[This article was originally published on September 27, 2004. The links were updated on August 24, 2018.]
Medicaid's share of cost (the "patient pay amount") may be used to pay off old medical expenses such as nursing facility bills that were incurred prior to determination of Medicaid eligibility, the Centers for Medicare and Medicaid Services (CMS) has confirmed.
CMS made the confirmation in response to a letter from Maryland ElderLawAnswers member Ron Landsman and reported in the September 24 issue of National Senior Citizens Law Center's Washington Weekly.
Some states, including Maryland, have been unwilling to follow the existing authority in the Code of Federal Regulations and the CMS State Medicaid Manual, which permits a Medicaid monthly share of the patient pay amount to be applied to old medical bills. Such bills may have been incurred when, for example, a nursing home resident has racked up uncovered facility bills during a poorly-managed transition from private-pay status to Medicaid eligibility.
The relevant regulatory language requires income deductions for "[n]ecessary medical or remedial care recognized under State law but not covered under the State's Medicaid plan, subject to reasonable limits the agency may establish on amounts of these expenses." 42 C.F.R. §§ 435.725(c)(4)(ii), 435.733(c)(4)(ii), and 435.832(c)(4)(ii). State Medicaid Manual section 3628.1 (pertaining to medically-needy individuals) states that an income deduction is required for "[c]urrent payments or unpaid balance on old bills incurred outside the current prospective and 3-month retroactive periods not previously deducted in any budget period."
The CMS letter sent to Landsman states:
"These post-eligibility provisions would apply to the unpaid nursing home charges that were involved in the case described in your correspondence. Thus, the $54,000 in incurred medical expenses representing the balance Mr. Monteagudo owed to the nursing home should have been deducted from his income as other medical expenses in the post-eligibility process, reducing the amount shown on the last line of the August 20, 2003 "Notice of Eligibility" as the "Available Income to be Paid to Cost of Care" to zero. This deduction would continue to be made for as many months as necessary to satisfy the outstanding bill."
The letter notes that a state may place "reasonable limits" on deductions for medical expenses, but only if the limits are included in the Medicaid State Plan. Examples of "reasonable limits" in State Medicaid Manual (Section 3703.8) are a requirement that services be prescribed by a physician, or that costs be limited to the market rate for the service in question.
To download a copy of the CMS letter in PDF format, click on: https://attorney.elderlawanswers.com/cms-letter-on-payment-of-pre-eligibility-medical-bills-3529.
(If you do not have the free PDF reader installed on your computer, download it here.)
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