Category Archives: Maryland Medical Assistance

Medicaid Protections for the Healthy Spouse

February 28, 2020

Medicaid law provides special protections for the spouses of Medicaid applicants to make sure he spouses have the minimum support needed to continue to live in the community while their husband or wife is receiving long-term care benefits, usually in a nursing home.

The so-called “spousal protections” work this way: if the Medicaid applicant is married, the countable assets of both the community spouse and the institutionalized spouse are totaled as of the date of “institutionalization,” the day on which the ill spouse enters either a hospital or a long-term care facility in which he or she then stays for at least 30 days. (This is sometimes called the “snapshot” date because Medicaid is taking a picture of the couple’s assets as of this date.)

In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in assets (an amount may be somewhat higher in some states). In general, the community spouse may keep one-half of the couple’s total “countable” assets up to a maximum of $128,640 (in 2020). Called the “community spouse resource allowance,” this is the most that a state may allow a community spouse to retain without a hearing or a court order. The least that a state may allow a community spouse to retain is $25,728 (in 2020).

Example: If a couple has $100,000 in countable assets on the date the applicant enters a nursing home, he or she will be eligible for Medicaid once the couple’s assets have been reduced to a combined figure of $52,000 — $2,000 for the applicant and $50,000 for the community spouse.

Some states, however, are more generous toward the community spouse. In these states, the community spouse may keep up to $128,640 (in 2020), regardless of whether or not this represents half the couple’s assets. For example, if the couple had $100,000 in countable assets on the “snapshot” date, the community spouse could keep the entire amount, instead of being limited to half.

The income of the community spouse is not counted in determining the Medicaid applicant’s eligibility. Only income in the applicant’s name is counted. Thus, even if the community spouse is still working and earning, say, $5,000 a month, she will not have to contribute to the cost of caring for her spouse in a nursing home if he is covered by Medicaid. In some states, however, if the community spouse’s income exceeds certain levels, he or she does have to make a monetary contribution towards the cost of the institutionalized spouse’s care. The community spouse’s income is not considered in determining eligibility, but there is a subsequent contribution requirement.

But what if most of the couple’s income is in the name of the institutionalized spouse and the community spouse’s income is not enough to live on? In such cases, the community spouse is entitled to some or all of the monthly income of the institutionalized spouse. How much the community spouse is entitled to depends on what the Medicaid agency determines to be a minimum income level for the community spouse. This figure, known as the minimum monthly maintenance needs allowance or MMMNA, is calculated for each community spouse according to a complicated formula based on his or her housing costs. The MMMNA may range from a low of $2,113.75 to a high of $3,216 a month (in 2020). If the community spouse’s own income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse’s income.

Example: Joe Smith and his wife Sally Brown have a joint income of $3,000 a month, $1,700 of which is in Mr. Smith’s name and $700 is in Ms. Brown’s name. Mr. Smith enters a nursing home and applies for Medicaid. The Medicaid agency determines that Ms. Brown’s MMMNA is $2,200 (based on her housing costs). Since Ms. Brown’s own income is only $700 a month, the Medicaid agency allocates $1,500 of Mr. Smith’s income to her support. Since Mr. Smith also may keep a $60-a-month personal needs allowance, his obligation to pay the nursing home is only $140 a month ($1,700 – $1,500 – $60 = $140).

In exceptional circumstances, community spouses may seek an increase in their MMMNAs either by appealing to the state Medicaid agency or by obtaining a court order of spousal support.

Contact your attorney to find out what you can do to make sure your spouse has enough income to live on.

A Change in Medicare Has Therapists Alarmed

January 22, 2020

courtesy of NAELAeBulletin:
by Paula Span

Nov. 29, 2019

Medicare revamped its reimbursement policy for physical, occupational and speech therapy in nursing homes. That has left some patients with less help.

In late September, a woman in her 70s arrived at a skilled nursing facility in suburban Houston after several weeks in the hospital. Her leg had been amputated after a long-ago knee replacement became infected; she also suffered from diabetes, depression, anxiety and general muscular weakness.

An occupational therapist named Susan Nielson began working with her an hour a day, five days a week. Gradually, the patient became more mobile. With assistance and encouragement, she could transfer from her bed to a wheelchair, get herself to the bathroom for personal grooming and lift light weights to build her endurance.

That progress ended abruptly on Oct. 1, when Medicare changed its payment system for physical, occupational and speech therapy in nursing homes. Ms. Nielson, employed by Reliant Rehabilitation, which supplies therapists to almost 900 nursing facilities, said that her allotted time with the woman was reduced from 60 minutes to just 20 or so minutes a day, not even long enough to help her leave her bed.

“I’m not able to do my job,” Ms. Nielson said. “This person had the potential to do more, and I couldn’t help her.”

The same lament is being expressed by therapists nationwide. Professional organizations, including the American Physical Therapy Association and the American Occupational Therapy Association, report that the new Medicare policy has prompted some nursing home chains and rehab companies to scale back the treatment they provide to patients, and to lay off therapists or switch them to part-time status.

The organizations’ members are also speaking out about the pressure they feel to conduct therapy in groups rather than one-on-one. Medicare allows up to 25 percent of patients’ therapy to take place in groups — and some employers reportedly began requiring that percentage on Oct. 1, whether therapists thought their patients would benefit or not.

“Patients’ needs didn’t change overnight,” said Kara Gainer, director of regulatory affairs for the American Physical Therapy Association. “So what changed?” Although some companies have reacted responsibly to the new system, she said, “some are bad actors who put profits before patients.”

Her members have responded with “concern, fear, outrage,” she added. A new Facebook group, Rehab Therapists for a Union, swiftly attracted more than 20,000 members. A petition on Change.org, asking the Department of Health and Human Services to intervene, garnered 80,000 signatures.

Before Oct. 1, Medicare reimbursed nursing homes for therapy based on the number of minutes provided to each patient, up to 720 minutes a week. The goal is to help patients regain mobility and the ability to perform daily tasks, so that they can safely return home.

For years, however, federal investigators and advisers have reported that nursing homes frequently provided the maximum number of minutes of therapy, regardless of whether patients needed that much treatment.

“Therapy was sort of a profit center,” said Sharmila Sandhu, who directs regulatory affairs at the American Occupational Therapy Association. “The more therapy, the higher the reimbursement.”

The new approach, called the Patient-Driven Payment Model, eliminates such incentives; now facilities are paid based on patients’ diagnoses and characteristics. In an email, a spokesman for the Centers for Medicare and Medicaid Services called the P.D.P.M. “a historic reform” that will “appropriately reflect each resident’s actual care needs.”

“This is a well-intended policy, a real sea change in how we pay for care,” said David Grabowski, a health care policy researcher at Harvard Medical School who is organizing a study of the policy’s effects.

But about 70 percent of the nation’s 15,000 or so nursing homes are for-profit and have proved adept at maintaining profit margins despite policy shifts, said Toby Edelman, senior policy attorney at the Center for Medicare Advocacy.

Without volume incentives, nursing homes may direct therapists to administer less therapy and to see patients in groups, reducing the number of professionals required and lowering labor costs.

“The risk before was overprovision of therapy,” Dr. Grabowski said. “Now the real concern is underprovision.”

Feds Release 2020 Guidelines Used to Protect the Spouses of Medicaid Applicants

January 22, 2020

The Centers for Medicare & Medicaid Services (CMS) has released the 2020 federal guidelines for how much money the spouses of institutionalized Medicaid recipients may keep, as well as related Medicaid figures.

In 2020, the spouse of a Medicaid recipient living in a nursing home (called the “community spouse”) may keep as much as $128,640 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care. Known as the community spouse resource allowance or CSRA, this is the most that a state may allow a community spouse to retain without a hearing or a court order. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2020 will be $25,728.

Meanwhile, the maximum monthly maintenance needs allowance (MMMNA) for 2020 will be $3,216. This is the most in monthly income that a community spouse is allowed to have if her own income is not enough to live on and she must take some or all of the institutionalized spouse’s income. The minimum monthly maintenance needs allowance for the lower 48 states remains $2,113.75 ($2,641.25 for Alaska and $2,432.50 for Hawaii) until July 1, 2020.

In determining how much income a particular community spouse is allowed to retain, states must abide by this upper and lower range. Bear in mind that these figures apply only if the community spouse needs to take income from the institutionalized spouse. According to Medicaid law, the community spouse may keep all her own income, even if it exceeds the maximum monthly maintenance needs allowance.

The new spousal impoverishment numbers (except for the minimum monthly maintenance needs allowance) take effect on January 1, 2020.

For a more complete explanation of the community spouse resource allowance and the monthly maintenance needs allowance, click here.

Home Equity Limits:

In 2020, a Medicaid applicant’s principal residence will not be counted as an asset by Medicaid if the applicant’s equity interest in the home is less than $595,000, with the states having the option of raising this limit to $893,000.

For more on Medicaid’s home equity limit, click here.

Medicaid’s Treatment of the Home

December 24, 2019

Nursing home residents do not automatically  have to sell their homes in order to qualify for Medicaid, but that doesn’t mean the house is completely protected. The state will likely put a lien on the house while the resident is living and attempt to recover the property after the resident has passed away.

Medicaid will not count a nursing home resident’s home as an asset when determining eligibility for Medicaid as long as the resident intends to return home (in some states, the nursing home resident must prove a likelihood of returning home). In addition, the resident’s equity interest in the home must be less than $585,000, with the states having the option of raising this limit to $878,000 (figures are adjusted annually for inflation; these are for 2019).

The equity value of the home is the fair market value minus any debts secured by the home, such as a mortgage or a home equity loan. For example, if your home has a fair market value of $400,000 and an outstanding mortgage of $100,000, the equity value is $300,000. Your equity interest depends on whether you own the home by yourself or with someone else.  If you own the home by yourself, your equity interest is the entire equity value.  If you own your home jointly with your spouse or someone else, your equity interest is only half of the home’s equity value.

The home equity rule does not apply if the Medicaid applicant’s spouse or a child who is under 21 or is blind or disabled lives in the home.

While the house may not need to be sold in order to qualify for Medicaid, state Medicaid agencies will likely place a lien on any real estate owned by a Medicaid beneficiary during his or her life. The state cannot impose a lien if a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living in the house.

Once a lien is placed on the property, if the property is sold while the Medicaid beneficiary is living, not only will the beneficiary cease to be eligible for Medicaid due to the cash from the sale, but the beneficiary would have to satisfy the lien by paying back the state for its coverage of care to date. In some states, the lien may be removed upon the beneficiary’s death. In other states, the state can collect on the lien after the Medicaid recipient dies. Check with your attorney to see how your local agency handles this.

Even if the state did not place a lien on the home during the Medicaid beneficiary’s life, the home may still be subject to estate recovery after the Medicaid recipient’s death, again depending on the state.

There are steps you can take to protect your home. Contact your attorney to learn more.

Medicaid’s Power to Recoup Benefits Paid: Estate Recovery and Liens

November 18, 2019

Federal law requires the state to attempt to recover the long-term care benefits from a Medicaid recipient’s estate after the recipient’s death. If steps aren’t taken to protect the Medicaid recipient’s house, it may need to be sold to settle the claim.

For Medicaid recipients age 55 or older, states must seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services. States also have the option of recovering all Medicaid benefits from individuals over age 55, including costs for any medical care, not just long-term care benefits.

There are a few exceptions. The state cannot recover from the estate of a Medicaid recipient who has a surviving spouse until after the spouse passes away. After the spouse dies, the state may file a claim against the spouse’s estate to recover money spent for the Medicaid recipient’s care. The state also cannot recover from the estate if the Medicaid recipient had a child who is under age 21 or a child who is blind or disabled.

While states must attempt to recover funds from the Medicaid recipient’s probate estate, meaning property that is held in the beneficiary’s name only, they have the option of seeking recovery against property in which the recipient had an interest but which passes outside of probate (this is called “expanded” estate recovery). This includes jointly held assets, assets in a living trust, or life estates. Given the rules for Medicaid eligibility, the only probate property of substantial value that a Medicaid recipient is likely to own at death is his or her home. However, states that have not opted to broaden their estate recovery to include non-probate assets may not make a claim against the Medicaid recipient’s home if it is not in his or her probate estate.

In addition to the right to recover from the estate of the Medicaid beneficiary, state Medicaid agencies may place a lien on real estate owned by a Medicaid beneficiary during his or her life unless certain dependent relatives are living in the property. The state cannot impose a lien if a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living there.

Once a lien is placed on the property, if the property is sold while the Medicaid beneficiary is living, not only will the beneficiary cease to be eligible for Medicaid due to the cash from the sale, but the beneficiary would have to satisfy the lien by paying back the state for its coverage of care to date. In some states, the lien may be removed upon the beneficiary’s death. In other states, the state can collect on the lien after the Medicaid recipient dies. Check with your attorney to see how your local agency handles this.

There are some circumstances under which the value of a house can be protected from Medicaid recovery. The state cannot recover if the Medicaid recipient and his or her spouse owned the home as tenants by the entireties or if the house is in the spouse’s name and the Medicaid recipient relinquished his or her interest. If the house is in an irrevocable trust, the state cannot recover from it.

In addition, some children or relatives may be able to protect a nursing home resident’s house if they qualify for an undue hardship waiver. For example, if a Medicaid recipient’s daughter took care of him before he entered the nursing home and she has no other permanent residence, she may be able to avoid a claim against his house after he dies. Consult with your attorney to find out if the undue hardship waiver may be applicable.

How to Use a Trust in Medicaid Planning

October 15, 2019

With careful Medicaid planning, you may be able
to  preserve some of your estate for your
children or other heirs while meeting Medicaid’s low asset limit.

The problem with transferring assets is that you have given them away. You no longer control them, and even a trusted child or other relative may lose them. A safer approach is to put them in an irrevocable trust. A trust is a legal entity under which one person — the “trustee” — holds legal title to property for the benefit of others — the “beneficiaries.” The trustee must follow the rules provided in the trust instrument. Whether trust assets are counted against Medicaid’s resource limits depends on the terms of the trust and who created it.

A “revocable” trust is one that may be changed or rescinded by the person who created it. Medicaid considers the principal of such trusts (that is, the funds that make up the trust) to be assets that are countable in determining Medicaid eligibility. Thus, revocable trusts are of no use in Medicaid planning.

Income-only trusts

An “irrevocable” trust is one that cannot be changed after it has been created. In most cases, this type of trust is drafted so that the income is payable to you (the person establishing the trust, called the “grantor”) for life, and the principal cannot be applied to benefit your or your spouse. At your death the principal is paid to your heirs. This way, the funds in the trust are protected and you can use the income for your living expenses. For Medicaid purposes, the principal in such trusts is not counted as a resource, provided the trustee cannot pay it to you or your spouse for either of your benefits. However, if you do move to a nursing home, the trust income will have to go to the nursing home.

You should be aware of the drawbacks to such an arrangement. It is very rigid, so you cannot gain access to the trust funds even if you need them for some other purpose. For this reason, you should always leave an ample cushion of ready funds outside the trust.

You may also choose to place property in a trust from which even payments of income to you or your spouse cannot be made. Instead, the trust may be set up for the benefit of your children, or others. These beneficiaries may, at their discretion, return the favor by using the property for your benefit if necessary. However, there is no legal requirement that they do so.

One advantage of these trusts is that if they contain property that has increased in value, such as real estate or stock, you (the grantor) can retain a “special testamentary power of appointment” so that the beneficiaries receive the property with a step-up in basis at your death. This will also prevent the need to file a gift tax return upon the funding of the trust.

Remember, funding an irrevocable trust within the five years prior to applying for Medicaid (the “look-back period”) may result in a period of ineligibility. The actual period of ineligibility depends on the amount transferred to the trust.

Testamentary trusts

Testamentary trusts are trusts created under a will. The Medicaid rules provide a special “safe harbor” for testamentary trusts created by a deceased spouse for the benefit of a surviving spouse. The assets of these trusts are treated as available to the Medicaid applicant only to the extent that the trustee has an obligation to pay for the applicant’s support. If payments are solely at the trustee’s discretion, they are considered unavailable.

Therefore, these testamentary trusts can provide an important mechanism for community spouses to leave funds for their surviving institutionalized husband or wife that can be used to pay for services that are not covered by Medicaid. These may include extra therapy, special equipment, evaluation by medical specialists or others, legal fees, visits by family members, or transfers to another nursing home if that became necessary. But remember that if you create a trust for yourself or your spouse during life (i.e., not a testamentary trust), the trust funds are considered available if the trustee has the ability to use them for you or your spouse.

Supplemental needs trusts

The Medicaid rules also have certain exceptions for transfers for the sole benefit of disabled people under age 65. Even after moving to a nursing home, if you have a child, other relative, or even a friend who is under age 65 and disabled, you can transfer assets into a trust for his or her benefit without incurring any period of ineligibility. If these trusts are properly structured, the funds in them will not be considered to belong to the beneficiary in determining his or her own Medicaid eligibility. The only drawback to supplemental needs trusts (also called “special needs trusts”) is that after the disabled individual dies, the state must be reimbursed for any Medicaid funds spent on behalf of the disabled person.

To find out whether a trust is the right Medicaid planning strategy for you, talk to your elder law attorney.

How Will Medicare-for-all Proposals Affect Medicaid?

October 15, 2019

Summary

As the debate over the future direction of our health care system heats up leading into the 2020 Presidential election, several Democratic proposals to create a single, federal, universal health insurance program known as Medicare-for-all have garnered significant attention. These proposals would replace most current public and private health insurance with a new federal program that would guarantee health coverage for all or nearly all U.S. residents. However, many details about how a new public program would be implemented and financed are not yet known. While much attention has focused on the implications of ending private insurance and Medicare, the debate has largely ignored the effects on the low-income and vulnerable populations covered by Medicaid and the broader implications for states of eliminating the Medicaid program. Key changes related to Medicaid under current proposals include:

The Medicare-for-all debate has largely ignored the effects on the low-income and vulnerable populations covered by Medicaid and the broader implications for states of replacing the Medicaid program.

Medicare-for-all proposals would generally eliminate current variation in eligibility, enrollment and renewal processes, benefits, and payment and delivery systems that are part of the current structure of Medicaid where states have considerable flexibility to design programs within broad federal rules.

Proposals would extend coverage for certain Medicaid services important to vulnerable populations (such as comprehensive benefits for children and non-emergency medical transportation) to other populations. The proposals would continue Medicaid protections against high out-of-pocket costs.

One of the most fundamental changes under Medicare-for-all would be uniform coverage of community-based long-term care services for all Americans. Medicaid is the primary payer for these services today, with substantial state variation in eligibility and coverage. Under current Medicare-for-all proposals, these services would be required and explicitly prioritized over institutional services. Medicare-for-all proposals vary as to whether they would include institutional long-term care, such as nursing homes, or instead continue the current Medicaid coverage of these services, locking in state spending, variation in benefits across states, and limited access to populations beyond Medicaid.

Some proposals would have the federal government assume all or a significant share of the nearly $222 billion in state spending on Medicaid, leading to significant state savings, while other proposals call for a maintenance of effort for all or some current state Medicaid spending.

The proposals would shift responsibility for designing and implementing much of health policy from states to the federal government, in contrast to states’ role under Medicaid today.

Introduction

As the debate over the future direction of our health care system heats up leading into the 2020 Presidential election, several Democratic proposals to create a single, federal, universal health insurance program known as Medicare-for-all have garnered significant attention. These proposals would replace most current public and private health insurance with a new federal program that would guarantee health coverage for all or nearly all U.S. residents, though many details about how a new public program would be implemented and financed are not yet known. While much attention has focused on the implications of ending private insurance and Medicare, the debate has largely ignored the effects on the low-income and vulnerable populations covered by Medicaid and the broader implications for states of eliminating the Medicaid program.

Multiple Medicare-for-all proposals have been introduced in Congress and advanced by Presidential candidates. Currently, the proposals are characterized by two main approaches: proposals that create a single-payer system and eliminate other forms of coverage, including employer-sponsored insurance, Medicare and Medicaid; and proposals that eliminate the Medicare and Medicaid programs but maintain a role for private insurance. Medicare-for-all bills proposed by Rep. Pramila Jayapal (HR 1384) and Sen. Bernie Sanders (S. 1129) and endorsed by Presidential candidates Sen. Elizabeth Warren, Sen. Cory Booker, and Andrew Yang adopt the former approach. A Medicare-for-all proposal offered by Sen. Kamala Harris takes the latter approach. Each of these proposals differs in some way from the others. However, for purposes of this brief, we refer to these proposals collectively as Medicare-for-all, though we note where important differences in the proposals may have different implications for Medicaid.

Medicaid is administered by the states, and each state’s program is unique, reflecting states’ use of existing program flexibility and waiver authority to design their programs. Because of this variation, the specific implications of a shift from Medicaid to a Medicare-for-all program would vary across states. However, in all states, Medicaid plays a key role by providing affordable health coverage for vulnerable populations that includes a wide range of medical, behavioral health, and long-term care benefits. It also is the largest source of federal funds to states. This issue brief explores key ways in which a shift to Medicare-for-all could affect current Medicaid enrollees, future enrollees (such as those who may need long-term care coverage at a later time), and states, which jointly finance the Medicaid program along with the federal government. Table 1 summarizes key similarities and differences regarding eligibility, benefits, affordability, provider payment and delivery systems, and state financing in the main Medicare-for-all proposals and Medicaid.

Medicaid’s Role Today

Medicaid covers 75 million low-income adults, children, pregnant women, seniors, and people with disabilities. The Affordable Care Act (ACA) expanded Medicaid eligibility to serve as the basis of its larger set of coverage and affordability reforms. As of August 2019, 37 states including DC have adopted the ACA’s Medicaid expansion. In 2017, the Medicaid expansion group included more than 12 million newly eligible low-income adults. However, 2.5 people remain in a coverage gap, with income too high to qualify for Medicaid but too low to receive Marketplace subsidies in the 14 states that have not yet adopted the expansion. Medicaid also covers 45% of nonelderly adults with disabilities and millions more people with chronic conditions for whom private insurance, designed for a generally healthy population, is inadequate and/or unaffordable.

Medicaid covers a broad array of medical, behavioral health, and long-term care services. The Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit for children provides comprehensive coverage including preventive screenings, vision, dental, and hearing services, and any other medically necessary care. Federal standards outline minimum benefits for adults, such as hospital, physician, and nursing facility services. States also can cover a variety of optional benefits, such as prescription drugs and private duty nursing. Medicaid is the principal source of coverage for long-term services and supports (LTSS), including nursing home care as well as home and community-based services that enable seniors and people with disabilities to live independently. While all state Medicaid programs cover a comprehensive set of services, because states have flexibility to provide optional services for adults, there is significant variation across states.

Medicaid provides affordable coverage for its low-income enrollees. Federal standards prohibit states from charging premiums to those with incomes less than 150% of the federal poverty level (FPL), though some states impose premiums for certain adults through a Section 1115 waiver. Federal rules also limit cost-sharing to nominal amounts and entirely exempt certain groups and services from any cost sharing. Aggregate out-of-pocket costs for an individual may not exceed 5% of family income.

Medicaid provides access to a broad range of providers, including many with unique expertise in treating vulnerable and low-income populations. States set provider payment rates within broad federal guidelines, and as a result, there is significant variation across states in how provider rates are determined and in payment levels. Despite lower payment rates in Medicaid and gaps in access to some types of specialists, national data show that access to services for children and adults is comparable to private insurance and exceeds access for the uninsured. Medicaid programs contract with a broad range of providers, including many safety net clinics, hospitals, and other providers that have experience in meeting the needs of Medicaid’s vulnerable enrollees. Managed care has become the dominant Medicaid delivery system, though states have substantial flexibility in designing their delivery and payment systems.

Medicaid is financed jointly by the federal government and the states, guaranteeing federal matching payments to states with no pre-set limit. The matching structure of the program provides states with resources that automatically adjust for demographic and economic shifts, rising health care costs, and changing state priorities. This structure also enables the program to respond to public health emergencies and natural and other disasters. Examples of this response include providing a coverage safety net to people affected by the HIV/AIDS epidemic and expanding eligibility and benefits for children and pregnant women exposed to high levels of lead during the Flint water crisis. Recessions, rising costs of prescription drugs, and increasing needs for long-term care and behavioral health services are factors that put upward pressure on Medicaid spending growth. However, over time, Medicaid growth per enrollee has been lower than private health spending. Medicaid is a significant spending item in state budgets, but also the largest source of federal revenues due to the matching structure.

Implications of Medicare-for-all for Medicaid
Eligibility, Coverage, and Enrollment

Medicare-for-all programs would establish universal national health coverage for all or nearly all U.S. residents, eliminating the need for the specific eligibility pathways in the current Medicaid program. Medicare-for-all programs would establish uniform eligibility criteria across all states that are tied to U.S. residency and not based on income. Notably, Medicare-for-all would eliminate the current variability in eligibility for health coverage across states and fill in coverage gaps in states that have not adopted the ACA’s Medicaid expansion. Under Medicaid, states must cover certain populations, such as very low-income parents and children, pregnant women, and poor people with disabilities who receive federal Supplemental Security Income (SSI) benefits. States then choose from a variety of optional coverage pathways and waiver authorities to expand coverage, especially for children with significant disabilities and seniors and adults with disabilities who need long-term care. While all states currently adopt at least one of these optional expansions, Medicaid eligibility criteria differ across states. Medicare-for-all programs would eliminate the need for specialized eligibility determinations based on disability or functional status. How current Medicaid enrollees, particularly those with complex health care needs, would be transitioned to a new coverage plan, is an important policy and implementation issue in the new proposals.

Immigrants’ eligibility for coverage under Medicare-for-all is unclear, while their coverage under Medicaid today is subject to limitations. Medicare-for-all proposals grant authority to the Health and Human Services Secretary to define residency when determining eligibility for coverage, so it is not yet known how undocumented immigrants would be treated, though some proposals specifically cover legal immigrants and certain undocumented immigrants. Many Democratic candidates running for President say they support coverage for undocumented immigrants. Most legal immigrants are barred from Medicaid coverage for five years after entering the United States (except in the 35 states that have taken up the option to eliminate the five-year waiting period for Medicaid/CHIP coverage for lawfully-residing immigrant children and/or pregnant women). Undocumented immigrants are not eligible for Medicaid coverage, although state Medicaid programs reimburse providers for emergency care for individuals who are otherwise eligible for Medicaid except for their immigration status.

A process for auto-enrolling individuals into coverage under Medicare-for-all programs would replace existing application and renewal processes in Medicaid. Once established, all of the Medicare-for-all proposals call for automatically enrolling individuals in coverage at birth. Auto-enrollment would result in higher coverage rates compared to the current Medicaid program, since not everyone who is eligible for Medicaid presently is enrolled. Each state administers its own Medicaid eligibility determination system. The ACA included new policies and strategies to streamline the eligibility and enrollment process, such as greater reliance on electronic data sources instead of paper verification, in an effort to keep eligible people enrolled in coverage. Nevertheless, the need to apply for and periodically renew Medicaid coverage can sometimes result in eligible individuals churning in and out of coverage.

Benefits

Medicare-for-all programs would cover a comprehensive set of health care services for adults that would eliminate the current variability in Medicaid benefit packages across states. For example, the Medicare-for-all proposals include some benefits that are optional in Medicaid for adults and consequently not available in all states, such as dental and vision care. The Medicare-for-all benefit package also would include mental health and substance use treatment services. While all state Medicaid programs cover mental health and substance use disorder services, the scope of coverage for adults can vary. Many states rely on Medicaid to cover specialized behavioral health services, and the Medicare-for-all proposals would include some of these benefits. For example, the Sanders and Jayapal proposals include day treatment and psychosocial rehabilitation for those with chronic mental illness. Also, although prescription drug coverage is not required by the Medicaid statute, all states cover this benefit. Medicaid must cover all drugs with a rebate agreement as medically necessary, but states may apply utilization controls such as prior authorization, a preferred drug formulary, or quantity limits on drug refills or pills per prescription, and those differ across states. While Medicare-for-all proposals would establish uniform coverage for prescription drugs across states, it is unclear if coverage would be as comprehensive. Under both Medicare-for-all and Medicaid, all covered services must be determined medically necessary.

Medicare-for-all would cover certain services important to vulnerable populations that currently are covered by Medicaid but not other payers. In current Medicare-for-all proposals, these include the EPSDT benefit that provides a comprehensive set of services for children as well as non-emergency medical transportation to access medical appointments, with the Sanders and Jayapal proposals limiting this benefit to those with low incomes and/or disabilities.

One of the most fundamental changes under Medicare-for-all would be uniform coverage of community-based long-term care services; Medicaid is the primary payer for these services today, with substantial state variation in eligibility and coverage. Medicare-for-all would cover many of the community-based long-term care services covered by Medicaid today. And, unlike Medicaid, where most community-based long-term care services are optional, these services would be required, and explicitly prioritized over institutional services, under Medicare-for-all. With community-based long-term care services included in the Medicare-for-all benefit package, everyone would be eligible to receive covered services without regard to income or assets, unlike in Medicaid today. The Jayapal proposal includes functional eligibility criteria (e.g. limitation in an activity of daily living) to qualify for LTSS; today, states set Medicaid LTSS functional eligibility criteria. Unlike other Medicaid services, states are allowed to cap enrollment for many community-based long-term care services, which means that some people who meet the eligibility criteria do not receive them. Including these services in Medicare-for-all could mean that individuals currently on state Medicaid waiver waiting lists as well as others who are not financially eligible for Medicaid could have access to these services. However, it could take time to develop adequate system capacity in terms of infrastructure and workforce to accommodate such an expansion in paid LTSS. Additionally, the cost of providing a universal long-term care benefit package could result in some limitations or restrictions on these benefits as more details are known and Medicare-for-all is implemented.

Medicare-for-all proposals vary as to whether they would include institutional long-term care, such as nursing homes, or instead continue the current Medicaid coverage of these services. Under a scenario where Medicare-for-all includes institutional long-term care, all enrollees would receive these services as part of their basic benefit package as medically necessary, without regard to income or asset limits. The Jayapal proposal includes functional eligibility criteria for institutional long-term care, as it does for HCBS. The Jayapal benefit package includes a range of institutional services, which could also include institutions for mental disease (IMDs) and intermediate care facilities for those with intellectual or developmental disabilities (ICF/DD). Medicaid currently covers ICF/DD services but generally does not cover services in IMDs for individuals ages 21-64. If institutional services are carved out of Medicare-for-all and instead continue to be provided through state Medicaid programs, as under the Sanders bill, then individuals would need to continue to meet current eligibility criteria for these services, which vary across states. Under this approach, states would also be required to continue to pay their state share of costs for these services based on the current federal Medicaid matching rules. Those not eligible for Medicaid would continue to have to pay for institutional long-term care out of their own income and assets or through private long-term-care insurance, or spend-down to be eligible for Medicaid. The Sanders Medicare-for-all program would require states to maintain their existing Medicaid eligibility standards and spending on institutional long-term care services and would continue to provide states with federal matching payments for these services, locking in variation in eligibility standards across states.

Premiums and Cost Sharing

Medicare-for-all would continue the protections that Medicaid provides against high out-of-pocket costs. Medicare-for-all programs would eliminate or reduce premiums and cost sharing. The Sanders and Jayapal proposals would eliminate premiums and deductibles, and the Jayapal proposal would eliminate cost sharing, while the Sanders proposal would include minimal copayments on prescription drugs for those with incomes above 200% FPL. Under these proposals, today’s Medicaid enrollees would continue to be protected from high out-of-pocket costs. While most Medicaid enrollees do not pay premiums and have limited out of pocket expenses, any who do would likely see these costs eliminated.

Payment and Delivery Systems

Similar to Medicaid, all licensed and certified providers would be eligible to participate in Medicare-for-all programs; however, given the scope of Medicare-for-all programs, it is likely a broader array of providers will participate, expanding the choice of providers for current Medicaid enrollees. State Medicaid programs are required to contract with federally qualified health centers, and most contract with other essential community providers, and consequently, these providers are an important source of care for Medicaid enrollees. While these contracting requirements are not part of current Medicare-for-all proposals, it is expected that health centers and other essential community providers would participate to the same extent they participate in Medicaid programs today.

Medicare-for-all programs would create a national fee schedule for paying providers, eliminating variation in payment rates across states and payers in Medicaid today. While few details are available, Medicare-for-all programs would establish payment rates for hospitals, physicians, and other providers, subject to a global budget process and negotiation under some proposals. In general, states have flexibility in setting Medicaid provider payment rates, leading for variation in payment rates across states. In general, Medicaid rates paid to physicians and some other providers are lower than Medicare rates, while other providers, such as safety net hospitals, may receive higher payments through Medicaid compared to Medicare due to supplemental payments. It is unclear whether payment rates under Medicare-for-all proposals would be based on Medicare rates or set using a different methodology. In addition, federal rules require special Medicaid payment rates for some providers, such as federally qualified health centers and rural health clinics that have contributed to their participation in the program. These providers are likely to see an increase in revenue from improved coverage under Medicare-for-all programs; however, given longstanding relationships Medicaid enrollees have with safety net providers, how they fare under a new program will matter.

The reliance on fee-for-service payments under current Medicare-for-all proposals may move away from current payment and delivery models adopted by state Medicaid programs. Medicare-for-all programs would pay physicians and other providers on a fee-for-service basis, while institutional providers would be paid through a global budget arrangement under some proposals or through fee-for-service under others. Medicaid initially relied on fee-for-service payments, but in recent years, states have experimented with innovative payment designs in their Medicaid programs that seek to improve quality of care, control costs, and address social determinants of health. In addition, through their contracts with managed care organizations as well as managed fee-for-service models, states have emphasized care management for people with complex health needs. Some proposals would allow for these types of payment and delivery models, including private managed care plans, while others would not. While moving to global budgets and a national fee schedule will likely lower costs, some of the benefits of care management strategies, particularly for people with multiple or complex conditions and other vulnerable patients, may be lost.

State Responsibilities

The state role in health care financing would change substantially under a Medicare-for-all program compared to Medicaid. The state share of spending for Medicaid was $222 billion in 2017. Medicare-for-all proposals vary in how much states could save and how much funding states would be required to contribute relative to current spending. For example, under the Jayapal proposal, states could see significant savings relative to current Medicaid spending because Medicaid would be eliminated, and there would be no state financing requirements. However, under other proposals, states would remain responsible through a maintenance of effort (MOE) requirement for all or part of current state spending on Medicaid. The Sanders Medicare-for-all program would require states to maintain their existing Medicaid eligibility standards and spending on institutional long-term care services and would continue to provide states with federal matching payments for these services, locking in variation in eligibility standards and financing across states. Long-term care accounts for more than one in five dollars of Medicaid spending and in 2016, community based long-term care services accounted for 57% of all Medicaid spending on long-term care nationally, although this varies by state. The level of state savings under the Sanders proposal will vary based on current state spending on institutional long-term care services. Under the Harris proposal, states would be required to make MOE payments to the new program equal to the amounts they currently spend on Medicaid and CHIP, increased over time by inflation. Since Medicaid costs have typically increased at higher rates than inflation, states could see some savings over time, but significantly less relative to the Jayapal and Sanders proposals. It is not clear in the Harris and Sanders proposals how state spending from provider fees or taxes (a mechanism used by nearly every state to finance the state share of Medicaid) would be factored in the MOE calculation.

In addition to transferring fiscal responsibility, the proposals would shift the role of designing and implementing much of health policy from states to the federal government. Under current programs, states have significant flexibility to design and administer Medicaid and other related health programs. Medicare-for-all programs would create more uniformity in eligibility and benefits and could result in state savings, but the proposals would also limit states’ ability to leverage Medicaid funding to implement innovative payment and delivery system reforms. Without a comprehensive Medicaid program – and the substantial financing of health care that comes along with it – state policymakers would have a much more diminished role in the health care system generally. Some role for states may remain. For example, the Sanders proposal calls for a regional administrative structure that would include state directors. While the proposals may open other avenues for innovation, the state role in administering all aspects of Medicaid and running insurance departments would diminish under Medicare-for-all programs as these functions shift to federal responsibility.

Looking Ahead

Many details about how a new Medicare-for-all program replacing all or most current public and private health insurance would be implemented and financed are not yet known. As proposals continue to emerge and develop, it is important to focus on the implications related to Medicaid, the program that currently covers 75 million low-income and vulnerable Americans. As with other parts of the health care system, there will be trade-offs. Medicare-for-all proposals would generally eliminate current variation in eligibility, enrollment and renewal processes, benefits, and payment and delivery systems that are part of the current structure of Medicaid, where states now have considerable flexibility to design programs within broad federal rules. However, the transition to a new program, even one with equally comprehensive benefits and cost sharing protections, could be particularly disruptive for current Medicaid enrollees who tend to be sicker with more complex health conditions, and for whom the ability to maintain relationships with current providers will be important. A smooth transition to any new system also will be critical for current Medicaid enrollees who rely on personal care and other services to meet daily self-care needs and maintain independent community living.

More broadly, Medicare-for-all programs would extend coverage for some Medicaid services to more Americans, most notably community-based long-term services and supports. For states, the role in health care financing would change substantially under a Medicare-for-all program. Some proposals would have the federal government assume all or a significant share of the nearly $222 billion in state spending on Medicaid, leading to significant state savings. However, other proposals call for a state maintenance of effort around spending broadly or for specific services. The details about how the MOE would be implemented are not clear. In addition, the proposals would shift responsibility for much of health policy from states to the federal government. As the debate continues and additional details emerge, it will be important to continue to evaluate how Medicare-for-all proposals affect coverage, benefits, out of pocket costs and access to care for the low-income and vulnerable populations currently covered by Medicaid.

Medicaid’s Asset Transfer Rules

October 8, 2019

In order to be eligible for Medicaid, you cannot have recently transferred assets. Congress does not want you to move into a nursing home on Monday, give all your money to your children (or whomever) on Tuesday, and qualify for Medicaid on Wednesday. So it has imposed a penalty on people who transfer assets without receiving fair value in return.

This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state.

Example: If you live in a state where the average monthly cost of care has been determined to be $5,000, and you give away property worth $100,000, you will be ineligible for benefits for 20 months ($100,000 / $5,000 = 20).

Another way to look at the above example is that for every $5,000 transferred, an applicant would be ineligible for Medicaid nursing home benefits for one month. In theory, there is no limit on the number of months a person can be ineligible.

Example: The period of ineligibility for the transfer of property worth $400,000 would be 80 months ($400,000 / $5,000 = 80).

A person applying for Medicaid must disclose all financial transactions he or she was involved in during a set period of time — frequently called the “look-back period.” The state Medicaid agency then determines whether the Medicaid applicant transferred any assets for less than fair market value during this period.  The look-back period for all transfers is 60 months (except in California, where it is 30 months).  Also, keep in mind that because the Medicaid program is administered by the states, your state’s transfer rules may diverge from the national norm.  To take just one important example, New York State does not apply the transfer rules to recipients of home care (also called community care).

The penalty period created by a transfer within the look-back period does not begin until (1) the person making the transfer has moved to a nursing home, (2) he has spent down to the asset limit for Medicaid eligibility, (3) has applied for Medicaid coverage, and (4) has been approved for coverage but for the transfer.

For instance, if an individual transfers $100,000 on April 1, 2017, moves to a nursing home on April 1, 2018, and spends down to Medicaid eligibility on April 1, 2019, that is when the 20-month penalty period will begin, and it will not end until December 1, 2020.

In other words, the penalty period would not begin until the nursing home resident was out of funds, meaning there would be no money to pay the nursing home for however long the penalty period lasts.  In states that have so-called “filial responsibility laws,” nursing homes may seek reimbursement from the residents’ children. These rarely-enforced laws, which are on the books in 29 states, hold adult children responsible for financial support of indigent parents and, in some cases, medical and nursing home costs.  In 2012, a Pennsylvania appeals court found a son liable for his mother’s $93,000 nursing home bill under the state’s filial responsibility law.

Exceptions

Transferring assets to certain recipients will not trigger a period of Medicaid ineligibility. These exempt recipients include the following:

  • A spouse (or a transfer to anyone else as long as it is for the spouse’s benefit)
  • A trust for the sole benefit of a blind or disabled child
  • A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances).

In addition, special exceptions apply to the transfer of a home. The Medicaid applicant’s home may be transferred to the individuals above, and the applicant also may freely transfer his or her home to the following individuals without incurring a transfer penalty:

  • A child who is under age 21
  • A child who is blind or disabled (the house does not have to be in a trust)
  • A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home
  • A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

Congress has created a very important escape hatch from the transfer penalty: the penalty will be “cured” if the transferred asset is returned in its entirety, or it will be reduced if the transferred asset is partially returned. However, some states are not permitting partial returns. Check with your elder law attorney.

Medicaid’s Gift to Children Who Help Parents Postpone Nursing Home Care

September 3, 2019

In most states, transferring your house to your children (or someone else) may lead to a Medicaid penalty period, which would make you ineligible for Medicaid for a period of time. However, there are circumstances in which transferring a house will not result in a penalty period.

One of those circumstances is if the Medicaid applicant transfers the house to a “caretaker child.”  This is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s entering a nursing home and who during that period provided care that allowed the applicant to avoid a nursing home stay.  In such cases, the Medicaid applicant may freely transfer a home to the child without triggering a transfer penalty.  Note that the exception applies only to a child, not a grandchild or other relative.

Each state Medicaid agency has its own rules for proof that the child has lived with the parent and provided the necessary level of care, making it doubly important to consult with your attorney before making this (or any other) kind of transfer.

Others to whom a home may be transferred without Medicaid’s usual penalty are:

  • Your spouse
  • A child who is under age 21 or who is blind or disabled
  • Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)
  • A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home

Medicare and Medicaid Programs; Revision of Requirements for Long-Term Care Facilities Arbitration Agreements (CMS-3342-F)

July 30, 2019

NAELA eBulletin:

Today, the Centers for Medicare & Medicaid Services (CMS) announced a final rule, “Medicare and Medicaid Programs; Revision of Requirements for Long-Term Care Facilities: Arbitration Agreements” (CMS-3342-F). The final rule revises the requirements for arbitration agreements when they are used by long-term care (LTC) facilities to resolve disputes with their residents. Provisions in this rule establish substantial protections for residents and their representatives and ensure transparency in the arbitration process in LTC facilities, also known as “nursing homes”. The rule is part of the agency’s five-part approach to ensuring a high-quality nursing home system that focuses on strengthening requirements for nursing homes, working with states to enforce statutory and regulatory requirements, increasing transparency of nursing home performance, and promoting improved health outcomes for nursing home residents.

This final rule repeals the prohibition on LTC facilities entering into pre-dispute, binding arbitration agreements with their residents, as proposed. However, this final rule includes protections of residents’’ rights by prohibiting LTC facilities from requiring residents to sign binding arbitration agreements as a condition of admission to, or as a requirement to continue to receive care at, that facility. It strengthens the transparency of arbitration agreements and the arbitration process with specific requirements for the LTC facility, such as the requirement that LTC facilities that resolve a dispute with a resident through arbitration retain copies of the signed arbitration agreement and the final arbitrator’s decision for five years and make such documents available for review by CMS or its designee. It also protects residents’ rights to make informed choices about their health care by ensuring that residents or their representatives have the right to understand what the arbitration agreement says and the consequences of signing the agreement.

Background

On October 4, 2016, CMS published in the Federal Register a final rule titled, “Reform of Requirements for Long-Term Care Facilities” (81 FR 68688) (2016 final rule). The rule banned binding pre-dispute arbitration agreements in LTC facilities. In 2016, the American Health Care Association (AHCA) and a group of affiliated nursing homes filed a complaint in the U.S. District court for the Northern District of Mississippi seeking a preliminary and permanent injunction enjoining CMS from enforcing the ban on LTC facilities entering into pre-dispute, binding arbitration agreements with their residents. After the court preliminarily enjoined the enforcement of that regulation, the agency determined that further analysis of the rule was warranted. On December 9, 2016, CMS issued a nationwide instruction to State Survey Agency Directors, directing them not to enforce the 2016 final rule’s prohibition of pre-dispute, binding arbitration provisions.

On June 8, 2017, CMSCMS published a proposed rule, “Medicare and Medicaid Programs; Revisions of Requirements for Long-Term Care Facilities: Arbitration Agreements” (82 FR 26649) in the Federal Register. The agency received over 1,000 public comments on the proposed rule from a number of stakeholders, including nursing homes and beneficiary advocates. That proposed rule focused on the transparency surrounding the arbitration process and proposed the following:

  • The prohibition on LTC facilities entering into pre-dispute, binding arbitration agreements with their residents would be repealed.
  • All agreements for binding arbitration must be in plain language.
  • If signing the agreement for binding arbitration is a condition of admission into the facility, the language of the agreement must be in plain writing and in the admissions contract.
  • The agreement must be explained to the resident and his or her representative in a form and manner they understand, including that it must be in a language they understand.
  • The resident must acknowledge that he or she understands the agreement.
  • The agreement must not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials, including federal and state surveyors, other federal or state health department employees, or representatives of the State Long-Term Care Ombudsman.
  • If the facility resolves a dispute with a resident through arbitration, it must retain a copy of the signed agreement for binding arbitration and the arbitrator’s final decision so it can be inspected by CMS or its designee.
  • The facility must post a notice regarding its use of binding arbitration in an area that is visible to both residents and visitors.

Final Rule Revisions to Arbitration Requirements

After careful consideration of the public comments, CMS is modifying our proposed changes.  We are not finalizing the requirements for plain language in the arbitration agreements and that the facility post a notice regarding its use of binding arbitration. We believe these proposed requirements are unnecessary due to other requirements finalized in this rule.  In addition, we are retaining some of the requirements finalized in the 2016 rule.  We are finalizing following provisions.  An LTC facility must:

  • Not require that a resident or his or her representative sign an agreement for binding arbitration as a condition of admission to, or as a requirement to continue to receive care at, the facility.  This must be explicitly stated in the agreement to ensure.  This ensures that no resident or his or her representative will have to choose between the resident obtaining the skilled nursing care he or she needs and signing an agreement for binding arbitration.
  • Ensure that the agreement is explained to the resident or his or her representative in a form and manner that he or she understands, including in a language that he or she understands, and that the resident or his or her representative acknowledges that he or she understands the agreement.  These two requirements ensure that the arbitration agreement is transparent and the resident or his or her representative understand what he or she is agreeing to.
  • Ensure that the agreement provides for the selection of a neutral arbitrator agreed upon by both parties and a venue that is convenient to both parties.  These requirements helps to ensure that the arbitration process is fair to both parties, especially the residents.
  • Ensure that the agreement does not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials, including Federal or state surveyors, other federal or state health department employees, or representative of the Office of the State Long-Term Care Ombudsman. This protects the resident and his or her representative from any undue influence by the LTC facility to not discuss the circumstances surrounding a concern, complaint or grievance.
  • Retain copies of the signed agreement for binding arbitration and the arbitrator’s final decision for 5 years after the resolution of any dispute resolved through arbitration with residents, and make these documents available for inspection upon request by CMS or its designee.  This will ensure that CMS will be able to obtain information on how the arbitration process is being used by LTC facilities, and on the outcomes of the arbitrations for residents.

For more information, please visit: https://www.federalregister.gov/documents/2019/07/18/2019-14945/medicare-and-medicaid-programs-revision-of-requirements-for-long-term-care-facilities-arbitration