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It can be confusing to understand the difference between a skilled nursing facility and a nursing home, especially as some larger healthcare providers offer both types of care but on separate floors. This becomes even more complicated when factoring in the accounts payable in nursing facility and the impact on the healthcare provider’s financial position.  

Accounts payable in nursing facility impact a healthcare provider’s financial position.
Accounts payable in nursing facility impacts a healthcare provider’s financial position.

The financial survival of any healthcare provider in today’s world depends on the successful management of its Accounts Payable (AP) module in the care plan software. Accounts Payable is where you will see financial metrics like credit rating, cash flow, and supplier relationships, all of which contribute toward having a successful operation. Late or missed payments will damage supplier relationships, causing delays for goods and services, which ultimately impact the quality of care. Therefore, healthcare providers must develop a well-managed accounts payable system to provide optimum care. 

Besides ensuring timely payments and maintaining strong supplier relations, one of the biggest financial challenges long term care facilities face is responding to a notification of “Medicaid pending,” meaning, a resident’s Medicaid application is pending approval by the Department of Social Services. A long term care facility will typically have between three to ten Medicaid pendings. There is usually a six to twelve-month turnaround time for Medicaid approvals. The long approval time impacts the facility’s financial position, especially if facility staff forget to follow up on payment processes. 

In light of this realization, many healthcare facilities have leaped to adopt modern nursing computer software systems with general financials modules. Efficient computerized systems have automated alerts so staff can follow up on payment delays when necessary. They also have the advantage of creating configured financial reports based on per patient day costs, revenue data, budgeting projections, and invoice calculations, thus ensuring accurate reimbursements and payments. 

8 Common Pitfalls for Accounts Payable for Nursing Homes

Part of having an efficient accounts payable for nursing homes system is managing the various resident payment methods like Medicare and Medicaid, insurance co-pays, and private pay. There are, of course, other factors to consider as well. Below are some common pitfalls that facilities need to avoid to run a successful business and improve their accounts payable in nursing facility and nursing homes.  

Efficient accounts payable for nursing homes system manage various resident payment methods.
Accounts payable for nursing homes system manages various resident payment methods.
  1. Inefficient coordination of staff efforts – Facility staff members can prevent problems with resident accounts. However, this is only possible if the healthcare facility provides sufficient staff training on using the SNF software and encourages open communication between the staff to fully understand their roles, responsibilities, and requirements. This allows for better coordination with the accounts team, thus creating standardized control measures that decrease financial liabilities. 
  2. Poor admissions process – Long term care facilities need to review their admissions screening process. Part of that process includes reviewing the applicant’s financial information and that of their family members. This allows facilities to determine the applicant’s medical history and eligibility for Medicare or Medicaid assistance. Failure to properly assess the applicant’s finances can impact future payments and reimbursements. Therefore, the resident’s financials must be carefully assessed during the admissions process.
  3. Failure to protect creditor rights – As a long term care health provider, the facility is responsible for providing excellent nursing care and filling the role of creditor. This entitles the facility to have creditor rights outlined in the admissions agreement contract (a binding contract between the facility and the resident). The admission agreement states what services are provided and has clear specifications that protect the facility should there be any problems with payments. It is important to create a well-drafted admissions agreement to protect the facility’s best interests.
  4. Inadequate resident preparation – It is advisable to include the accounts team during the admissions process so residents are fully aware of the procedures and responsibilities for Medicare reimbursements, Medicaid limitations, insurance co-pays, private charges, and income transfers. Residents need to know that they are responsible for the services rendered and understand what expectations are ahead.   
  5. Irregular monitoring of accounts payable report – A common problem is that facilities fail to review and maintain their resident accounts payable reports. These reports need to be reviewed regularly so the facility can clearly understand their payment weaknesses and where improvements are needed. 
  6. Failure to stop resident account problems – The accounts team needs to be vigilant and collect resident payments. This is much easier to manage using an analytics tool, like CareMetrics. Failure stay on top of payments will result in the facility losing out on money and bearing the brunt of the costs. When necessary, facilities should send a strong Demand Notice to the residents or their families reiterating their compliance with the Admissions Agreement. Facilities should carefully check and obtain the resident’s banking information during the admissions process, giving them some protection should any residents default on payments.  
  7. Pending Medicaid accounts – The accounts team needs to be fully active when identifying payment delays resulting from a resident’s poor cooperation, family, or Medicaid planner. As a last resort, facilities can ask their attorney to demand compliance as stated in the admissions agreement or initiate litigation for a breach of contract.
  8. Failure to appeal to Medicaid rejection benefits – Sometimes, a resident may be rejected by Medicaid for a claim. In such circumstances, facilities need to understand why the claim was rejected and what can be done. Denial Notice instructions and a thirty-day appeal deadline allow the facility and the family to gather additional financial information to support the resident’s claim. Therefore, it is wise for facilities to monitor the Medicaid biller very closely and ensure the appeal is submitted on time. Failure to do so can result in the facility paying for the services. 

Despite the many advantages that eMAR software can provide, facilities can only maximize their accounts payable when their staff understands the full capabilities of the nursing home software. Administrators, therefore, need to ensure the team is trained and equipped to use the long term care software. Failure to do so will result in not taking advantage of the software’s full capabilities, impacting the facility’s account payable and the quality of care.

Contact us here if you would like to test drive our user-friendly long term care software.

Examples of Accounts Payable in Nursing Facilities

There will always be instances when facilities encounter a difficult situation with resident payments. However, facilities can counteract these problems by implementing efficient long term care EHR software systems that generate accurate financial reports. These financial reports on hand will allow the facility to identify how and where it can improve its procedures. 

Examples of accounts payable in nursing facilities calculating resident payments
Examples of accounts payable in nursing facilities calculating resident payments.

Successful examples of accounts payable in nursing facilities include Megan Tucker, a financial accounting supervisor at Farewell Care. She found that she spent hundreds of hours a year manually entering invoices and calculating depreciating assets. She can now use that time for other tasks after her facility added a long term care software with specially built-in financial software, which features centralized accounts payable processes that gives her greater access to vendor information, better invoice processes, faster writing of checks, easier generation of 1099s, and more accurate monitoring of cash requirements. 

Another example of how long term care EHR can improve the accounts payable nursing facility can be found at the St. Mary’s Home for the Aged, where Mary Burkart’s team previously spent over five thousand hours a year on charting and accounting documentation. The St. Mary’s team was often sifting through the skilled nursing facility accounts payables with pages of documentation but still not finding the right information. And when it came to organizing and submitting payment information, the accounts payable for nursing homes could simply not produce the proper documentation needed for accurate reimbursement payments.  

Then the facility implemented an effective nursing home software with interoperability functions to better connect clinical data and the nursing home payment options. With precise language, improved usability, and efficient financial reporting—all with the click of a button—it is easy to see why Burkart and so many others prefer using nursing home management software over paper documentation. 

How to Improve the Accounts Payable in Nursing Facility

While the accounts payable in a nursing facility can be a struggle—especially regarding cash flow—there are ways facilities can improve their financial reports, starting with their admissions process. Obtaining the necessary resident information, such as insurance policies at the time of admission, will make a considerable difference in billing processing down the line. 

Admittedly, it is not always easy to obtain this information. Hence, facilities need to encourage closer working relationships between the admission screeners and the accounts and billing team. The key is to allow departments to support each other with open communication and sufficient staff training. 

The admissions team needs to be given specific billing training to understand the various payers, insurance types, and time frames. This will allow the admissions team to make informed decisions when deciding who to admit. It will also make them aware when they need to follow up on outstanding payment claims, especially for Medicaid pending due to the excessive turnaround time for approval. 

Should facilities implement these factors while using their long term care software, they will effectively cover all clinical and financial bases to ensure proper payments, excellent care, and successful healthcare business operations. For more on recent trends in long term care, read our blog and subscribe to the LTC Heroes podcast

Cindy Wong
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