There are many concerns that will keep an administrator awake at night: census, cash flow, survey preparation, and staffing, to name just a few. Rarely is the Resident Personal Fund Account (RPFA) on that list of nightly anxieties. As a former nursing home administrator, the value of a good night’s rest is not lost on me. With awareness and some simple safeguards, the hidden risks lurking behind the RPFA can be prevented from becoming a full-blown nightmare.
Owners and administrators often overlook the Resident Personal Fund Account (RPFA). Its accounting process runs quietly in the background. It doesn’t often demand the administrator’s attention. It doesn’t affect staffing. It doesn’t impact census. And because it stays out of sight, it often stays out of mind.
But that’s exactly what makes it dangerous.
The RPFA is one of the most heavily regulated and frequently audited areas of nursing home financial operations.
What is an RPFA in a nursing home?
The RPFA (Resident Personal Fund Account), also known as the resident trust fund, is an account maintained by the nursing home to safeguard and manage resident funds at the resident’s request.
RPFA Work Gets Passed Around
RPFA responsibilities often get passed from one employee to the next in the business office. When someone leaves, gets overwhelmed, or takes on other duties, the RPFA becomes a “hand-me-down” job.
The problem is obvious: the person inheriting the job is not always well trained.
Administrator training is extensive; however, hands-on RPFA instruction is not always part of that education or experience. Yet the accountability for RPFA compliance rests squarely on the administrator’s shoulders. The consequences of internal control failures and mismanagement of the RPFA can be significant, and many administrators don’t realize the true level of exposure until something triggers attention.
For Many Facilities, the Trigger Is a Medicaid Audit
In Louisiana, facilities are generally audited by Medicaid every two or three years. Whether it is a full-scope or limited-scope audit, the audit always includes a full audit of the RPFA. These audits require extensive submission of documentation and employee time. Audit findings related to the RPFA may appear to focus on minor details, but the meticulous detail of the audit correlates directly to the heightened responsibility of the nursing home.
Few things will ruin a good day at the nursing home faster than seeing that FEDEX cardboard envelope on your desk. If you have been through one of these audits, you know what I mean.
Tip – if you have a “bad” RPFA audit this year, expect to see that FEDEX envelope again next year.
In our experience, many RPFA audit findings are some of the most common and most avoidable compliance issues in nursing homes.
RPFA May Be the Biggest Hidden Financial Risk in the Facility
Because the RPFA is often ignored, neglected, or taken for granted, the risks associated with it are easy to underestimate.
Those risks range from mildly frustrating to financially devastating.
And sometimes, the risk can result in a very public exposure.
Worst Case Scenario: Theft, Criminal Charges, and Regulatory Fallout
A recent incident of misappropriation of RPFA money at a facility in Ohio illustrates just how public and expensive this risk can be.
Nursing home manager stole money from 50+ residents for years
In this instance, a nursing home office manager is alleged to have stolen more than $300,000 from resident funds across more than 50 residents over numerous years.
This is the kind of situation everyone assumes “won’t happen here.” But it happens more than people realize. And when it happens, the arrest is only the beginning.
Here’s what can be expected next:
- Survey attention, regulatory findings and possible fines
- Reputational damage
- Staff morale issues
- Family and resident distrust
- Corporate oversight escalation
Even if the nursing home has a surety bond in place, that does not mean the facility is protected.
A surety bond is not insurance. The surety bond may reimburse residents (to the extent coverage is sufficient), but the surety company will typically seek reimbursement from the facility. In other words, the facility may still end up paying the bill.
What keeps you up at night? Maybe the RPFA should be on your list. But wait! Before you begin a night of endless tossing and turning, let’s look at how you can turn this potential nightmare into a night of sweet dreams.
The most powerful deterrent to prevent an RPFA fiasco is Internal Controls
The most powerful deterrent to prevent an RPFA fiasco is to implement effective Internal Controls.
Internal controls are the policies, procedures, and oversight steps that keep money where it belongs, ensure transactions are properly documented, and prevent one person from having too much control without review.
Internal controls are not only about catching bad actors. Internal controls also protect good employees.
When one person is responsible for cash handling, posting, and reconciliation with little oversight, the employee is exposed. Mistakes happen. Accusations happen. And in the worst cases, temptation becomes opportunity.
A good internal control system is made up of layers that act as backups to other controls. In the event one control gets bypassed, another control has the potential to catch the issue.
While there are several internal controls that should be in place, the first and foremost way to begin establishing control over the nursing home’s RPFA is a monthly reconciliation of the RPFA bank account to the total of all resident ledger balances — with documented Administrator review and sign-off.
Look at that closely and make note. The bank reconciliation needs to be reviewed by another person, preferably the Administrator. A bank reconciliation that is performed and filed away is not an internal control in and of itself.
Monthly reconciliation is not just an accounting task — it is one of the strongest internal controls a nursing home can implement.
A Simple Question: Is Your RPFA at Risk?
If your nursing home has not reconciled RPFA accounts recently, or if you’re not confident in your documentation and oversight processes, it’s time to take a closer look.
To help administrators and business office teams identify risk areas quickly and confidently, we have developed a Resident Personal Fund Account (RPFA) Risk Self-Assessment Tool.
It’s designed to help Administrators get a good night’s rest by identifying weaknesses early — before they become audit findings, survey deficiencies, or worse.
To access the RPFA Risk Self-Assessment Tool, enter your name and email in the download form on this page. Our promise: We will not call you or sell your name and email information. You may receive an occasional email with information similar to what you see here. Nothing scary about that, right?
Final Thought
RPFA is not “just accounting.” It is a fiduciary responsibility. It is a compliance issue. And it is one of the most overlooked risk areas in the building.
The good news is that most RPFA issues are preventable — but only if nursing home leadership treats the process with the seriousness it deserves.