LTC Bullet: Medicaid Planning Update

Tuesday, June 3, 2008

College Park, Maryland (LTC Tour Mile 12,635, State #20)

LTC Comment: What's the latest on abuse of the poor's LTC safety net by professional abusers of Medicaid? After the ***news.*** [omitted]


LTC Comment: We have not published an "LTC Bullet" to expose the damaging practice of Medicaid estate planning for a long while. Following is kind of a grab bag, but it'll give you a feel . . . more like nausea . . . for the lucrative business of poverty-making.

Sadly, the poverty-makers impoverish more than their hapless clients. They take money out of the pockets of good people trying to make responsible long-term care planning succeed. They handicap struggling LTC providers who try to give decent long-term care at impossibly inadequate Medicaid reimbursement rates. They dispossess the poor of quality long-term care by grabbing the few good Medicaid beds for their well-heeled clients who can preserve "key money" to buy their way into the best facilities. Finally, they rob tax payers who intended their contributions to help people in need.

It's time to see Medicaid planning for what it is: a disgraceful abuse of a well-intentioned, extremely expensive, but grossly ineffective effort to help the needy.


Credit Center for Long-Term Care Reform co-founder David Rosenfeld with pointing us to this over-the-top idea: Elder law attorney Michael J. Keenan, Esq. of Glastonbury, CT suggests . . .

"Consider Supermarket Gift Cards as Medicaid Spend-Down Items. Big supermarkets have recently offered a new alternative to Medicaid spend-down planning when there is a spouse in the community. The community spouse can now purchase gift cards to buy groceries, and to the tune of four figures! This makes sense since it's a necessary expense that the community spouse will definitely have for an indefinite length of time. If you're in New England, I found an offer from Shaw's Supermarkets which offers a 5% discount when you spend more than $5,000 on Shaw's gift cards."

As Dave Barry might say: "I'm not making this up." Check it out here.


ElderLawAnswers Monthly (June 2008) reports that "State May Not Recover From Surviving Spouse's Estate If Medicaid Recipient Had No Legal Interest at Death."

Read how the Supreme Court of Minnesota holds against the state Medicaid program's ability to fund quality care for the poor - here. A court's job is to interpret the law, not make it. If this is a proper interpretation, then the law is bad and should be fixed. As likely, however, is that this court, like so many others over the decades, routinely rules against any effort by state Medicaid agencies to administer the program cost-effectively and in the best interest of the needy.


Baton Rouge, Louisiana Regional Representative of the Center for Long-Term Care Reform Charmaine Golsan brought the following article to our attention: "Evolving Medicaid guidelines pose new challenges," by John Dougherty and J.G. Wentworth,, Thursday, May 15, 2008. Read it here.

The topic here is how to circumvent the Deficit Reduction Act's rules in order to keep people with big assets in annuities from having to pay for their own long-term care. A better title for the piece would be "How to Kill Responsible Long-Term Care Planning, Fleece Tax Payers, Skin the Poor, Help Your Rich Clients, and Line Your Own Pockets."


Twin Cities Regional Representative of the Center Ric Schafer sent us the following abomination of responsible journalism: "State must reform system to allow long-term care," by Kathryn Grant Madigan, Buffalo News Opinion, June 2, 2008,

This author opines "Every day countless middle-class elderly New Yorkers are stripped of their dignity as well as homes and other assets they have worked a lifetime to build and propelled by government regulation into poverty in order to get health care."

Nothing could be further from the truth. New York has the most generous Medicaid program in the country. It exempts of a million dollars in home equity. It covers 24-hour-per-day home care with no transfer of assets restriction. It pays for more than 80 percent of all nursing home residents. I called New York's Medicaid LTC program a "basket case" in "The Realist's Guide to Medicaid and Long-Term Care." Read my profile of the state at Worst of all, as federal tax payers, YOU are paying for half this hemorrhage of waste.

The author of this article is promoting the New York Medicaid planners' campaign to preserve their gravy train by replacing Medicaid with an "LTC Compact." Read my analysis of that plan in "The New York Long-Term Care Compact Proposal: Update, Analysis and Recommendations" at


The problem is not just Medicaid planners ripping off state Medicaid programs. The state Medicaid programs themselves are ripping off the federal Medicaid program, according to the Wall Street Journal. The following summary of "Medicaid Money Laundering" (WSJ, 5/19/8) comes from the "NCPA: Daily Policy Digest" of 5/20/8.


Every politician moans that entitlement spending is out of control, so it ought to be easy at least to stop blatant fraud and abuse. Evidently not, says the Wall Street Journal.

The scene of this crime is Medicaid; it turns out that states have been goosing their financing arrangements to maximize their federal payouts and dump more of their costs onto taxpayers nationwide. The swindle works like this, says the Journal:

o A state overpays state-run health-care providers, such as county hospitals or nursing homes, for Medicaid benefits far in excess of its typical rates.

o Then the federal government reimburses the state for "half" of the inflated bills.

o Once the state bags the extra matching funds, the hospital is required to rebate the extra money it received at the scam's outset.

Cash thus makes a round trip from states to providers and back to the states -- all to dupe Washington. The right word for this is fraud. A corporation caught in this kind of self-dealing -- faking payments to extract billions, then laundering the money -- would be indicted. In fact, a new industry of contingency-fee consultants has sprung up to help states find and exploit the "ambiguities" in Medicaid's regulatory wasteland. All the feds can do is notice loopholes when they get too expensive and close them, whereupon the cycle starts over.

A reform alternative would be for the government to distribute block grants, rather than a set fee for every Medicaid service, says the Journal. That would amputate Washington from state accounting and insulate taxpayers from these shakedowns. States would have an incentive to spend more responsibly, and also craft innovative policies without Beltway micromanagement.

Source: Editorial, "Medicaid Money Laundering," Wall Street Journal, May 19, 2008.

For text:

For more on Federal Spending & Budget Issues:


LTC Comment: Medicaid planning hurts the poor, supports LTC institutional bias, reduces care access and quality, inhibits the expansion of home and community-based care, impedes the market for LTC insurance, diverts home equity away from funding quality long-term care, and enriches unscrupulous financial advisers.

Enough is enough. It's time to give Medicaid back to the poor and use the savings for tax incentives and education to encourage responsible long-term care planning. That's exactly what the National Long-Term Care Consciousness Tour advocates everywhere the Silver Bullet travels.