Unclaimed property remains a significant and growing risk area for today’s healthcare organizations. A rising trend in the past few years has been states pursuing unclaimed property as a potential revenue source. And with the pandemic adding to state budget strains, unclaimed property likely will remain a focus area, leaving many organizations exposed to audit risks and the financial and reputational risks of noncompliance.
To avoid costly risk exposure, organizations must stay compliant with unclaimed property regulations.
Unclaimed property: A refresher
Put simply, unclaimed property is money with a lost owner. Companies in all industries, including healthcare, are not allowed to keep money that is owed to the original owner. Common unclaimed property types seen in healthcare include payroll, accounts payable, patient refunds, and active credit balances.
Unclaimed property presents a two-pronged risk to healthcare organizations. Reporting unclaimed property is a statutory requirement, and state governments have the authority to audit organizations to make sure they are compliant. Audits, which are administered by the states, can be costly and time- and labor-intensive. In general, they can take one to five years and sometimes longer. Regardless of the outcome, the longer an audit lasts, the more organizational resources are expended. Organizations found to be noncompliant can incur substantial penalties and interest.
In addition to audit risks, organizations that do not comply with unclaimed property reporting regulations face reputational risk. A hospital that is known to be holding onto thousands of dollars of patient refunds does not lend itself to winning the trust or satisfaction of its patients or community.