Getting what's yours.

Limit delinquent accounts in your private-pay population

THOUGH MUCH ATTENTION HAS BEEN PAID TO THE INADEQUACY of Medicare reimbursement, private-pay nursing home residents present collection problems of their own. And with cutbacks in government funding, nursing home administrators must be more vigilant than ever in limiting the number of delinquent accounts. The process starts before admission and may continue even after departure or death.

* Begin your efforts at the screening stage. Treat each resident as a potential collection problem. In a thorough yet sensitive manner, qualify residents the same way that a real estate agent qualifies a home buyer. It would be inconceivable for a hotel to accept a guest without some guaranty of payment, yet providers regularly admit residents for periods longer than a hotel stay without engaging in the due diligence necessary to ensure that they will be paid.

Make sure your admission application requests comprehensive information about all of a resident's assets. Seemingly irrelevant financial information gathered at this stage can prove useful months or years later if the resident's account becomes delinquent. Obtaining bank account information, for example, can come in handy if a resident becomes incompetent or his or her spouse dies.

A resident with the wherewithal to afford long term care can often become a collection problem when family members foresee his or her imminent death and begin to engage in various estate-planning activities. There is tension between the need to pay for long term care and the heirs' desire to preserve the resident's estate. To preserve a resident's assets for necessary care, require residents and their families to acknowledge in writing at the time of admission the sources of funds they will use to pay ongoing charges.

* Consider using a collection agency. If an account becomes delinquent, don't hesitate to use a collection agency or a law firm to assist in your collection efforts. Many will handle such cases on a contingency basis. Larger accounts or residents who appear to have engaged in questionable asset transfers should be referred to a law firm capable of advising you on your state's fraudulent transfer laws.

* Solicit the help of a senior citizen advocacy group. If you suspect financial mismanagement by a family member, ask one of your state or local senior citizen advocacy organizations to investigate the case. These organizations are generally created by legislative enactment to protect seniors from financial abuse and mismanagement. The offending family members are likely to clean up their act and pay for services rendered if they know the authorities are watching.

Often, these organizations have representatives who will accept appointments from the court to act as residents' guardians. The court typically requires the guardian to gather the resident's assets and report back periodically regarding their disposition. Facilities are more likely to be paid if a guardian, who can also include an independent non-family member, has a fiduciary duty toward the resident's funds.

* Seek court intervention when necessary. Short of having a fiduciary appointed, you can sue residents, their families, or their estates for payment of an overdue account. In most cases, you will be required to produce the resident's charts, billing and pharmaceutical records, and all other documents pertaining to his or her care. But be prepared to be hit with a counterclaim that the care you provided was inadequate or your charges were excessive. Your medical staff may be required to testify that the care was reasonable and medically necessary.

* Know your post-judgment collection options. If you obtain a judgment, you become a judgment creditor with certain rights to collect on that judgment. These rights vary from state to state. Your lawyer should know which post-judgment collection techniques are available to you. Proceed quickly. The older a receivable, the more difficult it is to collect. Post-judgment collection techniques include garnishing bank accounts, levying on personal property, and, when appropriate, seizing real estate owned by the debtor.

Your stock and trade is treating and caring for residents; failing to collect from them means that you are giving away your services. But beds must be filled in order for revenues to be generated, so you may be tempted to take in private payors who may become problem payors. It's a catch-22.

Carrying 5 to 8 percent bad debt is normal but no excuse for resting on your laurels. Managing and collecting accounts receivable requires the constant monitoring of problem accounts. Your facility may provide superior care and treatment now, but if your collections are lagging, it's only a matter of time before you will be unable to provide that superior care and treatment.

John S. McAnney, au attorney and shareholder with the Pittsburgh law firm of Tucker Arensberg, specializes in health care litigation.