Prevent and React to AR Problems

Transcription

1 Managing Your Accounts Receivable How a Nursing Facility can Prevent and React to AR Problems Andrew R. Eisemann, Esq. Capozzi & Associates, P.C. andrewe@capozziassociates.com (717) (717) (fax) com Clare P. Bennett Business Office Manager Consulate Health Care at the Manor at Perry Village Clare.P.Bennett@consulatehc.com (717)

2 A Day in the Business Office

3 Assaulting the Beach: what are your Receivables and where can you get stuck? Medicare Part A R&B and skilled nursing Medicare Part B therapies, supplies, labs Other Commercial Insurance Providers and Medicare HMOs/ PPOs Medicaid and Medicaid pending Patient Pay Liability ( Resource payments ) Private Pay Residents Long Term Care insurance & VA Hospice Workers Compensation County crime victim claims Disproportionate Share Payments over 90% occupancy and >80% MA Nursing Home Assessments ( Granny Tax )

4 Agenda: 3 Major Goals Today I. How can you Prevent & Minimize A/R Problems? A. Business Office responsibilities & tips B. Admissions Process & Admission Agreement II. What can you do when Prevention Fails? A. Collection limitations, rules, and ethical standards B. Examples of Legal Actions C. Guardian of Resident s Financial Estate III. Common Scenarios that Nursing Facilities Encounter when an Account is Aging

5 I. Prevention: Delegate Responsibilities to Business Office & Supervise the following: A. Business Office staff trained and knowledgeable. Top 10: 1) External Agencies: - Procedures and the staff at your CAO, local SS office, Office of Aging, Protective Services, County VA director, County Register of Wills, Magisterial District Justice (DJ), guardianship services, local elder law attorneys who assist families and residents in pre-ma Planning and MA applications, and attorney representing your facility. 2) Admissions Agreement - Admissions process, Agreement, and requirements. - Rights of the nursing facility as a creditor under the Admission Agreement. 3) MA and Medicare - Medical Assistance Application and appeal processes. Relationship with CAO? Communication between BOM and Social Worker: review of 162s and tracking of appeal deadlines. Know generally the resources that are countable or non-countable. - Medicaid Undue Hardship Waiver application: transfer of assets penalty. PA Billing of unpaid Private Pay charges. 6 month limit for private pay balances per resident for billing of OME. OME log? - Billing Medicaid id after approval: in-house or outsource? - Medicare Bad Debt claims and log.

6 I. Prevention: Delegate Responsibilities to Business Office & Supervise the following: (cont d) A. The Business Office staff trained and knowledgeable in (cont d): 4) Social Security - Social Security Representative Payee policies and SSA forms. - Caseworkers at your local Social Security Office. - Your policy for Rep Payee or Direct deposit to Resident s facility bank account? 5) Pension Income Pension payments. Who? Direct deposits? Reporting of fraud or abuse. 6) Other Payer Sources - Insurance company and other 3 rd party payer claims. - Know the billing deadlines for all your payer sources, eg. 90 days-18 mos? 7) Discharge of Resident for failure to pay Procedures to Discharge a Resident. Your policy? 8) PA debt collection law and limitations 9) Dealing with and knowing family members, Legal Rep, or Guardian Care conferences? Ensure they receive bills early & understand responsibilities. Include communications on collections log. 10) Ability to identify a potential future problem account. Examples?

7 I. Prevention: Delegate Responsibilities to Business Office & Supervise the following: (cont d) B. Aging Report. Maintain current Aging Report to identify and monitor A/Rs: MA, PPL, MA Pending, Private Pay, and 3 rd Party Payers. - Question your balances on each account C. Demand Letter. Develop an effective Demand Letter for overdue accounts. Your policy? D. Collections Record. Develop & maintain a Collections Record and Communications Log E. Staff Coordination. Synchronize efforts of key members of your staff during your staff meeting to resolve seriously delinquent accounts. Plan strategy for the next Care Conference. - Any complaints as to medical or nursing care? F. Remember, the squeaky wheel always gets the grease.

8 I. Prevention: Your Admission Process and Admission Agreement Admissions Office and Process: 1) Adequate financial screening and family information! 2) Identify and inform the Legal Representative, if any, of his/her duties. 3) Medicare & Medicaid prohibit the requirement for a 3 rd party Guarantor as a condition for admission or continued stay. 4) Is your Admissions Director providing an MA Application to the family if Resident does not have secondary insurance? 5) MA Pending Residents. Ensure that your Admission Director is telling families to make income payments to the facility while the MA Application is pending. 6) Ensure your Admissions Director or Social Worker is not telling families that the facility will take responsibility for the MA Application. 7) Engage your Business Office during the initial admission: a) Reiterate with families how Medicare Part A pays and its time limitations; b) Discuss Medicare co-insurance/ secondary coverage; c) Discuss insurance co-pays; d) Is the Resident going to be Short Term or Long Term?; e) If insurance pays only for a Short Term, then what is the back up?; f) Discuss Medical Assistance coverage as an option i. Who handles the MA process in your facility? BOM, Social Worker, Admissions, central billing? ii. Discuss Patient Pay Liability iii. Responsibilities to provide financial information to CAO

9 I. Prevention: Your Admission Process and Admission Agreement A. Admission Agreement is a contract and an exhibit to a Complaint as evidence. Is your BOM reviewing completed Admissions Agreements? B. Provisions of the Agreement clearly worded: 1) Name and relationship of Legal Representative on 1 st page and signature page; 2) Payment terms. When due and how much? Pay while MA is pending. Bill first month and for each current month (not previous month); show credits; 3) Default clause: Interest, late fees, attorneys fees, and costs of collection; 4) Proper venue to exercise rights as a creditor under state law and pursuant to the Admission Agreement; 5) Legal Representative provision. Identify responsibilities and establish liability of POA or Legal Representative for failure to make payments from Resident s SS and/or pension income and assets. Don t weaken your position with a poor definition of the LR and his/her duties and responsibilities! 6) Facility s rights to participate on behalf of the Resident in MA application process and appeals; and, 7) Acknowledgment section. Resident and Legal Representative. C. DPW Admission Packet Notice and certification page (MA 401). Save with AA.

10 II. When Prevention Fails: Limitations, it ti Rules, and Ethical Standards d When Collecting a Debt Pennsylvania Fair Credit Extension Uniformity Act - applies to creditors Unfair Trade Practices and Consumer Protection ti Law deceptive and fraudulent practices & treble damages Rules of Civil Procedure obtaining and executing judgment and injunctive relief Federal US U.S. Fair Debt btcollection Practices Act - applies to debt collectors and attorneys collecting for a creditor U.S. Bankruptcy Code - Automatic Stay & Proof of Claim

11 II. When Prevention Fails: NF s Unfair or deceptive debt collection practices under the PA Fair Credit Extension Uniformity Act: Advice to Business Office: Five General Collection Practices 1. Obtaining Location Information. When communicating with any person other than the Resident/ Former Resident or Legal Representative for the purpose of acquiring location information: a) Identify yourself and state that you are confirming location information, and only if requested, identify your employer; b) Do not state that the Resident, Former Resident, or LR owes any debt; c) Do not communicate with that person more than once, unless requested by that person or you believe the previous info was erroneous or incomplete; d) Do not communicate by postcard; e) Do not mark the envelope that would indicate it relates to collection of a debt; f) Do not communicate with any other person if you know the Resident, Former Resident, or LR is represented by an attorney.

12 II. When Prevention Fails: NF s Unfair or deceptive debt collection practices under the PA Fair Credit Extension Uniformity Act: 2. Restrictions to Communication with a Resident, Former Resident, or LR. Do not communicate with the Resident, Former Resident, or LR regarding the debt collection, unless you have prior consent, a) At any unusual time or place known to be inconvenient to the Resident, Former Resident, or LR. Normally a convenient time is after 8a.m. and before 9p.m. Adjust the time, if necessary, for a current Resident; b) If you know that the Resident, Former Resident, or LR is represented by an attorney; or, c) At the Former Resident or LR s place of employment if you know that the employer prohibits that person from receiving such communication.

13 II. When Prevention Fails: NF s Unfair or deceptive debt collection practices under the PA Fair Credit Extension Uniformity Act: 3. Prevent harassment and abuse. The following conduct is a violation of this law because the natural consequence is to harass, oppress, or abuse any person in connection with the debt collection: a) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of the person; b) The use of obscene or profane language; c) The publication of a list of Residents, Former Residents, or LRs who allegedly refuse to pay the debt; d) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with the intent to annoy, abuse, or harass; e) The placement of telephone calls without disclosure of the caller s identity.

14 II. When Prevention Fails: NF s Unfair or deceptive debt collection practices under the PA Fair Credit Extension Uniformity Act: 4. Prevent False or Deceptive Representation. The following conduct is a violation of this law because such representations or means are false, deceptive, or misleading : a) The false representation of the character, amount, or legal status of a debt; b) The false representation or implication that you are an attorney or that the communication is from an attorney; c) The representation or implication that nonpayment will result in the arrest or imprisonment of the Resident, Former Resident, or LR; or, d) The threat to take any action that cannot be legally taken or that is not intended to be taken.

15 II. When Prevention Fails: NF s Unfair or deceptive debt collection practices under the PA Fair Credit Extension Uniformity Act: 5. Prevent unfair or unconscionable means. The following conduct is a violation of this law because such means are unfair or unconscionable : a) The collection of any interest, fee, costs, or charges incidental to the principal unless such amount is expressly authorized by the Admission Agreement; b) The acceptance from a Resident, Former Resident, LR, or any other person of a check postdated by more than 5 days unless that person is notified in writing of the nursing facility s intent to deposit such check not more than 10 days not less than 3 business days prior to such deposit. This includes Settlement Agreements that the nursing facility has entered into with the person; or, c) The solicitation of a postdated check for the purpose of threatening criminal prosecution.

16 II. When Prevention Fails: General Collection Rules for Business Office: A. Be firm, but flexible; B. Keep a record of all communications with Debtor; C. Keep whatever commitments t made to Debtor; and, D. Be prepared to follow through promptly against the Debtor, including threats to file a District Justice Complaint or to transfer resident s account information to your attorney.

17 II. When Prevention Fails: 8 Reasons to Involve Your Attorney Sooner than Later! 1. Puts Debtor(s) on notice that the nursing facility is serious about collecting the debt. 2. Attorney s demand letter and threat of lawsuit are serious matters that may result in loss of Debtor s rights and property. 3. Improved chances of locating the Debtor(s) and assets. 4. Ability to pursue family members, obtain judgment, lien, levy personal and real property for Sheriff Sale, void fraudulent transfers, obtain an injunction, and start a guardianship. 5. Reduced risk of counterclaims against the NF for violation of federal or PA debt collection laws. 6. A Debtor who is likely to file bankruptcy will file sooner and will keep your pre-petition claim smaller. 7. In-house collectors and collection agencies not taken seriously. The family and/or resident are probably receiving letters from other creditors too. Results in lost time. 8. Ability to obtain a court-approved Guardian to protect and administer the Resident s Estate and finances.

18 Examples of Legal Actions Taken to Reduce Accounts Receivable 1. Asset searches and skip trace searches. 2. Just a demand for payment letter, if wanted. 3. Negotiate Settlement Agreement and payment terms. 4. Decedent s Estate search and claim. 5. Protect facility s interests in U.S. Bankruptcy Court. 6. Negative credit report against consumer s personal credit file. 7. Report fraud and abuse to Pension Company. 8. Assist in obtaining information for MA Application. 9. Assist in SS Rep Payee process. 10. Assist with Notice of Intent to Discharge and follow up with family 11. Assist with report to AAA and possible criminal investigation. Restitution claim. 12. Appointment or change of Guardian. 13. Injunction Order from the Court against Resident and/or LR. 14. Litigation and judgment lien. County court or District Justice 15. Sheriff s levy, garnishment, and sale

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20 Any Resident whose ability to receive and evaluate information effectively and communicate decisions in a way is impaired to such a significant ifi extent t that t he/she h is partially or totally unable to manage his/her financial resources or to meet essential requirements for his/her physical health and safety. Any Resident who has common problems of advanced age where facility finds that there are financial questions.

21 But who will be the guardian? Makes payment predictable. Institutional guardians are professionals with a fiduciary duty to pay those who are owed money.

22 Manage income. Guardian can easily make facility the Social Security Representative Payee if facility is not Rep Payee already. Guardian can also re- route pensions. Manage assets. Guardian can make sure existing assets are discovered and paid to facility, if appropriate.

23 MA applications Guardian can marshal documents and deal with appropriate agencies more efficiently than family members. Trustees Guardian can interact with a Trust Company or Trustee.

24 Petition for a Review hearing if the Guardian fails to perform his duties in accordance with the law or to act in the best interest of the incapacitated person. Burden is on the party advocating the continuation of the guardianship.

25 III. Some Common Scenarios

26 III. Common Situations that Nursing Facilities Encounter When an Account is Aging: 1. Resident or Legal Representative refuse to cooperate with facility or CAO when applying for Medical Assistance. 2. Legal Representative wastes or takes Resident s income and/or assets. 3. Death of Resident or former Resident while the account is past due. 4. Resident or Legal Representative files for protection under Bankruptcy Code.

27 Scenario #1: Resident and/or Legal Representative Refuse to Cooperate When Applying for MA 1. Obligation. Legal Representative/POA and Resident have a contractual obligation to properly manage the Resident s financial affairs, including income, and transfer PPL or private rate to the facility. 2. Liability. Legal Representative ti may be found contractually liable or negligent for loss and subject to an Injunctive Order if: a. Legal Representative refuses to assist with the MA Application process; b. Legal Representative misrepresents to the facility or the CAO information regarding the income or assets of the Resident. c. The worst case scenario? 3. Breach of Contract. Failure to properly or timely apply for MA may lead to a civil il complaint for breach of the Admission Agreement and possible discharge of the resident.

28 Scenario #1: Resident and/or Legal Representative Refuse to Cooperate When Applying for MA, cont d 4. Complaint Cause of Action for Breach of Contract: a) Magisterial District Justice vs County Court of Common Pleas b) Attach Admission Agreement, POA, Form 162, & Account Invoice 5. Complaint Cause of Action Under PA Duty to Support Law: a) Title 23, Chap 46 (Support of the Indigent); b) Spouse, child, or parent responsible to care for and maintain or financially assist an indigent person, regardless of whether the indigent person is a public charge ; c) The above paragraph does not apply if the individual does not have sufficient financial ability; d) County Court of Common Pleas or Phila. Municipal Court; e) Know family relationships of each Resident! 6. Complaint Cause of Action for Fraudulent Transfer of Property: a) Family not applying because someone is trying to hide asset? b) Pennsylvania Uniform Fraudulent Transfer Act, Intent to hinder, defraud, or delay creditor. c) CAO will deny MA for a penalty period if transfer is found d) Look for indices of fraud : date, admission, consideration, & relationship e) Short Statute of Limitations. Transfer account to attorney immediately. f) Lien on property, avoid (nullify) the transfer, prevent sale of property

29 Scenario #2: Legal Representative or POA Wastes or Takes Resident s Assets 1. Includes social security or pension income, personal property, and real property; 2. Immediate action required for attorney s demand letter and Notice, injunctive relief, and Complaint; 3. What is your facility s Policy regarding submission of an Application or Request Change to Representative Payee for Social Security benefits? Pension benefits? SSA Form 11 and SSA Form 787 (Physician s Statement) SSA Form 4164 (Beneficiary s Agreement) at SS office. POA papers p have no legal significance to SS Office. 4. What is your facility s policy regarding Notice of Intent to Discharge Resident? 5. Complaint cause of action for Breach of Contract 6. Complaint cause of action for Conversion ( theft of funds )

30 Scenario #3: Death of Resident 1. Collection on past due account continues; Importance of family info in Admission Record SSA Form 1724 Claim for Amounts Due in Case of Deceased Beneficiary 2. Proceed against probatable assets of the Resident s Estate through the Executor or Administrator; Nursing facility claim is a priority claim for payment 3. Nursing Facility may open the Estate t if an Estate t is not opened or family refuses to open the Estate: Ability to bring suit against former POA for breach of contract or against family members responsible for paying bills of the deceased.

31 Scenario #4: Resident or POA Files Bankruptcy 1. Automatic Stay immediately applies. Upon receipt of notice of filing, all collection efforts must stop; 2. New bankruptcy law ( Means Testing ) forcing more people into Chapter 13 (Reorganization) with repayment plans; 3. Must file Proof of Claim with the Bankruptcy Court if Trustee requests POCs; 4. Notice of Intent to Discharge would be a violation of the Automatic Stay if facility did not first obtain Relief from the Bankruptcy Court.

32 A New Business Model for your Business Office

33 Questions?