LTC Bullet:  Center Tackles Medicaid Estate Recoveries

Friday, April 26, 2013


LTC Comment:  Medicaid estate recoveries (MER) fulfill Congressional intent that assets sheltered to qualify for public assistance will later “be used to defray the cost of supporting the individual” in government-financed long-term care.  Read our study plan for MER in Maine after the ***news.*** [omitted]



LTC Comment:  Following is a study proposal submitted by the Center for Long-Term Care Reform to the Maine Heritage Policy Center and to the Maine Health Care Association.  Your Center has been working on this project since April 1, 2013.  So far, we have:

  1. Reviewed the documentary and legislative history of Medicaid estate recoveries.
  2. Interviewed representatives of seven leading state MER programs by telephone.
  3. Visited and conducted in depth interviews in person with representatives of the private contractor that operates the Medicaid estate recovery program in Iowa (Des Moines).
  4. Visited and conducted in depth interviews in person with representatives of the Medicaid estate recovery program in Maine (Augusta).

We are currently analyzing our findings, developing cost-effectiveness measures to compare the various state programs, and developing our interim report due May 1, 2013.  We’ll report on those initial results next week.  For now, here’s a look at the research task we’ve undertaken along with an explanation of why the Medicaid estate recovery program is such an important part of the long-term care financing marketplace.


Project Proposal:

Maximizing NonTax Revenue from MaineCare Estate Recoveries

Submitted to the Maine Heritage Policy Center
the Maine Health Care Association
on February 14, 2013
Stephen A. Moses, President
Center for Long-Term Care Reform


I.  Objective:  Produce a step-by-step plan to increase the State of Maine’s Medicaid estate recovery revenue from an average of $6.7 million per year currently to $13.8 million per year with a net increase in non-tax revenue to the state of $7.1 million per year.  We will provide a guide for the MaineCare (Medicaid) program on how to maximize estate recoveries while maintaining the moral and political high ground for such a program. 

II.  Background:  Federal law requires all states to recover the cost of care provided by Medicaid from the estates of deceased recipients.[1]  The purpose of this requirement is to restore funds previously sheltered from spend down, especially resources sheltered by means of the home equity exemption, so they are available to help others in need rather than passing as a “windfall”[2] to heirs.[3] 

MaineCare has a relatively successful estate recovery program.  Average recoveries for state fiscal years (SFY) 2009-2012 were $6,725,000 per year.  Staff estimate the cost of recovery, including four positions, benefits and other expenses, to be $272,673 per year for a return on investment (ROI) of approximately 25 to one.  MaineCare estate recovery staff anticipate that with stronger laws supporting recovery and with additional staff, annual recoveries could realistically increase by $1.5 million to $2.0 million. 

Potential additional revenue from estate recoveries may be even higher, however.  Maine’s program exempts the first $7,000 of estate value from recovery; does not recover from the estates of spouses predeceased by MaineCare recipients;[4] and does not use TEFRA liens[5] to ensure that real property is retained by recipients until recovery from their estates.

A small, informal sample of new estate recovery cases showed that seven out of ten owned homes meaning potential recoveries should be substantial.[6]  Yet, of MaineCare’s 4217 nursing facility recipients, only 297 or 7.1% own homes that are exempt due to “intent to return.”[7]  These homes have an average equity value of $105,114 and a median equity value of $87,200, both far below MaineCare’s $750,000 home equity exemption.  Because we know a much larger percentage of age-65-plus people own homes, a key question to answer is “what happened to that home equity before the homeowners ended up on MaineCare?”

By hiring more staff, seeking stronger legislative authorities, researching and applying best practices from other states, Maine could aspire to achieve estate recoveries comparable to those of the most successful state, Oregon, which brought in recoveries equal to 5.8% of its Medicaid nursing home expenditures.[8]  A comparable rate of recovery for Maine would more than double the non-tax revenue Maine recovers from estates to $13.8 million per year.[9]

The preceding information was taken from the November 2012 report of an earlier study of MaineCare long-term care financing by Stephen A. Moses conducted for the Maine Health Care Association and titled “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net.”

III.  Diagnosis:  Rapidly increasing Medicaid long-term care expenditures in Maine have placed enormous pressure on the state budget.  Difficult decisions must be made to reduce costs or increase revenues.  One effective way to do both with minimal negative impact on the needy is to increase Medicaid estate recoveries.  Estate recoveries not only produce extra nontax revenue but they help to awaken the public to the importance of paying privately for long-term care.  The more likely and well known recovery from the estate becomes, the more likely people will be to purchase insurance or use their home equity to pay for long-term care.  Anything that delays or prevents Medicaid dependency reduces the cost of the program. 

IV.  Treatment:  By maximizing estate recoveries, articulating the moral high ground of personal responsibility for long-term care, publicizing the estate recovery program, and encouraging private long-term care financing alternatives like insurance and home equity conversion, the State of Maine can relieve the fiscal burden of long-term care on tax payers, improve Medicaid's ability to provide quality care to the genuinely needy, and avoid the worse consequences likely otherwise to occur in the wake of the baby boomer "Age Wave."

V.  Work Plan:  To achieve the objective and goals of this project, we propose the following activities:

1.  Conceptual Framework (the starting point):  The key to successful estate recoveries is KISS:  "Keep it simple."  The idea is to find estates to recover and to recover them as inexpensively and efficiently as possible.  (Liens are merely a sub-category of recovery to which the same principles apply.)  The first step is to find out quickly when a Medicaid nursing home recipient dies.  Years of practical experience have shown that the best source of this information is the local eligibility worker and/or the personal representative of the recipient.  The next step is to ascertain whether Medicaid has made sufficient payments on a case to warrant recovery efforts.  If not, no further effort is necessary.  If so, the final step is to contact the personal representative of the deceased recipient, determine whether or not a recoverable estate exists, and initiate the recovery process. 

In other words, one begins with a manageable amount of information--Maine can expect about [500] elderly nursing home recipients to die per month--and proceeds by an orderly process of elimination and prioritization to target staff efforts onto the most recoverable cases.  Once this process has been refined and perfected manually, certain elements of it can be automated cost-effectively.  The secret, however, is to start small, experiment, adopt procedures that work, drop those that do not, work the best and easiest cases first, measure progress in actual dollars recovered, and add staff and budget proportionately to the program's actual success.


2.  Preliminary Review (2 weeks)

a.  The first step to ensure a successful lien and/or estate recovery program is to capture the latest experience and best practices of successful recovery programs around the country. 

(1)  We will conduct a literature review:  identify and document significant studies of Medicaid liens and estate recoveries and identify best practices for Maine to consider.

(2)  We will identify and conduct telephone interviews with managers of the leading Medicaid estate recovery programs in the country.  For example, how much money do they recover?  Do they use TEFRA liens?  How many recovery staff do they employ?  How do they identify estates from which to recover?  Do they recover from surviving spouses' estates?  Have they used or considered using a private contractor to recover from estates on contingency and with what results? 

(3)  We will identify what the leading estate recovery states do, how they do it, and why it is successful.  We will analyze and compare their latest programs, state statutory authorities, forms, procedures, automation approaches and controls.  We will document best practices and assess their applicability in Maine. 

b.  The second step is to review and analyze Maine's Medicaid eligibility determination and information collection and verification process; to examine the availability of vital statistics including death records and property ownership, value, and transfer records; and to study the process in Maine for filing liens, placing estate claims, and enforcing liabilities.  We will also identify techniques used by recipients, Medicaid planners, and other financial advisers to avoid Medicaid estate recovery liability.  We will identify corrective actions to make estate recovery less avoidable.

c.  In light of the findings from these initial studies, we will conduct a comprehensive review and analysis of Maine's current Medicaid estate recovery program.  We will propose state legislation necessary to maximize Maine's estate recovery potential. 

d.  We will present an interim report following the preliminary study phase summarizing our progress, problems, findings and recommendations.

3.  Design  (two weeks)

a.  The next step is to design an adaptation of Maine's current estate recovery program that takes advantage of lessons learned by other states, provides for experimentation with alternative techniques, adapts quickly and effectively to unique circumstances or problems in Maine and maximizes early recoveries through prioritization and error-prone profiling.  Our project design takes into account the following kinds of considerations.

b.  Lien and estate recovery programs must perform three basic functions:  (1) identify assets, (2) track and preserve assets, and (3) recover assets when available.  Based on our review of MaineCare’s current estate recovery program and our analysis of estate recovery programs in other states, we will design and propose an enhanced program and implementation strategy for Maine.

4.  Report (two weeks):  We will provide a comprehensive final report at the end of the sixth week of the project which fully describes the preliminary study, design, and recommended implementation, recounts problems encountered and solutions recommended, and lays out an operational guide for a successful lien and estate recovery program. 

VI.  Site Visits:  We anticipate the need to spend approximately 5 work days in Maine during this project for the purpose of consulting directly with state staff on the analysis and design phases of this project.  We will return to Maine for a one-week series of meetings and briefings on MaineCare and long-term care financing to be planned by the Maine Heritage Policy Center sometime after completion of this project and publication of its report.

VII.  Schedule:  We recommend beginning this project by April 1, 2013 and completing it by May 15, 2013.

VIII.  Deliverables:  One interim status report in letter format and a final report in electronic form reflecting accomplishment of all of the commitments made within this proposal.  One week of presentations by Stephen Moses at the direction of the Maine Heritage Policy Center and in consultation with the Maine Health Care Association (MHCA).

IX.  Business Proposal:  We propose to conduct the work described in this proposal for the following compensation to the Center for Long-Term Care Reform:  [omitted]

X.  Experience and Credentials:  All substantive work related to this project will be performed by Stephen A. Moses, President of the Center for Long-Term Care Reform.  The Center's other staff will assist Mr. Moses with planning, research, and logistics.  A copy of Stephen Moses’s professional biography is attached.  Additional information on his direct experience with Medicaid lien and estate recovery programs and practices follows.

Stephen A. Moses was a career employee of the United States government for 18 years with extensive public benefit recovery experience.  He is intimately familiar with the Social Security Act programs having conducted quality control reviews, state management assessments, state plan and waiver reviews and approvals, and special studies on them for many years.  In 1978, for example, he conducted a special study of the Idaho Child Support Enforcement Program which launched that state from almost last to almost first in national collection standings.  He was the only federal employee ever invited to run a state child support collection agency, in order to field test his recommendations. 

In 1981, Mr. Moses was the principal investigator and sole author of Third Party Liability in the Medicaid Program:  A Seattle Case Study.  This study and report, published by the Health Care Financing Administration, received national recognition.  The study involved identification and actual collection of previously unidentified third party resources on a valid random sample of Medicaid cases.  This was the first study ever to discover and verify that 75 percent of all third party resources not identified at the public assistance eligibility interview are related to the employment health coverage of an AFDC recipient or an absent parent.  This study was the earliest empirical documentation of the efficacy of automated data matches between public assistance eligibility rolls and state employment security records. 

Mr. Moses served for nine years with the Health Care Financing Administration, for most of that time as a "Medicaid State Representative."  In that capacity, he conducted periodic reviews of Oregon's long-term care eligibility system, asset control methodologies, and estate recovery program; he directed a feasibility study of closing eligibility loopholes and implementing estate recoveries in Idaho; and he surveyed every Medicaid eligibility system, lien and estate recovery program in the country (The Medicaid Estate Recovery Study, Region 10, November 1985). 

In 1987, Mr. Moses joined the Office of Inspector General of the U.S. Department of Health and Human Services where he was the national project director and author of another national study of Medicaid nursing home eligibility, Medicaid estate planning, and asset and resource divestiture problems titled Medicaid Estate Recoveries, June 1988.  He also directed and authored Transfer of Assets in the Medicaid Program:  A Case Study in Washington State, May 1989 for the Office of Inspector General.  Both of these projects delved deeply into all of the topics proposed for review in Maine.  Mr. Moses advised the General Accounting Office on all aspects of its study titled Medicaid:  Recoveries from Nursing Home Residents' Estates Could Offset Program Costs, March 1989.  He briefed then-incumbent Secretary Otis Bowen of the US-DHHS and Administrator William Roper of HCFA on the growing national problem of Medicaid asset/resource divestiture and the need for Medicaid estate recoveries and he wrote the Inspector General's contribution to the report to Congress on these subjects that was mandated by the Medicare Catastrophic Coverage Act of 1988 (Medicaid Estate Recoveries:  A Management Advisory Report, December 1988.) 

On the national scene, Mr. Moses has advised the United States Congress on liens and estate recoveries.  He presented a 21-page report titled Medicaid Loopholes:  A Statutory Analysis with Recommendations to the Senate Committee on Finance in 1991.  He presented a critique and analysis of the bill which ultimately became OBRA '93 to the Senate Special Committee on Aging and the Senate Committee on Finance in July 1993.  This report, titled Medicaid Estate Planning:  An Analysis of GAO's Massachusetts Report and Senate/House Conference Language, was instrumental in fending off efforts by lobbyists to dilute the strong loophole-closing and estate recovery provisions in OBRA '93. 

Since leaving federal service in 1989, Mr. Moses has published hundreds of articles on Medicaid estate planning, nursing home eligibility, transfer of assets, liens and estate recoveries, and long-term care service delivery, financing and policy; he has consulted on these subjects in most U.S. states and spoken at innumerable national conferences.  He has testified before over half of America's state legislatures.  As Director of Research for LTC, Inc., Mr. Moses directed and authored studies on Medicaid nursing home eligibility, asset and resource transferring techniques, methods to control divestiture, estate recoveries, and how to implement OBRA '93 in numerous states, e.g.:  Medicaid Estate Recoveries in Massachusetts:  How to Increase Non-Tax Revenue and Program Fairness, December 1990; The Senior Financial Security Program:  A Plan for Long-Term Care Reform in Wisconsin, June 1992; Medicaid Estate Planning in Kentucky:  How to Identify, Measure and Eliminate Legal Excesses, March 29, 1993; Long-Term Care in Montana:  A Blueprint for Cost-Effective Reform, September 23, 1993; The Florida Fulcrum:  A Cost-Saving Strategy to Pay for Long-Term Care, April 21, 1994; The Magic Bullet:  How to Pay for Universal Long-Term Care, A Case Study in Illinois, February 1, 1995; The Long-Term Care Financing Crisis:  Danger or Opportunity?  A Case Study in Maryland, September 15, 1995; The Heartland Manifesto:  How to Finance Long-Term Care for Middle America, August 1, 1996; The Jersey Share:  How to Pay for Long-Term Care with Less Federal Money, March 31, 1997.  Most of these reports and publications are available for review upon request.  For additional, more recent examples, see

Since founding the Center for Long-Term Care Reform in 1998, Mr. Moses has continued to speak, write and publish on long-term care financing issues.  The Center for Long-Term Care Reform's website at contains many of his speeches, published articles, and reports.  The Center's four original public policy reports are available in .pdf format on the website.  These include LTC Choice:  A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle (1998), The Myth of Unaffordability:  How Most Americans Should, Could and Would Buy Private Long-Term Care Insurance (1999), The LTC Triathlon:  Long-Term Care's Race for Survival (2000), and The Heartland Model for Long-Term Care Reform:  A Case Study in Nebraska" (2003).  A biographical sketch of Stephen Moses is attached.


[1] The Omnibus Budget Reconciliation Act of 1993 made estate recovery mandatory.

[2] “It is their children, after all, who stand to inherit whatever property remains after the costs of long-term care are paid and who currently reap the windfall of Medicaid subsidies.  We must emphasize that the issue is enrichment of nonneedy adult heirs, not denial of care to the elderly.”  (Office of Inspector General, US Department of Health and Human Services, “Medicaid Estate Recoveries:  National Program Inspection,” June 1988, pps. 47-48;

[3] Congress made it clear 30 years ago that “all of the resources available to an institutionalized individual, including equity in a home, which are not needed for the support of a spouse or dependent children will be

used to defray the cost of supporting the individual in the institution.”  (Source:  United States Code, Congressional and Administrative News, 97th Congress—Second Session— 1982, Legislative History (Public Laws 97-146 to 97- 248), vol. 2 [St. Paul, MN:, West Publishing], p. 814, cited in U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Office of Disability, Aging and Long-Term Care Policy, “Medicaid Treatment of the Home: Determining Eligibility and Repayment for Long-Term Care,” Policy Brief no. 2, April 2005, p. 10.)

[4] The General Accounting Office (now called the Government Accountability Office) found in a 1989 study that "In the eight states studied, as much as two-thirds of the amount spent for nursing home care for Medicaid recipients who owned a home could be recovered from their estates or the estates of their spouses.”  (General Accounting Office, “Recoveries from Nursing Home Residents' Estates Could Offset Program Costs,” HRD-89-56, March 7, 1989, p. 3;

[5] The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA ’82) authorized states to place liens on homes owned by institutionalized Medicaid recipients to ensure their availability for later estate recovery so long as no surviving exempt dependent relative lives in the property.

[6] Source:  Email, October 24, 2012, from Deen Dunn, Manager, State of Maine Estate Recovery:  “We did look at a small ample and there were 7 out of 10 cases that had homes at the time we processed.”

[7] As of 2010, Maine had 6390 nursing home residents, 66% of whom or 4217 relied primarily on MaineCare.  (Source:, but currently only 297 cases or 7.1% have homes with values over $1 exempted due to intent to return according to an October 27, 2012 email from Reinhold Bansmer, Special Projects Program Manager, DHHS, Augusta.

[8] U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Office of Disability, Aging and Long-Term Care Policy, "Medicaid Estate Recovery Collections," Policy Brief No. 6, September 2005, p. 8;

[9] MaineCare spent $237 million on nursing facilities in 2010.  (Source:,  At a 5.8% rate of recovery, matching Oregon’s, Maine would recover $13.8 million.