A warning letter sent late last week by federal regulators about debt collection practices at nursing homes was overblown and masked another significant problem, operations experts said during the weekend.
The Centers for Medicare & Medicaid Services, prompted by the letter’s co-signer Consumer Financial Protection Bureau, reminded providers that they cannot require family members to agree to assume debt as a condition of admission. The letter also warned debt collection agencies that pursuing such debts could be illegal.
Interests of suppliers contacted by McKnight Long Term Care News fully agreed that operators should follow all laws, but were also unhappy with what they saw as an unnecessary spotlight on a relatively small faction of bad actors.
“It’s grossly disproportionate. There are a handful of senior living providers doing these illegal things,” said veteran industry expert Melissa Brown, chief operating officer of Gravity Healthcare Consulting. should be pursued but they are not a good representation of the industry as a whole. I think that’s a lot of noise about a little mouse.
She recalled that debt collections are an integral part “of the life cycle of any viable organization, and it is no different in residences for the elderly”.
She noted that Medicaid, the primary payer for nursing home services, exists to protect both patients and their family members, whether or not they can pay for themselves.
“The problem arises when family members want to protect the estate from proper debt collections and don’t pay what they can from the patient’s funds or estate,” Brown added. “Care is not free and someone has to pay for it. When the patient cannot pay, Mediaid pays the bill. But families can’t rob communities of the elderly either. To paraphrase an old adage: “Give back under the seniors’ residence what belongs to the seniors’ residence”.
Mom’s money embezzled
The CEO of a large non-profit operator agreed and said his biggest concern was collecting an appropriate net monthly income from patients, including things like social security and other third-party payments.
“That’s where the most fraudulent transfers come in,” he said, asking not to be named due to the sensitive nature of the subject. “When a family member signs an admission agreement, they should not be responsible (for payment) in any way. But on the other hand, there may be language that talks about the requirements to help us collect what benefits the resident may be eligible for. If someone has Social Security and they’re in a nursing home, that should go to the nursing home. That lowers what Medicaid will pay, and (Medicaid) doesn’t is not only already the worst payer, it is (often) the only thing we have left.
He noted that Social Security checks could be $1,500 to $2,000 a month, meaning a facility could lose tens of thousands of dollars a year if family members don’t show up. Coinsurance “can really add up” for short-stay patients, he added.
“A lot of people see Social Security coming in and think, ‘It’s our money.’ No, it’s not your money. It can cost around $25,000 a year. It’s an outrage. It’s your mom’s and it has to go to the supplier,” he said. “If [CMS] going to pursue that, so CMS should collect Social Security payments and make sure that in Medicaid cases, it goes directly to the provider.
Observers also acknowledged that providers may find themselves in a difficult position because Medicaid payments leave operators without the ability to change costs. Additionally, intertwined family circumstances and common financial planning practices can divert funds that would otherwise have to go to a service provider.
Marc Zimmet, CEO of Zimmet Health Services Group, is among those strongly emphasizing that the illegal debt collection measures, at the center of the CMS letter, should be reversed. He pointed out that such practices are “not common” among operators.
He also defended the right of suppliers to appropriately pursue debts – through proper channels. This is where drama can enter the equation, if families – rightly or wrongly – choose to draw attention to the process, or if a provider uses aggressive but legal tactics.
“Consumers are entitled to protections in all aspects of commerce, much of which is within the realm of the state to regulate, but facilities also deserve protection.” Zimmet noted. “Providers should be required to separately and explicitly discuss all financial matters with the patient’s proxy. While a financial commitment shouldn’t be a requirement for admission, we’ve seen this scenario play out for benefits beyond standard room and board, such as a non-medically necessary private room.