Every industry has its own set of unique issues relating to unclaimed property and organizations related to healthcare are no exception. Unclaimed property compliance for healthcare companies generally falls under two categories: general ledger types of unclaimed property resulting from corporate operations such as vendor payables or payroll and unclaimed property in the form of patient or insurance credits, which can be complex. We will discuss a few unique circumstances we encounter in this industry below as it relates to unclaimed property.
Patient credits and accounts receivable
Patient credits/accounts receivable is one area healthcare organizations predominantly generate unclaimed property. Specifically, credit balances that occur on an organization’s books primarily are derived from overpayments, duplicate payments or unapplied payments received by the organization. Typically for accounts receivable, the relationship that creates the credit balances is from the transactions between the organization and its customers.
Accounts receivable for healthcare organizations become more challenging because there can be multiple parties involved in the transactions that create a credit balance, such as the organization itself, the patient and the insurance companies. The complexities of dealing with unclaimed property becomes a concern when a payment for the same services is made by the patient and the insurance company. A credit balance may occur because the patient or guarantor paid a higher co-pay or deductible than necessary, paid out of pocket for a service, the insurance company paid more that was contractually necessary, or multiple insurance companies paid for the same service.
The numerous factors create a scenario where it can take an extended period to reconcile. Nevertheless, the healthcare organization has the responsibility to resolve the credit balance on its books and records, whether by refunding the owner or reporting it as unclaimed property if it remains unresolved once the prescribed dormancy period of the state expires. It should be noted that it is necessary to age the credit based on the date it occurred, not when it was reconciled.
Challenges of returning the funds back to the owner include the time that has lapsed from when the credit occurred and whether the owner information is still reliable. If the patient address has changed, it reduces that possibility of reuniting the funds with its rightful owner. If the healthcare organization is unable to locate the owner, the credit balance will need to be reported to the applicable state based on its unclaimed property laws.
The healthcare organization and insurance company relationship
The contractual relationship between the healthcare organization and insurance companies is an added layer of complexity. The mere volume of transactions that occur requires a robust billing and reconciliation process. However, errors do occur due to misinterpretation of the plan agreement, incorrect contractual adjustments or changes in plan offerings. In situations when two insurance companies pay for the same service, the plan agreements with the patient need to be reviewed to determine which insurance is primary and secondary. The determination will provide insight into how those credits need to be resolved.
Another factor that involves healthcare organizations and insurance companies are the state recoupment laws. Recoupment laws only allow insurance companies to have a specific time period to “recoup” any payments made to the healthcare organization.
Similar to unclaimed property laws, recoupment laws vary by state. Recoupments are in effect in case the insurance company believes they made an overpayment to the healthcare organization. For example, the insurance company was not aware of a secondary insurance and duplicate payment made for the same service or billing errors. If the state has recoupment laws that limit the insurance company on how long after the occurrence they can make a recoupment claim and if the claim is not made, the insurance company cannot make a future claim against that specific occurrence. Thus, healthcare organizations can take the position that unclaimed property laws wouldn’t be applicable in such states. A complete review and determination on the applicability of the state recoupments laws over state unclaimed property laws will need to be made by legal counsel.
While the primary unclaimed property types generated for healthcare companies are a result of services to a patient, it is important to have a pulse on unclaimed property generated by corporate operations, such as vendor payment and employee wages. A comprehensive unclaimed property process and review is necessary to ensure compliance with each state’s unclaimed property laws.
By: Laurie Andrews and Jinu Thomas