LTC Bullet: How Medicaid Planners Seduce Nursing Homes

Tuesday, March 23, 2004


LTC Comment: Why would nursing homes help residents artificially impoverish themselves to qualify for Medicaid? How do Medicaid planners invite nursing homes' complicity in Medicaid planning? More after the ***news.***

*** ANOTHER MEDICAID PLANNER BITES THE DUST. "A Placer County [California] attorney who advises seniors throughout the state on how to qualify for state health care benefits is under investigation on suspicion of defrauding the state's Medi-Cal program of $50 million, according to a search warrant affidavit unsealed in Sacramento Superior Court." To read the whole story, go to Steve Moses says: "I found this story of special interest because this particular Medicaid planner actually tried to induce members of my own family to do Medicaid planning. Big mistake!" The attorney in question is a long-standing member of the National Academy of Elder Law Attorneys (NAELA).***

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The LTC Reader #4-011--How Medicaid Chills the Market for LTCi (Don't miss this excellent article on the potential for private insurance to save Medicaid and LTC.)

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LTC Comment: Nursing homes are heavily dependent on Medicaid financing. The program covers 70 percent of nursing home residents and nearly 80 percent of patient days. Although Medicaid pays notoriously low reimbursement rates--$4.1 billion dollars short of breakeven nationally according to a recent report--at least it pays. That's more than can be said for a lot of "private payers" who avoid paying while they wangle ways to qualify for Medicaid. A bird in the hand is worth two in the bush. That's why nursing homes are susceptible to the kind of seduction made in the following letter.

This is an actual letter from a Medicaid planning firm to a nursing home administrator. We've dropped the identifying information to protect our source. Note that the letter tries to establish a moral high ground by appealing to the reader's concern for people in crisis with a long-term care need. Note that Medicaid is described not as a safety net for the poor, but as a resource for people with very substantial assets. Note that legally giving away $100,000 per year to qualify for Medicaid is not only legal and acceptable, but just the first of many potential techniques to accelerate Medicaid eligibility.

Here's the problem. Medicaid is already struggling financially at the federal, state, and local levels. Access to and quality of care are suffering--for the poor especially, but also for the well-to-do duped into giving up their wealth, freedom and control. When people can ignore the risk and cost of long-term care and pass the liability to tax payers and nursing home owners at the last minute, they feel no incentive to save, invest or insure for long-term care. Over time, more and more people end up on a bankrupt welfare program which is less and less able to meet anyone's needs. In the long run, no one benefits from the strategies advocated by Medicaid planners except the welfare profiteers themselves.

Nursing homes should realize this, shun the siren's call of Medicaid planning, and help in the fight for rational long-term care policy. The Medicaid program should target LTC benefits to the genuinely needy and ensure that others pay their own way. Only this kind of "tough love" will induce the public to purchase LTC insurance and make use of home equity conversion to purchase quality long-term care. Legislators and policy makers should close eligibility loopholes that invite abuse. Medicaid planners who abuse the program should be prosecuted. If these measures are not taken, and taken soon, America's long-term care service delivery and financing system will continue quickly to spiral in toward total collapse.


Dear Nursing Home Administrator/Social Worker,

As we begin this new year, we would like to thank you for the many opportunities we have had to work with Missouri nursing home residents and their families during this past year, and take this opportunity to share with you some exciting new information regarding Medicaid eligibility for nursing care. As we have worked with you, you have helped us to fine tune our methods of working with families, and to make significant improvements in the way we communicate with and provide services to our clients. It has been and continues to be our highest priority to provide a blend of social and legal services to your families in a compassionate and caring way.

As you know, the Medicaid eligibility guidelines have been modified substantially over the last few years to allow "middle class families" to receive assistance in paying for long term care. Congress has expressed a resolve that all members of society shall be treated fairly. No longer is Medicaid a "Pauperís Program!" ALL citizens of the United States can now preserve their assets under Medicaid program guidelines. In fact, effective January 1, 2004, the Missouri Medicaid policy has increased the gifting amount to approximately $8,000 per month, per couple. That means a couple may give away nearly $100,000 a year with no impact to their future Medicaid eligibility for nursing care. We are VERY excited about this expansion, as well as additional new Medicaid Planning strategies.

We are finding as we work with your families, that we have yet to find one, that has not been able to preserve assets. Many have come into our office, with no hope and a dismal outlook for their financial future. Many have been misled by even our own state Medicaid staff, to believe that their only alternative is to simply spend everything they have on nursing care, and then . . . and only then . . . get any assistance paying the bill. Others have been told that the Division of Assets will only let them keep half of the assets, up to a maximum of $90,000. While still others have been told that if you are not married, you cannot preserve any assets. THESE STATEMENTS ARE NOT TRUE! It has truly been our privilege and great pleasure to share hope with these families, many of whom, shed tears in unbelief that there are any options available to them. What a great job we have, to offer hope and a financially secure future to those who have been so hopeless!

Our goal is two-fold in writing this letter. First, we are truly thankful for the referrals you have made and the opportunity we have had to become acquainted with you and your facility, and we want you to know that. Secondly, we want you to be aware, that you can consider us a friend in the business and a resource to field your Medicaid questions and issues. We will do everything we can to help you resolve issues and get answers to questions pertaining to Estate Planning and Medicaid eligibility and services.

Best wishes to you in the coming year, and may you be truly blessed as you tirelessly provide services to our frailest friends and family members.

Very truly yours,

Administrator [of elder law firm]