Unclaimed Property Issues Affecting the Healthcare Industry

Navigating the complexities of unclaimed property in the healthcare industry can be daunting. Have you ever wondered how unclaimed property laws might affect your healthcare organization? BDO Unclaimed Property professionals have seen a recent uptick in healthcare-related unclaimed property audits. Let’s explore this intricate topic and uncover how healthcare providers can manage challenges effectively.

Unclaimed Property: What Is It?

Unclaimed property, also known as abandoned property or escheat, refers to assets that have not been claimed by their rightful owner after a specified period. All 50 states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands have enacted unclaimed property laws. States require companies to report and remit unclaimed property, which can include uncashed checks (often uncashed patient refunds), customer credits, and more. The goal? To ensure that property is returned to its rightful owner, with the state acting as a custodian.

Why Is This Important for the Healthcare Industry?

Healthcare organizations are particularly vulnerable to unclaimed property audits. Why? The nature of their transactions with patients and insurance companies creates a complex web of potential liabilities. These audits can be financially draining, especially when records are incomplete or missing. Healthcare providers of all types and sizes, including hospitals, physician practices, and medical centers, as well as outpatient specialized care centers, skilled nursing, and many other healthcare-related outfits, are at risk for unclaimed property issues. 

Specific Issues in Healthcare

Healthcare providers face unique challenges. For instance, multiple payers can make it unclear who owns a refund or credit. Overpayments might occur as a result of misinterpretations or outdated contracts, leading to perceived liabilities.

Imagine a patient with insurance receives treatment. If both the patient and insurance pay, an overpayment may result. Without timely resolution, that overpayment becomes unclaimed property. Similarly, outdated contracts might lead to incorrect credit in receivables, confusing matters further.

Accounts Receivable Challenges

Have you considered how credits in accounts receivable might unexpectedly lead to unclaimed property liabilities? Many healthcare institutions struggle to manage patient credits and reimbursements. They can also find it difficult to navigate the complex interplay of state recoupment provisions and state unclaimed property reporting and/or private escheat laws. Moreover, the volume of records involved in healthcare complicates unclaimed property reviews. For all those reasons, healthcare organizations are particularly at risk for unclaimed property audits.   

Legal Complications

Did you know that private escheat laws and prompt pay recoupment laws can affect unclaimed property? They might seek to void what would otherwise be unclaimed property liabilities before unclaimed property dormancy periods between healthcare providers and insurers, complicating the resolution of credits. For example, a state’s recoupment laws might limit the time an insurer can seek a refund, but that doesn’t necessarily eliminate unclaimed property obligations. 

BDO is not a law firm and cannot provide legal advice. Legal issues must be addressed in conjunction with appropriate counsel.

Proactive Measures

So, what can healthcare organizations do? Engaging in voluntary disclosure agreements can be a strategic move. These programs allow companies to resolve liabilities with reduced penalties. Alternatively, conducting diagnostic reviews can help identify and guide compliance efforts. Learn more about steps you can take to address state unclaimed property programs. 

Implementing Policies and Maintaining Compliance

Establishing robust policies and procedures is crucial. Regularly reviewing patient accounts, documenting transactions, and maintaining records can help prevent unclaimed property issues. Consistent accounting practices and detailed documentation demonstrate credibility during audits. Further, strong policies and procedures should be used to drive the annual compliance return filing process.

Taking Action

Unclaimed property is a significant concern for all businesses, but because of the industry’s transactional nature, healthcare organizations face unique challenges. By understanding the complexities and taking proactive steps, healthcare providers can better manage their unclaimed property obligations. Isn’t it time to consider how these strategies might benefit your organization? 

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