Feds worry death rules will limit new Medicaid enrollees – USA TODAY

ASBURY PARK, N.J. — The government is urging states to look the other way and not apply Medicaid estate recovery rules to new Medicaid enrollees under the Affordable Care Act, according to a recent federal letter.

U.S. law allows states to force families of deceased Medicaid recipients to sell a loved one’s possessions to repay benefits a recipient received from age 55 on.

But in a recent letter to state Medicaid directors, the Centers for Medicare & Medicaid Services says it “intends to thoroughly explore options and to use any available authorities” to limit so-called estate-recovery actions to the costs associated with nursing home and other long-term care. S tates can tack on thousands of dollars to the bill in administrative fees that have little to do with direct medical care for a patient.

The message to prospective Medicaid enrollees is “there is no sword of Damocles hanging over your head,” said Matt Salo, executive director of the National Association of Medicaid Directors. ” This is health insurance. Come and get it.”

That’s because basic health plans available to new Medicaid enrollees do not include coverage for long-term care.

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Yet the message from the New Jersey Department of Health and Senior Services, which administers the state’s Medicaid program, hasn’t changed.

Asked if the federal letter would alter New Jersey’s intent to apply the recovery rules to those enrolling in Medicaid through the Affordable Care Act, Dianna Rosenheim, a deputy attorney general in the division responsible for recovery actions, noted the letter said those individuals are “not exempt from the estate recovery provision.”

Reports about the possible implications of the Medicaid provision, which critics call a “clawback,” on new enrollees added to the controversy surrounding the new health care law that went into effect Jan. 1.

“People were saying: ‘Oh, I see what’s happening. The government is forcing me to go on Medicaid, and three months later they’re going to take my house away,’ ” Salo said.

The new federal health care law isn’t what’s putting recipients’ assets at risk but a Clinton-era 1993 law that requires states to recoup the billions of dollars they spend on long-term Medicaid services. That law was enacted to help reduce the federal deficit.

The same law gives states the option of tapping a recipient’s assets to repay all Medicaid costs incurred from age 55 on — not just those related to long-term care. New Jersey is one of about two dozen states that takes this broader approach although the amount actually recovered each year represents only a tiny fraction of overall Medicaid expenditures.

In most cases, the state places a lien on a deceased person’s home shortly after being notified of the death. The state’s policy is not to try to collect the debt while a surviving spouse, dependent child or a disabled adult child is living in the home.

The problem: Those recovery laws pose a potential barrier to getting more people to enroll, the Centers for Medicare & Medicaid Services letter said.

To reach millions of low-income Americans who lack health insurance, the new law gives states the option of expanding their Medicaid programs to cover adults with “modified adjusted gross incomes” of up to 133% of federal poverty guidelines, or $15,282 a year.

Before the Affordable Care Act, only lower-income families and elderly or disabled adults could qualify for New Jersey’s Medicaid program, called NJ FamilyCare. The program covered about 1.3 million people in 2013, and New Jersey expects to add up to 300,000 new enrollees in the next few years.

A person’s income, not assets, determines whether a potential recipient is eligible for a basic health insurance plan through Medicaid. So many new enrollees could own homes and other personal property subject to recovery. However, the recovery provision applies only to Affordable Care Act Medicaid recipients ages 55 to 64.

Medicare, a different government program that doesn’t have a recovery provision, takes over once a person turns 65.

Elderly or disabled individuals seeking Medicaid coverage for long-term institutional or home-based care, which isn’t offered in basic Medicaid health plans, still must meet strict asset limits.

Salo says it’s possible, but highly unlikely, that New Jersey’s existing rules could require the estate of a Medicaid recipient 55 or older who never received so much as a flu shot to be on the hook for thousands of dollars in capitation fees. Those are monthly fees the state pays to its contracted managed-care companies to cover the average risk-adjusted cost of an individual’s care, regardless of whether the person receives services.

The monthly fee for a non-disabled adult enrolled in the expanded Medicaid program this year is $589, $7,068 annually.

The federal letter doesn’t compel states to abide by the agency’s guidance. But Salo thinks that states won’t want to take a hard line with new Medicaid enrollees where recovery is concerned.

Washington and Oregon already have amended state statutes to exempt expanded Medicaid recipients. Yet, other states may elect to keep the door open on seeking recovery in these cases.

They may want to retain some discretion to pursue cases where a recipient who received a considerable amount of care — a heart transplant, for example — leaves significant assets that can be used to repay the debt, Salo said.

“These things are very difficult, both logistically and politically, so you’re not going to do this willy nilly,” he said. “You’re going to want to take a look at this on a case-by-case basis.”