The Struggle is Real: Collecting Payments for Nursing Home Care

In recent years, we have seen an increase in nursing homes struggling to obtain payment for care provided to residents. Certainly, Iowa’s elimination of the 90-day retroactivity for Medicaid coverage (which has now been reinstated for nursing home care) contributed to this to some extent, but the problem seems to occur more frequently than ever.  While there is no “magic bullet” to solve this problem, there are some practical steps to help avoid and/or remedy these issues.

1.  Obtain complete financial information before accepting the resident.

Often, this relatively simple step is either overlooked or avoided.  Facilities may feel pressured to make a decision about admitting a resident quickly, they may feel that the information is not necessary because the resident is only expected to stay while they still have Medicare coverage and/or they may feel that asking this information is intrusive or unfriendly.

However, gathering financial information up front is important for a number of reasons.  First, it allows the facility to make an informed decision as to whether and how long the individual – even if they are initially admitted with Medicare coverage – can afford to privately pay for services.  Second, it allows the facility to assess whether the Medicaid application process should be started immediately.  Third, even if the Medicaid application process need not be started immediately, it provides the facility with all the information to assist the resident with a Medicaid application when the time comes (and when family members seem to drop out of sight).

Facilities should treat the application process much like a landlord treats an application for an apartment.  What are the prospective resident’s sources and amounts of monthly income?  Does the resident have bank or investment accounts? If so, where are the accounts located and what is the value of each?  Do other people have access to and an interest in these bank or investment accounts?  Does the resident have any long term care insurance? Does the resident own any property? Is any of that property for sale?  Does the resident have any debts or continuing payment obligations?  Has the resident already purchased a burial plan? 

In addition to seeking the financial information of the resident, another important question is whether the resident has a financial or general Power of Attorney.  The Power of Attorney may not be needed to act now but having a document that allows a designated person to handle these issues when and if the resident becomes unable to is extremely important.  Without a designated Power of Attorney, the facility has no one to handle financial matters when the resident can no longer do so unless and until they or someone else seeks to establish a conservatorship for the resident.  It is also important for there to be a “back-up” Power of Attorney designated in the event the resident’s initial choice is unable to (or refuses to) undertake these responsibilities.

2.  Do not let non-payment exist for long.

Nursing facilities may be slow to press for payment because the resident is already living there, they are getting assurances from a family member that the “check is in the mail” and/or they don’t want to upset the resident and/or his/her family.  It is important to take action immediately and repeatedly when this occurs so that the resident and/or his/her family know that you are serious and will not tolerate non-payment.  It also is more difficult to collect when there is more debt to collect and when the resident continues to decline, thereby making involuntary discharge a difficult process.  Sometimes, a demand letter from an attorney can be just the impetus the person needs to make a payment.

Also, if the facility believes the resident is even relatively close to being able to qualify for Medicaid (or if there is uncertainty about certain assets or transfers), it may make sense to proceed with an application.  Even if the application is denied, the response to that application will often provide detail as to the resident’s future likelihood and timing for Medicaid eligibility.

3.  Consider becoming the resident’s Social Security representative payee or setting up automatic payments related to the resident’s monthly income resources.

Unfortunately, some family members who are receiving payments from Social Security, pensions or similar resources for their loved one eventually stop turning those payments over to the nursing facility.  If the facility can directly obtain those payments, it eliminates this potential problem.  Certainly, there are additional administrative burdens that come along with becoming a representative payee, but it may be worth it for certain residents.

4.  Determine whether involuntary discharge is an option.

Iowa law allows nursing facilities to involuntarily discharge a resident for non-payment.  The statute and regulations outline a very specific set of processes and procedures that must be followed for such involuntary discharge.  While we can easily assist a facility through such process, the practicalities of an involuntary discharge must be considered before undertaking such process.

Many involuntary discharges – even if all the notice and timing requirements are met – ultimately fail because the resident has no safe place to be discharged.  Perhaps the resident is too frail to be discharged at all.  Or, even if they can be discharged to another facility, no other facility will accept them because they have not paid their current provider and the new facility does not expect they will be paid either.  This is precisely why it is so important to gather as much financial information about the resident up front – even though the involuntary process exists for such situations, it often becomes difficult or impossible to find the resident another facility.

5.  Keep the family member, Power of Attorney or other caretaker engaged on a regular basis.

Issues often arise because the family member, friend or Power of Attorney who is assisting the resident moves, becomes ill themselves or simply fails to continue to be involved. If you engage with this individual regularly, it will be relatively easy to immediately see when they start to lose interest and/or are unable to assist the resident.  As soon as this individual begins to show signs of dropping out of sight or being unable to provide assistance, take action quickly to get another family member, friend or the back-up Power of Attorney involved.

Certainly, many residents and their families are responsible, responsive and do the right thing by ensuring that the facility is paid for providing care to themselves or their loved one.  Unfortunately, there are always residents that do not have a support system, or they have a support system that selfishly fades away (or even worse, takes advantage of their loved one).  Each resident’s situation is different, but the more you know up front and the more quickly you establish internal processes and procedures to ensure that non-payment is not allowed to linger for long, the easier it will be to handle non-payment situations.

If you have any questions about these tips or would like assistance with a particular non-payment matter, please contact any BrownWinick attorney in the Health Law Practice Group.