We've all seen it happen. Resident A is admitted into the nursing home as "Medicaid pending." However, six months later, Resident A's Medicaid application has been denied and the nursing home is concerned about getting Resident A's private nursing home bill paid. Generally speaking, nursing homes and residents are happy when the local Department of Social Services approves a resident's Medicaid application from the earliest possible pick-up date. Even though the nursing home will not receive the private rate for the care it provided, the facility will save time and money by not having to pursue collection of an outstanding receivable if the Medicaid application is denied. The question remains: what can be done about a mounting private bill while nursing homes are waiting for Medicaid to make a determination on a resident's Medicaid application? There is no authority that prohibits a nursing home from initiating a private collection action against a Medicaid pending resident. While residents have the right to wait for payment from a third-party payor (such as Medicare or Medicaid), the facility must protect itself in the event that the resident's Medicaid benefits are denied. Legal authority on this issue focuses largely on a resident's rights while he or she is receiving nursing home care. However, the law does not prohibit a nursing home from taking legal action against Medicaid pending residents to secure payment of an outstanding bill. Specifically, while a nursing home may request pre-payment of up to three months of service, State regulations[1] prohibit a nursing home from receiving payment, in addition to what third-party payors will pay, as a precondition of admission, expedited admission or continued stay at the facility. In addition, the regulations prohibit a nursing home from requiring residents or potential residents to waive their rights to pursue Medicare or Medicaid coverage. Therefore, so long as the resident has been admitted, and has received care for which a third-party payor will not cover, the nursing home can initiate a collection action for payment of an outstanding bill. Likewise, State regulations[2] can also be interpreted as permitting a nursing home to demand private payment from Medicaid pending residents. Under certain circumstances, such as an erroneous determination by the local Department of Social Services, Medicaid applicants or their representatives are entitled to reimbursement for the funds spent to cover the cost of care during the pendency of a Medicaid application or appeal. Thus, the regulation not only supports residents' rights to reimbursement, but also a facility's right to payment. Pursuant to applicable Federal Regulations[3], a facility may consider a resident "private pay" if his application has been denied or has not yet been approved. Thus, until Medicaid has approved the resident's application, the facility can charge the private pay rate. Lastly, while a nursing home should never consciously violate a resident's rights as set forth under New York Public Health Law[4], in order for a resident to pursue an action against a nursing home, the resident must have been deprived of a "right or benefit," for which he or she has suffered a "deprivation and injury." This statute is not a defense against a collection action by a nursing home for an unpaid bill. In addition, even if the resident was deprived of a right or benefit, and suffered a deprivation and injury, the facility is still free of liability under this law if it exercised "all care reasonably necessary to prevent and limit the deprivation and injury for which liability is asserted." Unless a resident has sufficient funds to privately pay their bill, a nursing home must protect itself against a "Medicaid pending" resident in the event that the resident is denied Medicaid benefits. The nursing home should be aware of its right to initiate a collection action against the resident for failure to cover the cost of care.
[1] 10 NYCRR 415.3(b)(2) and (3).
[2] 18 NYCRR 360-7.5(a)(3).
[4] N.Y. Pub Health L. § 2801-d.
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