 CFR 413.89(e)(2)(i)).
Indigence: what “deemed indigent” requires
Once indigence is properly determined, the debt may be deemed uncollectible without the 120-day collection effort (42 CFR 413.89(e)(2)(ii)(B)). The determination must be documented beneficiary by beneficiary, and the policy must be available to the MAC on request.
Practical checks before you file
- Totals tie to Worksheet E, Part A, lines 64 and 66 for each CCN.
- No account is still with a collection agency on the Medicare write-off date.
- Every dual-eligible line has a Medicaid remittance date or alternate documentation.
- Waived deductible and coinsurance amounts are excluded (Worksheet S-2, Part II, line 14).
- Recoveries on previously claimed accounts are reported.
Related: Lessons from OIG Medicare bad debt audits and our Medicare bad debt recovery service.
Primary sources
- 42 CFR 413.89, Bad debts, charity, and courtesy allowances (eCFR)
- 42 CFR 413.24(f)(5), Cost report acceptability (eCFR)
- CMS Provider Reimbursement Manual, Part 2 (Pub. 15-2), Chapter 40, §4004.2: Exhibit 2A instructions
- CMS Electronic Cost Report Exhibit Templates: 2552-10 Exhibit 2A specification and template
Sources checked October 16, 2026. This page is general information, not legal or reimbursement advice for a specific hospital.