January 20, 1999
PERSONAL NEEDS ALLOWANCE (PNA)
By: Robin Cohen, Principal Analyst
You asked how Medicaid-eligible nursing home residents get access to their PNAs and whether the homes can use these funds for items other than a resident's personal needs.
State law governs the PNA and the Department of Social Services (DSS) is responsible for enforcement. DSS regulations require nursing homes to follow very detailed processes when they are asked to manage a resident's PNA and include clear guidance as to the types of items on which a home may not spend these funds. In addition, the Department of Public Health (DPH), as part of its periodic nursing home inspection, looks to make sure that residents' rights with respect to their PNAs have been safeguarded.
Until a few years ago, DSS routinely audited these accounts, says Jim Weitrak of DSS's Quality Assurance (QA) Unit. But with recent budgetary cutbacks and early retirement, this practice has all but stopped. At this point, QA investigates only those cases that an independent auditor identifies in “flash reports” as involving significant amounts of money.
The heads of the state's for-profit and nonprofit nursing home trade associations assert that nursing home abuse of PNAs has not been an issue for their member homes. And the state's nursing home ombudsman reports that there have been no complaints of homes misspending these funds. (There have been isolated cases of family members' misuse of these funds.)
State law requires nursing homes to provide each resident, or her legally liable relative, guardian, or conservator (hereafter, other responsible party) with a written statement explaining her rights regarding her personal funds and listing the charges which can be deducted from the fund. Residents or the other responsible party can ask the home to manage these funds. When a resident is not mentally capable of understanding and has no conservator, both she and the other responsible party must cosign the consent.
If asked to manage the funds, the home must establish either a separate account for each resident or an aggregate trust account to prevent commingling of the resident's funds with those of the facility's. It must obtain signed receipts for each expenditure from each resident's personal funds, maintain an individualized itemized record of income and expenditures from the personal funds, and permit access to these records.
The law further requires that the home notify in writing each resident whose account reaches $1,400 ($200 less than the $1,600 Medicaid asset limit) and advise them they could lose their eligibility should their combined assets exceed the legal limit (CGS § 19a-551).
Anyone violating these provisions is guilty of a class A misdemeanor.
DSS regulations establish in great detail the process by which homes manage the PNA and seem to contain numerous safeguards.
The regulations clearly state that no nursing home can use or cause these funds to be used unless it has written consent from the resident or other responsible party. In cases where the other responsible party receives the resident's “resource or Supplemental Security Income” check and manages the PNA, the facility is not required to keep any records. When the home receives the resident's income money and remits the PNA to the other responsible party, it must get that party to sign for them and record the date and amount received. If the check is mailed, the cancelled check can substitute for the signature. When a resident handles her own money, the home must get her to sign for it, along with the date and amount received.
When the Nursing Home Manages the PNA. When the facility is the trustee for the funds, it must use the following accounting procedures. It can choose to (1) have an individual bank account for residents, using bank books; (2) establish a single trust account; or (3) use a combination of both. If it uses a trustee account, the home's owner or administrator must be one of the designated trustees. This account must be entirely separate from any facility business account.
The accounting system must, at a minimum, consist of the following: (1) receipts register or acceptable equivalent, (2) patient ledger, and (3) disbursement vouchers. The bank account statement and the patient's ledger must be in agreement and reconcilable at any point in time. Bank statements and cancelled checks must be saved for at least three years. Each resident must have an individual recording in the register or equivalent. For each disbursement there must be an accompanying voucher, which must also be saved for three years. If a resident cannot sign the voucher, both the fund custodian and manager, or their designees, must sign.
Annual Report to DSS. The regulations require homes to provide an accounting of PNA funds to DSS by each June 1, which reflects the balance of each resident for whom the home manages the PNA. If money is held in an aggregate trust account, the balance must be accompanied by a bank statement. A bank statement is not required for individual resident bank accounts. The accounting must include:
1. the resident's name and “welfare” number,
2. the DSS office,
3. the amount of petty cash held in a bank book for the resident,
4. the balance in the resident's bank book and in the trustee account, and
5. any other money being held for the resident for whom the home is the trustee.
Access to Fund and Records. The regulations further require that the PNA portion of income that residents receive be deposited into the account no later than two weeks after the home receives it. Cash must be available to residents at least 10 hours or three days per week, and the home must inform the resident of the times during which the money is available.
All PNA records must be available to DSS upon request. In addition, a home must, within a reasonable amount of time, allow the resident or other responsible party to see the PNA records. Or, the home can send copies of the ledger record to the person making the request.
Items Which Cannot Be Purchased with PNA Funds. The regulations generally prohibit spending PNA funds on items included in a nursing home's per diem rate, such as gowns, geri-chairs, physical therapy, and speech therapy, as well as on the home's business or operating expenses. They prohibit PNA use by the home's employees, administrators, owners, or their relatives. And they prohibit their use as a loan. More specifically, the regulations provide a “partial” list of unacceptable uses of the PNA:
1. group activities or entertainment which occurs within the facility;
2. facility-organized parties;
3. medically-necessary drugs, medicines, or medical supplies;
4. funeral expenses, up to $5,400;
5. room and board to the facility;
6. non-customized wheelchair purchase, rental, or repair;
7. physical restraints;
8. transportation to necessary medical treatment;
9. gifts to relatives in excess of $25.00; and
10. medically necessary treatment normally paid for by Medicaid.
When a Resident is Transferred to Another Home or Returns to the Community. When a resident is transferred to another nursing home, she keeps her own bank book and the transferring home must send the receiving home the balance of her funds within 10 days of the transfer. Likewise, when a resident is discharged back into the community she keeps her bank book and gets a check for the balance from the home before she leaves.
When A Resident Dies. When a resident dies, any funds in her account become part of her estate. The home must notify DSS's district Resource Unit which, within seven days of the resident's death, must let the home know how the funds have been disposed of.