Arkansas Patient Trust Fund Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain an Arkansas Patient Trust Fund Bond
At a Glance:
- Lowest Cost: 0.75% of the bond amount per year based on the applicant’s credit
- Bond Amount: Equal to the total amount of resident funds held in a trust account
- Who Needs it: Arkansas nursing homes that manage resident funds and receive Medicaid payments
- Purpose: To ensure residents will receive compensation for any damages should the nursing home mismanage their funds
- Who Regulates Nursing Homes in Arkansas: The Arkansas Office of Long Term Care
Background
Arkansas requires all long-term care (nursing home) facilities operating in the state to enroll with the Department of Human Services before receiving Medicaid reimbursements. Arkansas enacted the enrollment requirement to ensure that eligible facilities are reimbursed for services that are covered by Medicaid. To ensure that residents are not taken advantage of, nursing homes that hold resident funds in a trust account must purchase and maintain a surety bond to be eligible for enrollment as a Medicaid provider. Additionally, federal statute 483.10 requires all long-term care facilities that hold resident funds in a trust account to purchase a surety bond or other similar form of security. However, the federal regulation leaves the implementation and enforcement of this requirement to individual states.
What is the Purpose of the Arkansas Patient Trust Fund Bond?
Arkansas requires nursing homes that hold resident funds in a trust account to purchase a surety bond as part of the application process to enroll as a Medicaid provider. The bond ensures that residents will receive compensation for financial harm if the nursing home fails to comply with the regulations set forth in Arkansas statute 483.10. Specifically, the bond protects residents in the event the nursing home in any way mismanages resident funds. In short, the bond is a type of insurance that protects the public if the nursing home acts unethically with residents’ funds.
How Can an Insurance Agent Obtain an Arkansas Patient Trust Fund Surety Bond?
BondExchange makes obtaining an Arkansas Patient Trust Fund surety bond easy. Simply log in to your account and use our keyword search to find the “patient” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
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How is the Bond Amount Determined?
The Arkansas Department of Human Services dictates that the bond amount must be equal to the total amount of resident funds held in a trust fund, and must be updated every quarter to reflect any changes.
Is a Credit Check Required for the Arkansas Patient Trust Fund Bond?
Surety companies will run a credit check on the owners of the nursing home to determine eligibility and pricing for the Arkansas Patient Trust Fund Bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Arkansas Patient Trust Fund Bond Cost?
The Arkansas Patient Trust Fund Bond can cost anywhere between 0.75% to 5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the bond cost on a $50,000 bond requirement.
$50,000 Patient Trust Fund Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $375 | $38 |
| 625 – 799 | $500 | $50 |
| 600 – 624 | $1,250 | $125 |
| 575 – 599 | $1,500 | $150 |
| 500 – 574 | $2,500 | $250 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
Who is Required to Purchase a Bond?
The Arkansas Department of Human Services requires all long-term care facilities, or nursing homes, that manage resident funds to purchase a surety bond as a prerequisite to enrolling as a Medicaid provider. To paraphrase Arkansas statute 20-10-228, a long-term care facility is an institution that houses three or more unrelated individuals who are unable to care for themselves in some capacity. Exemptions to this definition include:
- The offices of private physicians and surgeons
- Hospitals
- Recuperation centers
- Supervised or supported living homes run by licensed operators
- Institutions operated by the federal government
- Separate, unmonitored living spaces located on a long-term care facility
- Hospices
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Nursing Homes Enroll as Medicaid Providers in Arkansas?
Nursing homes in Arkansas must navigate several steps to enroll as Medicaid providers. Below are the general guidelines, but applicants should refer to the provider manual for details on the process.
Step 1 – Obtain a Permit
Arkansas requires all new license applicants to obtain a permit from the Health Services Permit Agency. To obtain a permit, nursing homes must complete the application located here. Contact the Health Services Permit Agency at (501) 661-2509 for requisitions regarding the permit application process.
Step 2 – Obtain a Long-Term Care License
After obtaining a permit from the Health Services Permit Agency, nursing homes must obtain a business license from the Office of Long Term Care. To obtain a license, nursing homes must contact the Office of Long Term Care at (501) 320-6194 and request an application packet. The Office of Long Term Care will walk the nursing home through the application process and answer any questions they may have.
Step 3 – Purchase a Surety Bond
Nursing homes that hold resident funds in a trust account must purchase and maintain a surety bond with a limit equaling all resident funds held
Step 4 – Enroll as a Provider
Nursing homes are eligible to enroll as Medicaid providers after they have obtained the required license and permit. All Arkansas Medicaid provider enrollment applications can be completed online here
How Do Arkansas Nursing Homes Renew Their License and Provider Enrollment?
Prior to March 1, the Office of Long Term Care will contact the nursing home with instructions on how to renew their license. All Arkansas Long-Term Care Facility Licenses expire annually on March 1 and must be renewed before the expiration date. Nursing homes can revalidate their provider enrollments online here, and must do so at least once every five years.
How Do Arkansas Nursing Homes File Their Bond?
Nursing Homes should mail their completed bond form, including the power of attorney, to the following address:
Office of Long Term Care
P.O. Box 8059, Slot S409
Little Rock, AR 72203-1437
The surety bond requires signatures from both the surety company that issues the bond and from an owner/officer of the nursing home. The surety company should include the following information on the bond form:
- Legal name and location of entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
- Witness signatures for the principal and surety company
What Can Arkansas Nursing Homes Do to Avoid Claims Against Their Bonds?
To avoid claims on their bond, nursing homes in Arkansas must adhere to the following provisions:
- Hold all resident funds in a trust account
- Do not mismanage resident funds
- Accurately report on all resident funds
What Other Insurance Products Can Agents Offer Nursing Homes in Arkansas?
Most reputable nursing homes will seek to obtain insurance coverage. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Arkansas Nursing Home Customers?
Arkansas conveniently provides a public database to search for licensed nursing homes in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
