Historically, the healthcare industry has experienced challenges in identifying and reporting unclaimed property. This is due to several reasons including a lack of clear statutory guidance, limited understanding of the potential unclaimed property liabilities which they are truly subject, and conflicting laws (i.e., refund recoupment, prompt payment, HIPAA, etc.).
The fundamental understanding that healthcare entities need to be aware of, as well as all other organizations subject to unclaimed property laws, is that property held for longer than the allowed dormancy period is therefore deemed abandoned by the owner. To be compliant, the entity in possession of the unclaimed property must perform the statutory due diligence to reunite the property with the rightful owner. If unsuccessful, the entity must remit and report the unclaimed property to the corresponding state. This process becomes more challenging when involving multiple parties for the payment for services; it requires more effort to identify the rightful owner of the credit and validate it as unclaimed property.
Potential sources of unclaimed property in healthcare may include write off accounts with credit balances, unapplied cash, patient credit balances, uncashed payroll or vendor checks, overpayments, and unidentified remittances. Accounts receivables are particularly susceptible to generating unclaimed property within this industry. As part of normal business operations, significant patient credit balances occur from transactions unique to the industry, such as insurance company overpayments, billing system updates, payments of the same bill by multiple sources, payments that aren’t matched to a specific patient or treatment, and the reimbursement processes. The aforementioned issues, in concert with record retention limitations, creates difficulty in proving proper remediation of items.
As healthcare entities often operate or conduct business with patients and vendors across different states, they need to understand and abide by the following key pieces of information for each state:
- Dormancy periods
- Potential exemptions or deductions
- Report due dates and cut-off dates
- Due diligence timeframe and threshold values
Worried about your company’s compliance with unclaimed property and how to stay updated on the constantly changing rules and regulations? Talk to an expert today.