A warning letter sent late last week by federal regulators about nursing home debt collection practices was overblown and obscured another significant problem, operations experts said over the weekend.
The Centers for Medicare & Medicaid Services, prodded by letter co-signer Consumer Financial Protection Bureau, reminded providers that they cannot require family members to agree to assume debt as an admissions condition. The letter also warned debt-collection agencies that pursuing such debt could be illegal.
Provider interests contacted by McKnight’s Long-Term Care News were in full agreement that operators must follow all laws, but they also resented what they saw as an unnecessary spotlight on a relatively small faction of bad actors.
“This is blown way out of proportion. 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. “They should be prosecuted but they are not a good representation of the industry as a whole. I believe it’s a lot of noise about a tiny mouse.”
She reminded that debt collections are a common part of “the life cycle of any viable organization, and it is no different in senior living.”
She noted that Medicaid, the top payer of nursing home services, exists to protect both patients and their family members, whether or not they can pay by themselves.
“The issue arises when family members want to shield the estate from appropriate debt collections, and don’t pay what they are able to from the patient’s funds or estates,” Brown added. “Care isn’t free and someone has to pay for it. When the patient can’t pay, Mediaid foots the bill. But families can’t steal from the senior living communities, either. To paraphrase an old saying: ‘Render under senior living what belongs to senior living.’”
Mom’s money diverted
The CEO of a large nonprofit operator agreed and said his biggest concern is collecting appropriate net monthly income from patients, including things such as Social Security and other third-party payments.
“This is where the most fraudulent conveyances come,” he said, requesting not to be named due to the subject’s sensitive nature. “When a family member signs an admission agreement, no way should they be responsible (for payment). But on the other hand, there may be language that talks about the requirements to assist us in the collection of applying benefits to which the resident may be eligible. If somebody has Social Security and they’re in a nursing home, it should go to the nursing home. It reduces what Medicaid will pay, and (Medicaid’s) not only the worst payer already, it’s (often) the only thing we have left.”
He noted that Social Security checks could be $1,500 to $2,000 per month, which means a facility could be losing out on tens of thousands of dollars a year if family members aren’t forthcoming. Co-insurances “can really add up” for short-stay patients, he added.
“A lot of people see that Social Security come in and think, ‘That’s our money.’ No, it’s not your money. It can run about $25,000 a year. This is an outrage. It’s your mother’s and it needs to go to the provider,” he said. “If [CMS] is going to pursue this, then CMS ought to recover Social Security payments and make sure in Medicaid cases, it goes directly to the provider.”
Observers also acknowledged that providers can find themselves in a tough position because Medicaid payments leave operators without the ability to cost shift. In addition, tangled family circumstances and common financial planning practices can divert funds that should otherwise go to a services provider.
Marc Zimmet, the CEO of Zimmet Health Services Group, is among those staunchly pointing out that illegal debt collection steps, the focus of the CMS letter, should be quashed. He emphasized that such practices are “not common practice” among operators.
He also defended providers’ right 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 a provider uses aggressive, but legal, tactics.
“Consumers are entitled to protections in all aspects of commerce, much of which is the state’s domain to regulate, but the facilities deserve protection as well.” Zimmet noted. “Providers should be required to distinctly and explicitly review all financial matters with the patient’s proxy. While a financial commitment must not 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.”