There are many different elements that factor into the quality of care for residents at a long-term care (LTC) facility. One of the most often overlooked areas is financial care and, more specifically, resident trust fund management. Also known as a personal needs account, these funds must be held and safeguarded by a facility for use by the resident. The resident is entitled access (with certain limitations) to this personal money for items such as books, clothing, salon services and hobbies.

Facilities have traditionally managed trust funds for all their residents under one bank account, so it is imperative to have a functional system in place to keep accurate up-to-date balances for everyone who belongs to the account. Should a facility fall behind on this responsibility, they inevitably jeopardize their resident’s well-being and put their operation at great risk. State Surveys are conducted at random and if cited for a violation, facilities could suffer penalties/withholds from Medicare, fines, as well as negative public ratings. Even worse, confidence with existing residents, potential future residents and their families will weaken, leaving facility administrators with the difficult task of rebuilding credibility.

LTC providers can help avoid these inherent risks by focusing on:

1. Authorizations
2. Documentation
3. Segregation of duties

Obtain Proper Authorizations

Once a resident (or their responsible party) has decided to utilize a facility’s trust fund service, they should be required to sign a standardized authorization form. There are specific rules in place (which vary by state) if the resident is unable to sign or is otherwise incapacitated, and the signature must be legible.

A facility’s rules on obtaining authorizations should be clearly outlined in policies, and those policies should be reviewed on a regular basis. Facilities should also conduct periodic audits of authorizations, checking specifically for missing forms and proper signatures.

Document Every Transaction

Resident trust fund accounts should operate very similarly to the way a local bank operates. When an account is initially opened, the account owner is required to complete a series of paperwork. With every deposit, withdrawal and transfer to or from the account, there is a record of that transaction. The bank has specific set hours when customers can walk in to make a transaction. All these same rules apply to LTC providers and the trust fund residents they serve. Every time money is moved to or from the resident’s account, whether through petty cash, checks or receipt reimbursements, there must be a paper trail to trace those funds. On top of that, facilities are also required to distribute quarterly statements to residents that detail their transaction history. These can also be requested on demand.

As you can imagine, the amount of time a facility could spend documenting resident trust fund activities can become quite significant. The use of certain software systems can help ease some of that burden, but facilities that continually become overwhelmed and unable to keep up with records should seek immediate help before the issue worsens.

Segregation of Duties

When a single employee is tasked with responsibility for managing every resident’s trust fund, not only is that person likely to experience burnout which may lead to carelessness, but this puts the facility and the residents in a position more susceptible to fraud.

Internal controls need to be established that divide responsibilities among several employees, from front-end receptionists to upper-level management. With two sets of eyes on every transaction, errors will be reduced and suspicious activity can be questioned and quickly addressed. The following tasks should be shared between a minimum of two employees:

1. Managing and reconciling the petty cash box
2. Signing checks
3. Recording transactions into software
4. Monthly reconciliation & audit

Consider Your Options

While there are other resident trust fund rules and processes that LTC facilities must follow, the three we have outlined above tend to be the most problematic. However, there is a simple solution that facilities should seriously consider—especially if they are facing major consequences that would gravely impact operations. With Richter’s Resident Trust Fund Management & Advisory Services, facilities can choose the level of assistance they need, whether it’s a one-time clean-up of accounts to get you back in good standing, quarterly reviews or regular consulting to keep you compliant. For more information, contact Richter Healthcare Consultants online or call us at 866.806.0799