KeepUP™ Blog

9/22/16 10:53 AM

Industry Focus: 3 Ways Healthcare Companies Can Ensure Proper Escheatment

by David Poehler

healthcare-unclaimed-property.pngIn addition to the massive numbers of transactions that end up in the unclaimed property bucket for large healthcare providers, the nature of provider transactions also causes unique issues in this industry. Escheatment for healthcare providers and insurers can be very complex, especially if an organization has not yet come into compliance. However, MarketSphere has identified several high-level unclaimed property focus areas providers can target to get well on their way to proper escheatment.

In general, these focus areas in the healthcare industry center around recordkeeping excellence. It pays to begin at the beginning — designing policies and processes for records management that establish meticulous account set-up protocols, clearly identify unclaimed property amounts, mark them for remediation, and track resolution.

Documentation of records handling is critical for healthcare providers, especially for amounts deemed unreportable, because an unclaimed property auditor is allowed to include questionable amounts in assessments and extrapolate past unclaimed property amounts if records are missing.

High-level unclaimed property management targets in healthcare

The following actions can resolve a large number of unclaimed property issues for healthcare companies. Once these actions are completed, the unclaimed property team can come back around and address more detailed issues to continue fine-tuning the organization’s unclaimed property management going forward.

1) Track and report all sources of unclaimed property

Unclaimed property is created within the healthcare provider institution in a variety of ways that are not always obvious. Capturing all sources of unclaimed property more than likely will require establishing a team to analyze all departments and transactions. Potential sources of unclaimed property include:

  • write-off accounts with small debit and credit balances
  • original credit dates lost during records system conversions
  • unapplied cash, such as when one payment is received for several claims and a dummy patient account is set up during the research process
  • credit details lost during transference of total liability in a merger, acquisition or divestiture (common in healthcare)

2) Move toward complete and accurate processing of all stale dated records

To avoid being surprised by undiscovered or unresolved unclaimed property liabilities, create a process and procedures document to guide unclaimed property records management. The document should include detailed steps for reviewing each property type and chart of accounts to determine if new disbursement accounts have been opened or closed during the year and for reviewing patient credit aging. Ensure that your unclaimed property team is trained in these processes. In the event of an audit, documented processes also can reduce assessments. The guide should include:

  • streamlined processing to minimize staff time and account for all records
  • assignment of a team leader in charge of all unclaimed property information
  • key points of contact for each property type
  • processes to ensure proper application of payments to debit
  • clear assignment of ownership to provider, patient or insurance company
  • guidelines for proper assignment of property type codes

3) Review third-party processor contracts to establish liability for escheatment

Generally, if a third-party processor is responsible for escheatment, the healthcare company should establish clear checks and balances to make sure it’s getting done. However, this can be complicated by the large number of responsibilities that can exist within a third-party contract. For example, a health insurer may act as a third-party administrator via an Administrative Services Only (ASO) arrangement. An organization might hire an insurance company to evaluate and process claims under its employee health plan, while retaining the responsibility to pay claims.

The key is to make no assumptions about who has legal responsibility for reporting. If escheat filing liability is not explicitly stated in a contract, you might need to ask for an addendum to spell out each party’s responsibilities and when those responsibilities began. Ultimately, if there is any question, the company originating the transaction will likely be held responsible.

3 more ways healthcare providers can ensure proper escheatment

In addition to the technical principles of escheatment listed above, healthcare companies also must address three other very important aspects of unclaimed property management:

  1. Use the latest version of unclaimed property law for each state to which the company reports. (This can be difficult to keep up with. Get assistance from professional unclaimed property specialists who keep rolling up-to-date statute documentation.)
  2. Streamline due diligence to find as many owners as possible.
  3. Establish reserve accounts to cover at least part of expected remittances; this requires analysis of potential unclaimed property liability.

MarketSphere offers a number of services and materials specifically to assist healthcare companies in managing unclaimed property compliance and audits. Visit us at and search for “healthcare”, or call your MarketSphere advisor.

Topics: Reporting, Recordkeeping, Healthcare