June 25

Guardianship Funds Must Go to Estate to Reimburse Medicaid Claim

New York’s highest court rules that the funds in a deceased nursing home resident’s guardianship account must pass to the resident’s estate to pay a Medicaid claim instead of being used to reimburse the nursing home that had a claim against the guardianship account. Shannon v. Westchester County Dept. of Social Servs. (N.Y., No. 80, June 10, 2015).

Eastchester Rehabilitation & Health Care Center applied for a guardian for resident Edna Shannon and also applied for Medicaid on her behalf. The court appointed a guardian, and the state granted Ms. Shannon Medicaid benefits. The nursing home filed a claim with the guardian for services provided Ms. Shannon that were not covered by Medicaid. The court approved the sale of Ms. Shannon’s home, and the money went into the guardianship account.

After Ms. Shannon died, the state filed a claim against her estate for reimbursement of Medicaid expenses. The nursing home argued its claim accrued before the state’s claim because the state did not have a lien against Ms. Shannon’s home. The state argued that it was a preferred creditor, and the trial court agreed. The nursing home appealed, and the appeals court reversed, holding that the nursing home is entitled to reimbursement from the guardianship account before any funds pass to the estate. The state appealed.

The New York Court of Appeals, the state’s top court, reverses, holding that all money from the guardianship account must pass to the estate. The court concludes that state law permits a guardianship account to retain only property needed to satisfy the administrative costs of the guardianship, not to pay a claim against the incapacitated person that arose before that person’s death.

For the full text of this decision, go to: https://www.nycourts.gov/ctapps/Decisions/2015/Jun15/80opn15-Decision.pdf

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June 22

Medicaid Applicant Can Appeal Decision that Has Not Yet Been Enforced

An Ohio appeals court rules that a trial court improperly dismissed an appeal by a Medicaid applicant for lack of justiciability because the decision had not been enforced yet. Stolzenburg v. Ohio Dept. of Job & Family Servs. (Ohio Ct. App., 3rd Dist., No. 2-15-01, June 8, 2015).

Nursing home resident Larry Stolzenburg applied for Medicaid benefits. The Medicaid agency found that Mr. Stolzenburg had made an improper transfer and imposed a penalty period. Mr. Stolzenburg appealed the decision to the Ohio Department of Job and Family Services (ODJFS), and after a hearing, the ODJFS affirmed the decision.

Mr. Stolzenburg appealed the ODJFS’s decision to court (Mr. Stolzenburg died while the case was pending and his executor was substituted). The trial court dismissed the appeal for lack of justiciability, holding that ODJFS’s decision does not adversely affect Mr. Stolzenburg until the Ohio Department of Medicaid (ODM) takes action to enforce the state’s decision. The estate appealed.

The Ohio Court of Appeals reverses, holding that the case is justiciable. According to the court, “the possibility that parties might settle a case following a court’s judgment or that a prevailing party might not enforce a court’s judgment do not affect justiciability and the court’s ability to enter judgment in the first place.  Applying the common pleas court’s reasoning, no case would be justiciable . . . “

For the full text of this decision, go to: http://www.supremecourt.ohio.gov/rod/docs/pdf/3/2015/2015-Ohio-2212.pdf

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June 18

State Can Impose Second Penalty Period on Same Transfers of Assets

A Massachusetts appeals court rules that the state may impose a second penalty period based on the same transfers of assets after one of the transfers was cured and the applicant reapplied for benefits before the first penalty period was over. Burt v. Director of the Office of Medicaid (Mass. Ct. App., No. 13-P-1853, May 29, 2015).

Catherine Harrington made two separate transfers of assets—one for $45,000 and one for $134,834. She applied for Medicaid benefits in December 2006. Based on the transfers, the state imposed a penalty period until December 2008. More than 60 days after Ms. Harrington was notified about the penalty period, her niece returned the $45,000 transfer. In June 2008, Ms. Harrington filed a second application for benefits. The state imposed a new penalty period, running from March 2008 until July 2009, for the $134,834 transfer that occurred before the first application.

Ms. Harrington appealed, arguing that her penalty period should have begun in December 2006 and that it was impermissible for the state to impose a new penalty period for the same transfer she was already penalized for. Under Massachusetts regulations, because the transfer was cured more than 60 days after the notice about the penalty period, Ms. Harrington had to reapply for benefits. The state argued its regulation requires it to review a new application in its entirety and make a new determination about when the applicant is “otherwise eligible.” The trial court affirmed the state’s decision, and Ms. Harrington appealed.

The Massachusetts Court of Appeals affirms, holding that the state’s imposition of the second penalty period does not violate state or federal law. According to the court, “nothing in the plain language of the regulations requires that the start date for the recalculated penalty period be the same day that the prior penalty period began.” The court rules that an applicant does not become “otherwise eligible” at a time when nursing home services are being paid for and that Ms. Harrington was paying for services until March 2008.

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June 15

House Bill Would Make Income from Community Spouse’s Annuity Available to Medicaid Applicant

New legislation in the U.S. Congress would change the way income from a community spouse’s annuity is counted for the purposes of Medicaid eligibility. The bill would make a portion of the income available to the institutionalized spouse.

In April 2015, Rep. Markwayne Mullin (R-Okla.) introduced H.R. 1771 to amend the section of the Medicaid law dealing with the treatment of income (42 U.S.C. 1396r–5(b)(2)). The proposed amendment would provide that if the annuity pays income solely in the community spouse’s name, one-half of the income will be considered available to the institutionalized spouse. The same thing is true if the annuity pays income to both the institutionalized spouse and the community spouse. If the annuity pays income to the community spouse and another person, then one-half of the community spouse’s portion will be considered available to the institutionalized spouse.  The legislation has been referred to the House Committee on Energy and Commerce.

To read the proposed amendment, click here.

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June 11

CMS Issues Guidance on Applying Protections to Spouses of HCBS Recipients

Little noticed among its more famous provisions, the Affordable Care Act expanded impoverishment protections to the spouses of home and community-based services (HCBS) beneficiaries.  However, although the rules have been in effect since 2014, states have not always been in compliance, according to Justice in Aging (formerly the National Senior Citizens Law Center). 

States now have less of an excuse not to comply because the Centers for Medicare and Medicaid Services (CMS) has issued guidance to states on the implementation of section 2404 of the Affordable Care Act which amended section 1924 of the Social Security Act, “Protection for Recipients of Home and Community-Based Services Against Spousal Impoverishment.” The Act amended section 1924(h)(1) to require, for the five-year period beginning January 1, 2014, that states include in the definition of an “institutionalized spouse” married individuals who are “eligible for medical assistance for home and community-based services . . . ”

The guidance describes how states must apply the statute in making Medicaid eligibility determinations.  Justice in Aging summarized some of the highlights in a recent Health Network Alert:

  • Under the statute, an individual must be eligible for HCBS in order for the protections to apply, and CMS interprets this to mean individuals must meet the nonfinancial eligibility requirements for HCBS.
  • For those eligible through use of the spousal eligibility rules based on their need for HCBS, the statute does not require that they actually receive the HCBS for which they are eligible. This rule will apply, for example, to clients who are on a waiting list for a waiver.
  • CMS provides additional guidance on what type of HCBS an applicant must be eligible for in order for spousal impoverishment rules to apply.  
  • The guidance includes clarification on how the expanded application of spousal impoverishment rules applies in post eligibility treatment of income (PETI) cases and the rule’s applicability to individuals deemed eligible for services under the Modified Adjusted Gross Income (MAGI).  

 To read the letter providing guidance to state Medicaid Directors, click here. 

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