TAKE CONTROL OF YOUR RESIDENT ACCOUNTS RECEIVABLE: The 12 Most Common Mistakes Made by Long-Term Care Facilities

Andrew R. Eisemann, Esquire   andrewe@capozziadler.com

This is another installment of our series, “Take Control of your Resident Accounts Receivable”.  As you are already aware, the financial survival of most nursing facilities in Pennsylvania depend on how aggressively and effectively their business office managers administer their accounts receivable.  This series is devoted solely to the design, management, and improvement of your Accounts Receivable Management Program and your collections efforts.  Also, here we share with you tips, legal updates, personal observations, and “lessons learned” to help you improve the effectiveness of your Accounts Receivable Management Program. 

This installment summarizes the 12 most common mistakes that I have seen long-term nursing care facilities make that negatively impact their Accounts Receivable and their Days Revenue Outstanding (DRO) Reports. 

You provide an extremely valuable service, however, it is clear that most consumers do not plan for or want to pay for the nursing care and services that you provide.  As you have seen in your experience, and as I identified in the eighth installment of this series, residents and their families will frequently not place your rights as a creditor high on their financial priorities.  Each of the following observations likely apply to your facility in varying degrees:

  1. You are not coordinating the efforts of your staff.  The best AR Management Programs always synchronize the efforts of the NHA with the Business Office staff, the Social Worker, Admissions Director/Coordinator, Director of Nursing, and central billing office, if any.  Each one of these staff members has a role in preventing problem resident accounts and financial liabilities.  In fact, the very best programs require the Business Office Manager to physically participate in a resident’s Care Conference when there are financial issues involved.  The NHA should address financial or payment issues with the Staff during Staff Meetings.  The key is to enforce open communication and control measures among the Staff. 
  2. Your Facility’s Admissions Process is a wide-open gate.  Although your census isa top priority, the weakest link in your AR Management Program is probably your admission and screening process.  Review the screening process in your Admissions Office, including the screening of financial information and family members.  Are you screening applicants to determine whether the applicant was discharged from another facility?  Is your applicant a US citizen or is eligible for Medicaid with a Green Card?  Was your applicant discharged from a hospital and is eligible for Medicare after a qualifying stay?  Do you have a system in place to prevent the readmission of problem former residents?  Are you collecting and saving bank or other asset information?  Are your Admissions Director and BOM communicating with each other?  The worst offense by a weak Admission Office is the failure to properly complete and maintain a copy of the Admission Agreement.  Review your Admission Agreements for your admitted residents to ensure the Agreement is executed fully, including the names and signatures of the contracted parties.  Also, ensure you actually have an Admissions Agreement for each resident.    
  3. Your Facility’s Admissions Agreement does not protect your rights as a Creditor.  You have rights under state law as a creditor.  Your facility is not only a provider of excellent nursing care.  It is also a Creditor.  Your Admissions Agreement is a contract.  It is not merely a Notice listing all the care and services that you will provide the Resident.  I frequently review Admissions Agreements that are poorly drafted as a contract and lacking provisions that protect you in the event of default, non-payment, or Bed-Hold situations.  There is no reason to use a weakly drafted Admission Agreement.      
  4. Your Facility’s Admission Agreement fails to explain the duties and responsibilities of the Resident Representative.  A contract that fails to adequately define the responsibilities of the Resident Representative (some facilities make the mistake of using the title “Responsible Party” or other name) is not enforceable against a Resident Representative who fails to transfer the Resident’s income or complete a Medicaid application.  I frequently review Admission Agreements that require the signature of a Resident Representative, but do not include the required provisions to hold a Resident Representative financially liable by a court.  The key is to have a strongly worded Admission Agreement that is enforceable against a non-compliant Resident Representative. 
  5. Your staff is not adequately preparing the Resident Representative or the Resident if the Resident is a self-admit.  Many facilities include the Business Office immediately and directly in the admission process specifically to ensure the Resident Representative or Resident understands the procedures and responsibilities related to Medicare benefits, Medicaid limitations, insurance co-pays, private charges, and income transfer.  Too frequently a Resident Representative will allege that he or she did not understand his or her expectations, including the payment of income while the Resident is MA Pending.  Finally, never advise the resident or Resident Representative that your facility will assume responsibility for the Medicaid application.  The resident, or his or her Resident Representative, is ultimately responsible.  
  6.  Your staff is not adequately or regularly screening your Accounts Receivable Report.  The NHAs or EDs who review and maintain their AR Reports adequately and on a regular basishave a good understanding of their facility’s weaknesses with specific payer sources.  Question the balance of each payer source and watch deadlines for claims.
  7. You are failing to aggressively “Stop the Bleeding” on a problem resident account.  Apply a tourniquet to an account that is increasing each month for reasons that can be controlled.  The Business Office must be aggressive and timely to initiate involuntary discharge procedures, take control of social security and pension income, report suspected financial exploitation to its Area Agency for Aging (AAA), schedule a Care Conference with the BOM present, file a “bare bone” Medicaid application, and initiate litigation.   Your Business or Billing Office must effectively follow up with residents, Resident Representatives, or families to collect outstanding Medicare co-pays, Patient Pay Liability, or Private Pay charges.  A weakly worded Demand Letter from the Administrator mailed more than twice to the debtor(s) is not an effective collections program.  The debtor is likely also receiving collection letters from other creditors or collection agencies.  This debtor will ignore your “requests for payment”.  A strong Demand Notice from a law firm to all appropriate members of family is always more effective in forcing compliance with the Admission Agreement.  A facility with an effective screening process or Business Office will have bank information available for a possible garnishment of a debtor’s account(s) or liquid assets.          
  8. You are too passive with your Medicaid Pending accounts.  These accounts must be watched closely during your AR review.  Identify the source of the delay, including Options Assessment, County Assistance Office caseworker, lack of cooperation by family or resident, or ineffective Guardian, or Medicaid planner.  Involve your attorney to demand compliance or seek a Court Injunction Order against a resident, Power of Attorney, or Resident Representative.  As a last resort, initiate litigation for breach of contract.
  9. Your Business Office is not billing while the Resident is Medicaid Pending.  Ensure the resident or Resident Representative is receiving monthly Invoices while the resident is MAP.  As a minimum, you should be receiving the Resident’s income, minus an agreed amount for a spousal allowance or home maintenance allowance.  A family that becomes “addicted” to a resident’s social security, pension, or annuity income.   Ensure the resident, spouse, Resident Representative, or POA receives a copy of the Notice to Medicaid Applicant (MA/PA Form 162) immediately if the payment of Patient Pay Liability is required.  Frequently, a spouse will ignore the payment of PPL if the CAO authorizes only a partial Spousal Allowance. 
  10. Your staff is not appealing the denial of Medicaid benefits.  All Business Office Managers are aware that the deadline to submit an appeal is 30 days.  If you need time to gather additional financial documentation from the family, then submit the appeal on Day 29.  Do not allow the appeal period to lapse and lose your rights for automatic appeal.  Because the time period is short, immediately involve your attorney for assistance.  The DHS will allow a late appeal (“nunc pro tunc”) under the most unusual circumstances.  Ensure your Business Office or Medicaid biller is closely monitoring denials for an appeal or for a possible 180-day exception request later. 
  11. You are not developing or enforcing a Policy for Social Security Representative Payee.  You will identify missing social security income when you review your AR Report.  Social Security benefits are a federal entitlement not subject to the personal discretion of an Agent under a Power of Attorney, Resident Representative, or Guardian.  These funds must be paid for the “current care and maintenance” of the Beneficiary.  Accordingly, you have several options if you are not receiving your resident’s social security income by check or direct deposit through RFMS.  Your resident can execute SSA Form 4164 at the regional Social Security office if it is safe to transport the resident there.  Or, apply for Representative Payee with SSA Form 787 (Physician Statement) and SSA Form 11 if your resident is not competent to handle his or her personal finances. 
  12. You are not following up on delinquent accounts of Former or Deceased Residents.   The Business Office is usually overwhelmed with daily requirements and emergencies.  As a result, the delinquent accounts of former residents or deceased residents are frequently set aside and forgotten.  The account may still be MA Pending, which requires the submission of additional documents to obtain approval. Involve your attorney to demand payment from the former resident, Resident Representative, or family.  A discharged resident may have died and an Estate Claim is appropriate.  In Pennsylvania, the debt to a nursing facility for the last six months of the decedent is a high priority claim.         

These are your Dirty Dozen.  The above is a summary of the 12 most common mistakes or bad practices that I have witnessed while working with countless competent and professional NHAs and BOMs over the years.  I will address these common mistakes in more detail during our next semi-annual Seminar at Hollywood Casino on November 8, 2019.

If you would like more information on how we can provide further analysis and legal assistance to improve the management and liquidation of your Accounts Receivable, you may contact Andrew R. Eisemann at our Firm at andrewe@capozziadler.com or 717-233-4101.