Top 5 healthcare unclaimed property compliance trends 

When you have a moment, download Kodiak’s healthcare CFO Mind Map. The CFO Mind Map visualizes everything on the plates of healthcare CFOs across the country.  

Once you have it up on your screen, find “unclaimed property reporting” on the map. It’s there along the “Other” synapse about halfway down and to the left.  

Is unclaimed property on your mind? We think it should be—both the risks and the rewards. 

Most states are ramping up their unclaimed property reporting compliance enforcement efforts in a push to find new revenue sources. We’re seeing a noticeable rise in state unclaimed property audits, particularly in audits targeting healthcare organizations. 

The combination of unclaimed property reporting being a low priority for healthcare organizations and unclaimed property reporting being a high priority for states can be a financially dangerous compliance mix for unprepared hospitals, health systems, and medical practices.  

5 common unclaimed property compliance gaps 

The unclaimed property compliance team at Kodiak has recently performed nearly 250 unclaimed property assessments at provider organizations. Our team’s assessments have identified five common unclaimed property compliance trends, both risks and rewards, that provider organizations must know as more states start sniffing around healthcare as an industry ripe with new revenue opportunities. 

The five biggest and most common healthcare unclaimed property compliance gaps, in no particular order, are: 

1. Single state filing errors. The organization files one annual unclaimed property report only with the state in which the organization’s facility is physically located. All organizations must send their annual unclaimed property reports to states with the property owners’ last known addresses. That could mean sending reports to a dozen or more states versus erroneously sending a report to just one state. 
2.  Missing property. This gap falls into three distinct areas. One, the organization hasn’t reported all types of unclaimed property that it’s liable for, most notably patient account credit balances, which are healthcare organizations’ largest source of unclaimed property under state law. Two, the organization has never filed an annual unclaimed property compliance report with any state. And three, the organization periodically has filed an annual unclaimed property compliance report with a single state or filing in some years but not in others.
3. Unconsolidated health system filings. In many large provider organizations like multi-hospital health systems, individual hospitals file their own separate unclaimed property compliance reports with their respective states. That creates two potential issues: one, inconsistent filing practices that make individual hospitals and the health system parent corporation vulnerable to state audits; and two, a lost opportunity to standardize and consolidate unclaimed property reporting and benefit from the cost savings that come along with it. 
4. Overreporting unclaimed property. Most provider organizations believe that they must turn over every cent of unclaimed property to the state. That’s not true. There are more than 100 exemptions in state laws specific to healthcare that allow providers to exclude amounts from unclaimed property reporting. Knowing what those exemptions are and becoming skilled at using them correctly can convert unclaimed property reporting to a revenue center from a cost center. 
5. Missed unclaimed property asset recovery. On the flipside, there is a substantial “new cash” opportunity for providers to claim money owed to them. This isn’t simply about unclaimed property that they owe to others. Providers should actively engage in asset recovery in addition to their unclaimed property reporting process. Hospitals, health systems, and medical practices should claim amounts owed to them by state, regional, and local government agencies. 

Filling the gaps: Take a risk-and-reward approach 

How can healthcare providers start filling these five common gaps in their unclaimed property reporting processes? We recommend a two-pronged “risk-and-reward” approach: 

• Risk. Adopt a proactive approach to unclaimed property reporting. State audits are a matter of when, not if. If you don’t take a proactive approach your organization stays vulnerable to costly penalty assessments and multi-year audits. 
• Reward. Take advantage of unclaimed property exemptions and asset recovery opportunities. These will lead to net positive results from additional savings and income. 

In future articles, we’ll be digging deeper into both avenues of this risk-and-reward approach as well as how they address each of the five common unclaimed property compliance gaps we’ve identified in our risk assessments with our hospital, health system, and medical practice partners. More to come! 

Until then, if you need immediate guidance with an unclaimed property reporting or compliance issue, please contact our healthcare unclaimed property compliance team at Kodiak.