 LTC Bullet: IG Report Reveals Costly Medicaid Enforcement Failures Friday, November 21, 2014 Seattle— LTC Comment--The USDHHS Inspector General reports that many states failed to implement mandatory provisions in OBRA ’93 and/or DRA ’05 designed to discourage abuse of Medicaid LTC benefits. Details after the ***news.***
*** HAPPY THANKSGIVING *** *** LTCI BENEFITS HOME CARE: The nation's providers of home health care aides and services can expect significantly increased revenue as a result of growing sales of long-term care insurance products. “We expect 300,000 Americans will purchase a new traditional long-term care insurance policy or a combo product in 2015,” predicts Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI). "The maximum potential benefit value for just 2015 new sales will equate to about $5 billion in future benefit payments for home care services." Contact: Jesse Slome, 818-597-3227, jslome@aaltci.org. *** *** BIPARTISAN POLICY CENTER (BPC) presented “Threats to Retirement Security: Longevity, Long-Term Care and Leakage” on Thursday, Nov. 20. Video of the program is archived here; scroll to bottom of the page. BPC’s Commission on Retirement Security and Personal Savings and Long-Term Care Initiative hosted this event “to discuss how LTSS needs, the risk of outliving savings and pre-retirement withdrawals can make a financially secure retirement more difficult to achieve” and to “examine potential solutions to these problems, including expanded use of annuities and long-term care insurance and reforms to the public programs like Social Security and Medicaid that help mitigate these risks.” *** *** NCPA STUDY CORROBORATES CLTCR ANALYSIS: A new study by the National Center for Policy Analysis confirms analysis and recommendations we made in a 1992 study titled The Senior Financial Security Program: A Plan for Long-Term Care Reform in Wisconsin. On the day of its release, we highlighted the new NCPA report in an LTC Clipping for our clippings subscribers. To subscribe to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com. Here’s our LTC Clipping about the new NCPA study. 11/19/2014, “Improving Long-Term Care in Wisconsin,” by Pamela Villarreal, National Center for Policy Analysis Quote: “At the federal level, allow states to establish their own home equity limits, or none at all, for Medicaid eligibility. … Allow Medicaid to require and support reverse mortgages as an alternative to asset recovery. … Phase out the public/private partnership, and replace it with a state income tax credit for the purchase of long-term care insurance. … Use home care in place of institutional care when possible.” LTC Comment: We agree with three of this report’s recommendations: letting state Medicaid programs set their own home equity limits, requiring reverse mortgages as a condition of eligibility, and providing more home care assuming the first two recommendations are actually implemented so that home care doesn’t drive up Medicaid’s cost and make Medicaid dependency more attractive than ever. Cancelling the LTC Partnership program, however, would be a mistake. Read the full study here.
LTC BULLET: IG REPORT REVEALS COSTLY MEDICAID ENFORCEMENT FAILURES LTC Comment: 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. Background. Medicaid is a means-tested public assistance program, i.e., welfare. Applicants for the program’s expensive long-term care benefits must qualify based on limited income and assets. Wealthier people and their legal advisors have found many ways to hide or transfer excess assets in order to take advantage of Medicaid benefits. The federal government has attempted to discourage this so-called Medicaid planning with two major statutes. OBRA ’93 made transfer of assets restrictions longer and stronger and required recovery of costs from recipients’ estates. DRA ’05 placed the first cap ever on Medicaid’s home equity exemption and prohibited several of Medicaid’s more egregious loopholes. Over time, evidence accumulated that some states did not implement some or all of the requirements in these two laws. See for example the Center for Long-Term Care Reform’s report for the Pacific Research Institute titled Medi-Cal LTC: Safety Net or Hammock? In 2011, two members of the U.S. House of Representatives and two Senators asked the USDHHS Inspector General to investigate “whether States are implementing provisions of Federal law that are meant to limit individuals with above-average wealth from accessing Medicaid.” They also asked the IG to “provide data on States' efforts with regard to estate recovery, including the amount of resources States put into estate recoveries; and [to] update estate recovery figures for each State.” The IG Report. On July 7, 2014, the Inspector General issued a letter report responding to the Congressmen’s and the Senators’ inquiry. For reasons related to their concern that negative findings in the report could influence the recent midterm election, public release of the IG’s report was postponed until this week, Monday, November 17, 2014. You can now read the IG’s full report on the Center for Long-Term Care Reform’s website here: http://centerltc.com/OIG/IG_LetterReport.pdf. Major Findings and Analysis. Quotes from the IG report and our comments follow. IG Report: “As of November 2013, 48 States had reported that they have implemented all the eligibility and asset transfer requirements of the Omnibus Budget Reconciliation Act of 1993 COBRA) (P.L. No. 103-66, Aug. 10, 1993). However, the remaining three States—California, the District of Columbia, and North Carolina—reported that they have not implemented some OBRA eligibility and asset transfer requirements.” (p. 1) LTC Comment: More than two decades after passage of OBRA ’93, two states and DC have still not implemented all of its provisions. Which ones? IG Report: California failed “to require that the [asset transfer] look-back period be extended to 36 months for asset transfers (60 months for asset transfers to irrevocable trusts).” Washington, DC did not “include in the definition of ‘assets’ any income or resources that the individual or spouse is entitled to but does not receive because of his or her own action. Such actions may include disclaiming an inheritance, waiving pension income, or refusing to accept an injury settlement.” DC and North Carolina failed to provide that the term “trust” may include an annuity under specific circumstances. (pps. 1-2) LTC Comment: Failure to comply with federal law is supposed to cause the Centers for Medicare and Medicaid Services (CMS) to withhold federal matching funds from the violating state. Yet this has not happened. In California, Medicaid applicants can give away unlimited wealth 30 months before applying without incurring a transfer of assets penalty. (Not only has California failed to implement OBRA ‘93’s 36-month look back period, Medi-Cal has still not implemented DRA ‘05’s 60-month look back.) DC applicants can disclaim an inheritance with impunity in order to maintain Medicaid LTC eligibility. The IG report does not estimate the cost to the federal and state Medicaid programs of these oversights, but federal regional financial reviewers should evaluate the loss and enforce the law. IG Report: “As of November 2013, 29 States had reported that they have implemented all the eligibility and asset transfer requirements of the DRA (P.L. No. 109-171, Feb. 8, 2006). However, one State—California—reported that it has not implemented the majority of the eligibility and asset transfer requirements of the DRA. In addition, the remaining 21 States reported that they have not implemented 1 or more of the DRA eligibility requirements.” (p. 3) LTC Comment: California continues to thumb its nose at the federal Medicaid program without consequences. More than a score of other states have failed to implement some provisions of the DRA ’05. Which states and which provisions? IG Report: Medi-Cal’s infractions according to the report include failure to implement the 5-year transfer of assets look back period; failure to change the penalty period start date which was intended to end the notorious “half-a-loaf” spend down gimmick; failure to stop the practice of rounding down asset penalties; failure to require applicants to report ownership of annuities; failure to treat the purchase of an annuity as a transfer of assets unless the state is listed as a remainder beneficiary; and failure in several other areas including promissory notes, life estates and the “income first” rule for computing the community spouse resource allowance. The report’s “Table 3: Unimplemented Deficit Reduction Act of 2005 Eligibility and Asset Transfer Requirements” lists each state’s deficiencies. (Enclosure A, pps. 3-6) LTC Comment: In the Center for Long-Term Care Reform’s January 2011 report Medi-Cal LTC: Safety Net or Hammock?, we stated that Medi-Cal has not implemented key provisions of OBRA ’93 nor most provisions of DRA ’05. Despite the fact that stipulations in both federal laws are mandatory and long past due for implementation, Medi-Cal still uses the older, more lenient—and far more costly—rules. (p. 25) It was to confirm or disprove this accusation that Congress asked the Inspector General to investigate. The IG report fully collaborates our analysis. IG Report: “All 51 States reported that they have implemented the OBRA provision requiring recovery of medical assistance costs from the estate of a deceased Medicaid recipient. Table 5 includes a year-by-year summary of State implementation of the OBRA estate recovery requirement.” (Enclosure B, p. 1) LTC Comment: Hallelujah! It’s about time we had some new data on estate recoveries. The last information was published by DHHS in 2005 reporting on Fiscal Year (FY) 2004 data: “Medicaid Estate Recovery Collections.” But the IG really dropped the ball on this latest report. It lists collections for each year from 2005 to 2011 by state, but unlike the earlier DHHS report, the IG report fails to compare the states’ recovery success based on the percentage of Medicaid long-term care costs recovered. Not to worry, however, we’ve done that analysis for you and we’ll report our findings soon in another LTC Bullet. Stay tuned after the Thanksgiving Day holiday for our explanation of why the state and federal Medicaid programs may be missing nearly $2.5 billion in non-tax revenue by failing to implement and enforce estate recoveries fully. |
