Medicaid Recpients that owe money, What to do?

An issue that comes up quite frequently (and one that I’m sure is very important to many facilities) is when a person is approved for Medicaid services but still owes money for prior medical expenses.  By the way, prior nursing home payments are considered to be “medical expenses”.

This happens many times when a facility resident’s family does the application and something gets messed up along the way.  I have seen this occur with unknown assets such as life insurance policies with cash value and also when a Miller Trust becomes over funded and is not corrected.  The nursing home bill then goes unpaid while this mistake is in effect.  To add insult to injury, many times the DHS office takes quite some time to make their determination and then, all of a sudden, you have a substantial past due amount.

The good news is that there is a Federal Medicaid (CMS) rule stating that the applicant’s income should be used to pay for their pre-eligibility medical expenses while Medicaid then makes up the difference to the facility while this back debt is being paid.  The Federal Law is 42 C.F.R. § 1396a(r)(1)(A)(ii).  Specifically, the income can be used to pay for “medical services not covered under the State plan”.  The few cases that have pursued this have, to this point, ruled that nursing home bills fall under this category and therefore can be paid.

Therefore, how this works out is best to ask for the income offset when you apply for Medicaid if you know of pre-eligibility debts.  However, there is no reason not to go to DHS now and ask for an income offset for resident’s that now owe for previous debts.  Please understand this has not been done in Arkansas to my knowledge.  I am currently pursuing one of these and have had little response from the State.  I did not pursue this aggressively because I was waiting on some other information from other states, which I now have.

In order to pursue this you must ask the caseworker for the income offset.  He or she will more than likely not know what you are talking about or will deny the request.  You must then proceed to a Fair Hearing.  You must have a good understanding of Administrative Law to make a good record and more than likely pursue this to Circuit Court based only on the Fair Hearing record.

If you know of someone in this situation, please contact our office with some details.  We will look at these cases and consider taking them to the caseworkers.  I am excited about this new information and look forward to working with families and facilities to eliminate a problem that up until this time really did not have a good answer.  Please contact us if you have any questions.

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