[This article was originally published on September 26, 2008. The links were updated on August 24, 2018.]
A federal appeals court upholds CMS's rejection of a Maryland State Plan Amendment that would have prohibited Medicaid beneficiaries living in long-term care facilities from using their income to pay for the medical expenses they incurred before they became eligible for Medicaid. Maryland Department of Health and Mental Hygiene v. Centers for Medicare and Medicaid Services (4th Cir., No. 07-1512, Sept. 25, 2008).
In 2003, Maryland ElderLawAnswers member Ron M. Landsman informed the Centers for Medicare and Medicaid Services (CMS) that Maryland was not allowing Medicaid recipients to deduct from their patient pay amount the cost of medical expenses they incurred prior to becoming Medicaid-eligible, a violation of section 42 U.S.C. §1396a(r)(1)(A)(ii) of the federal Medicaid statute. When Maryland submitted an amendment to its state Medicaid plan seeking approval of this practice, CMS denied the request, in effect forcing the state to allow patients to pay for their past-due medical bills out of their current income before they were required to use their patient pay amount for their long-term care. Maryland appealed the decision.
On appeal, the state argued that federal law gives states latitude to limit patients' ability to pay for medical expenses incurred before they became Medicaid-eligible, since the practice effectively allows beneficiaries to cover their debts while the government pays for their full cost of care. CMS pointed out that when Congress drafted the statute at issue, it was clearly overturning a then-new CMS regulation that would have allowed the states to engage in this exact practice, proof that the Congress intended to prevent states from engaging in it.
The U.S. Court of Appeals for the Fourth Circuit agrees with CMS and upholds the rejection of Maryland's amendment. The court finds that "in promulgating regulations for states to follow, in calculating the post-eligibility income of nursing home residents, CMS has not clearly exceeded its authority."
Commenting on the decision's impact, attorney Landsman says:
"The decision has great practical significance for elder law attorneys who handle Medicaid in States not already following this rule. It gives them an additional tool for dealing with nursing homes and Medicaid where clients going onto Medicaid have gotten into arrears.
"The problem most often arises when a nursing home resident seeking Medicaid does not quite qualify for benefits, typically because they were slightly overscale, but with too little to pay the full cost of care. By the time they qualify, they have no money to pay the old bill, and so are under threat of discharge or non-readmission after a hospital stay.
"The CMS rule allows the resident to pay the old nursing home bill using current income. While current income is used to pay the old bill, Medicaid pays 100 percent of the current cost of care. The nursing home then has no incentive to discharge for non-payment since they are, in essence, getting super-Medicaid payments; discharge would likely result in losing any payment for the prior care. If a nursing home does insist on discharge, it suggests an anti-Medicaid motive in violation of the Federal Nursing Home Reform Act."
Landsman, along with Cyril Smith of the firm Zuckerman Spaeder LLP, filed an amicus brief in support of CMS. Landsman, with Smith and Carlos Angulo of Zuckerman Spaeder, assisted by longtime National Academy of Elder Law Attorneys member René H. Reixach, Jr., of the Rochester, New York, firm of Woods, Oviatt & Gilman LLP, are also helping Maryland Medicaid beneficiaries pursue a class action lawsuit against the state to enforce CMS's decision. For more on that case, click here.
Landsman credits Justice in Aging's (previously the National Senior Citizens Law Center) Eric Carlson, one of the nation's leading consumer experts on nursing homes and assisted living facilities, with educating him five years ago on the issue he has been litigating.
To read the full text of the 4th Circuit's decision, click here.
Did you know that the ElderLawAnswers database now contains summaries of more than 1,800 fully searchable elder law decisions dating back to 1993? To search the database, click here.
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