5. REVENUE RECOGNITION AND ACCOUNTS RECEIVABLES

SunLink’s subsidiaries have agreements with third-party payors that provide for payments at amounts different from the subsidiaries’ established rates. A summary of the payment arrangements with major third-party payors follows:

Medicare—Inpatient acute care services rendered to Medicare program beneficiaries are paid at prospectively determined rates per Diagnosis Related Group. These rates vary according to a patient classification system that is based on clinical, diagnostic, and other factors. Inpatient non-acute services, certain outpatient services, and defined capital and medical education costs related to Medicare beneficiaries are paid based on a cost reimbursement methodology. Cost reimbursable items are paid at a tentative rate, with final settlement determined after submission of annual cost reports and audits thereof by the Medicare fiscal intermediary.

Medicaid—Inpatient and outpatient services rendered to Medicaid program beneficiaries are reimbursed either under contracted rates or reimbursed for cost reimbursable items at a tentative rate, with final settlement determined after submission of annual cost reports and audits thereof by the Medicaid fiscal intermediary.

Other—SunLink’s subsidiaries have also entered into payment agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations. The basis for payment under these agreements includes prospectively determined rates per discharge, discounts from established charges, and prospectively determined daily rates.

The Company’s revenues before provision for doubtful accounts by payor were as follows for the years ended June 30, 2018 and 2017:


	2018			2017
Healthcare Services segment:
Medicare	$	9,411		$	8,523
Medicaid		8,701			9,289
Self-pay		658			452
Managed Care & Other Insurance		3,048			3,031
Other		1,396			1,564

Revenues before provision for doubtful accounts		23,214			22,859
Provision for doubtful accounts		(509	)		(478	)

Healthcare Services segment Net Revenues		22,705			22,381
Pharmacy segment Net Revenues		30,167			30,907

Total Net Revenues	$	52,872		$	53,288

The net revenues of the Pharmacy segment are presented net of contractual adjustments. The provision for bad debts of the Pharmacy segment is presented as a component of operating expenses in the Consolidated Statements of Operations and Comprehensive Earning and Loss.

Summary information for receivables is as follows:


	June 30,
	2018			2017
Patient accounts receivable (net of contractual allowances)	$	5,352		$	6,458
Less allowance for doubtful accounts		(529	)		(552	)

Patient accounts receivable—net	$	4,823		$	5,906

The following is a summary of the activity in the allowance for doubtful accounts for the Healthcare Services segment and the Pharmacy segment for the fiscal years ended June 30, 2018 and 2017:


Fiscal year ended June 30, 2018	Healthcare Services			Pharmacy			Total
Balance at July 1, 2017	$	328		$	224		$	552
Additions recognized as a reduction to revenues:
Continuing operations		509			0			509
Discontinued operations		0			0			0
Bad debt expense		0			703			703
Accounts written off, net of recoveries		(584	)		(651	)		(1,235	)

Balance at June 30, 2018	$	253		$	276		$	529


Fiscal year ended June 30, 2017	Healthcare Services			Pharmacy			Total
Balance at July 1, 2016	$	624		$	367		$	991
Additions recognized as a reduction to revenues:
Continuing operations		478			0			478
Discontinued operations		0			0			0
Bad debt expense		0			438			438
Accounts written off, net of recoveries		(774	)		(581	)		(1,355	)

Balance at June 30, 2017	$	328		$	224		$	552

Net revenues included an increase of $112 for the year ended June 30, 2018 from the settlement of prior year Medicare and Medicaid cost reports. Net revenues included an increase of $193 for the year ended June 30, 2017 from the settlement of prior year Medicare and Medicaid cost reports.