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For example, from the beginning, the Programs have not recognized as "allowable" cost charity allowances or bad debts. Medicare does reimburse providers for (but only for) deductibles and co-insurance not recoverable from the Medicare patient. However, no recognition is given by the Programs even to those charity allowances and bad debts arising from non-covered services required to be rendered to Medicare and Medicaid patients after admission or after covered days expire.

Further, the history of the Medicare and Medicaid Programs' cost reimbursement posture has been one of a continual contraction of the defined composition of "allowable cost." Two of the more significant revisions are discussed in the following paragraphs.

In 1973, providers were required to begin computing reimbursement under revised reimbursement methods (DRCC and modified combination methods). This restriction, in effect, said, among other things, that (often absolutely necessary) standby loss departments such as the operating and delivery rooms were no longer regarded by Medicare as their joint responsibility. Based on certain surveys, this change reduced providers' reimbursement generally in the range of 1 percent to 3 percent.

Another significant reduction in reimbursable cost will apparently occur upon the commencement of use of the new cost report forms to be released in June, 1975. A sample survey of the impact of such forms indicates a further reduction in reimbursement of 1 percent to 3 percent. Much of this reduction will be due to the taking away of many alternative allocation bases now available to providers. Exhibits C and D already have been presented to show the impact upon the self-pay patient when third-party cost reimbursers do not meet their fair share of economic cost. Exhibits E and F demonstrate the further impact upon self-pay patients when third-party cost reimbursers do not meet their fair share of even accounting cost.

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