LTC Bullet:  Holding CMS’s Feet to the Fire

Friday, February 6, 2015

Seattle—

LTC Comment:  When a federal agency fails to enforce the law hurting the poor it’s supposed to help and costing tax payers billions of dollars, bureaucratic heads should roll.  Background and details after the ***news.*** [omitted]

 

LTC BULLET:  HOLDING CMS’S FEET TO THE FIRE

LTC Comment:  Two members of Congress have demanded that the Centers for Medicare and Medicaid Services enforce laws governing Medicaid LTC eligibility that the agency has allowed states to ignore with impunity since 1993 (Omnibus Budget Reconciliation Act) and 2005 (Deficit Reduction Act). 

The laws in question bear on rules restricting asset transfers and other legal loopholes the affluent and their legal advisors use to qualify for Medicaid’s expensive long-term care benefits without first spending down privately as Congress intended.  Read the letter here.  Following is the back story.

For over three decades, several Congresses and Presidents have tried to ensure that Medicaid benefits reach only their intended beneficiaries, the genuinely needy.  We know.  Through all that time, we’ve been at the forefront of analyzing the problem of Medicaid planning abuse and urging corrective action.

It’s been a long hard slog, but not without some big successes.  Most of our recommendations in a 1988 study titled “Medicaid Estate Recoveries” for the USDHHS Inspector General—including longer and stronger transfer of assets rules and mandatory estate recovery—became law in the Omnibus Budget Reconciliation Act of 1993.  Read that study here.

After Center-co-founder Attorney David Rosenfeld drafted them (in his later role as Health Council to the House Energy and Commerce Committee) and I spent half a year in Washington, DC advocating them, critical changes to Medicaid LTC eligibility rules—including ending the egregious “half-a-loaf” strategy, putting the first limit ever on Medicaid home equity exemption, and liberating the LTC Partnership Program—became law in the Deficit Reduction Act of 2005.

In 2011, when it appeared Congress was eager to confront the burgeoning budget deficit, I spent two hot summer months back in DC working with the Cato Institute and talking to anyone who would listen about state Medicaid programs’ failure to implement those critical OBRA ’93 and DRA ’05 provisions.  I argued that fixing Medicaid LTC rules could save $30 billion annually in How to Fix Long-Term Care.”  My appeals fell mostly on deaf ears as I reported with great frustration in “Near-Term Prospects for Long-Term Care Financing Reform.”  Check it out including the cover which shows an elder on a super-charged Medicare-financed scooter heading at break-neck speed toward a brick wall of fiscal reality.

But thankfully, a few bright minds on Capitol Hill were open to learning more and doing something about it.  I’ll mention two key staffers, Brian Blase, then of the House Committee on Oversight and Government Reform and Josh Trent, then of Senator Tom Coburn’s staff.  Thanks to their efforts, requests went forth from their principals to the USDHHS Inspector General for information about the status of states’ enforcement of OBRA ’93 and DRA ’05.

In “LTC Bullet:  IG Report Reveals Costly Medicaid Enforcement Failures,” we announced the results of the Inspector General’s study conducted to respond to that congressional query: 

The U.S. Department of Health and Human Services Inspector General (IG) has reported that 23 states did not implement some or “all of the eligibility and asset transfer provisions” in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) and the Deficit Reduction Act of 2005 (DRA ’05).  The same report provides the first data on Medicaid estate recoveries since FY 2004.  The states and federal government may be missing $2.5 billion in potential recoveries.

As we had already discovered and reported long ago, the IG’s study confirmed that too many states failed to implement critical provisions of the two laws; that California wasted untold billions of taxpayers’ money by ignoring asset transfer rules and other mandatory legal and regulatory provisions; and that most states dropped the ball on estate recoveries leaving further billions uncollected that could have helped fund Medicaid for those who truly needed its help.

It’s a sorry story of irresponsible management by states and legally actionable failure to enforce the law by the federal Centers for Medicare and Medicaid Services.  What happens next?  It depends on how CMS responds to this latest letter demand from Congress for an explanation and whether or not Congress compels CMS to take corrective action. 

We’ll be watching and we’ll let you know what, if anything, transpires to remedy CMS’s malfeasance.  The wheels of government grind slowly.  But with a new Congress now and a new President in two years, there is every reason to hope for another major success.  Success would mean targeting Medicaid to those most in need and using some of the savings to educate and incentivize consumers about responsible long-term care planning.