Patient monthly liability (PML) refers to the amount of cost that a Medicaid recipient is responsible for paying, in return for their care within a skilled nursing or other long-term care facility. Also referred to as “share of cost,” the patient liability must be paid first, before Medicaid will cover the remainder of the bill. Providers need to understand the complexities this process can bring, and employ best practices to collect outstanding receivables as quickly and efficiently as possible.
Calculating Patient Liability
Patient liability is ultimately determined by Medicaid during the initial eligibility process. It is based on an individual’s total income (earned and unearned), minus allowable deductions. Countable income includes Social Security income, pensions, or any other source of income that could potentially be used to pay for medical care. Once patient liability is established, it will remain the same each month unless there is a change in income or allowable deductions.
The patient liability formula is as follows:
Patient/resident total income (earned and unearned)
- Excluded income (per individual state code)
- Monthly income allowance for community spouse
- Allowable medical expenses
= Total patient liability
Employing Best Practices
Residents are responsible for paying their share of cost directly to the facility, and when those payments are not made, Medicaid will not reimburse their portion to the NF either. This means that a NF is heavily reliant on a resident’s timely payment to maintain operations and a healthy revenue cycle.
So how can you build an effective collection strategy to get paid sooner?
1. Keep accurate records
As we mentioned earlier, Medicaid determines the patient liability for each resident. Since this amount will vary for every individual, it is important that the information be accurately documented within your software so records reflect the resident’s financial responsibility. Any time there is a change to this amount, it needs to be promptly updated within the system to avoid underpayment or overpayment issues.
2. Consider all sources of income
Residents may have multiple sources of income that can be used to cover their payment. They cannot pay their bills, however, if they are not in receipt of their income checks. One of the biggest hurdles for NFs can be the detective work involved in tracking down those sources of income. If an old mailing address is to blame, request a change of address on behalf of the resident so future payments can be sent directly to the facility.
3. Expect prompt payment
As with any type of repayment, the longer you wait to be paid, the less likely you will be to collect any money owed. Bills need to be sent on time every month, and payment should be immediate. Residents who are receiving Social Security, for example, receive direct deposits on the 3rd of the month, so NFs should expect payment no later than the 6th of each month. Once payments are flagged as late, prompt follow-up should be initiated.
4. Contact family members for help
At times it may be necessary to involve a resident’s family member or other responsible party. While it is helpful if they are privy to the resident’s financial situation, this is not always the case, so it may take a little digging to uncover sources of income and distribute them to the appropriate balances due.
5. Encourage resident trust fund accounts
Every NF must offer residents the option to enroll in a trust fund account that is managed by the facility. When residents take advantage of this service, all their income is deposited directly into the trust account. Their monthly patient liability is withdrawn from the trust each month to pay the liability amount for each period. Any amount deposited to the trust that exceeds the liability amount is left in the trust (in an interest-bearing checking account) and can be used by the resident for personal expenses. This option is very beneficial for a SNF because the resident’s funds are centralized and accessible, but be sure to keep thorough accounting records for every transaction to and from the account.
6. Become the representative payee
Additionally, a SNF can apply through the Social Security Administration to become a resident’s representative payee, which allows them to receive the resident’s Social Security income directly. Much like the resident trust fund, this is especially helpful when a resident does not have the capacity to manage their funds by themselves, and does not have family or friends who can help fill that role.
When you’ve tried all the best practices we’ve highlighted above and uncollected payments continue to add up, further action may be necessary. While patient liability collections can be difficult to pursue – and the burden unfortunately lies on the NF – that does not mean you should give up easily. After all, residents are required to pay their established patient liability to the NF to continue receiving Medicaid benefits.
What recourse do you have?
1. Report it to Medicaid
There may be good reason why a Medicaid resident has not paid their bill. There may be expenses that were incurred before they became eligible to receive Medicaid, and they simply cannot afford to keep up with their cumulative payments. In this case it may be necessary to ask that the resident’s monthly patient liability amount be temporarily deferred until they can pay off the old debts. If approved by the Department of Medicaid caseworker, the monthly liability amount applied to the current room and board will be zero during this period, and the State will pay full room and board until the past medical expense is paid in full.
2. Contact Social Security Administration
If a resident is not making payments, the NF can contact the Social Security Administration to report the issue and request that a representative payee is appointed. If one is already appointed, a new one can be requested since the current representative is not meeting their fiduciary responsibilities.
3. Start discharge proceedings
If the resident or responsible party refuses to pay the full patient liability after multiple attempts to collect, the NF can begin discharge proceedings against the individual for reasons of nonpayment. Written notice must be given to the resident (or their representative) stating the reason for the transfer/discharge, in a language and manner they understand.
Enhance Outcomes with Richter
If your facility is struggling to keep your patient liability aging clean while maintaining compliance with state and federal regulations, Richter can help. As the industry’s leading LTPAC performance advisors, we understand the impact that outstanding receivables can have on your bottom line. To learn more about our comprehensive solutions, contact us here or call us at 866.806.0799.
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