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Medi-Cal Update


Status of Recovery Regulations

In September 2003, the San Francisco Superior Court issued an injunction requiring the Department of Health Services to submit regulations to the Office of Administrative Law covering annuities, the process pertaining to disability determinations and regulations covering a range of issues that had previously only been addressed on an ad hoc or underground basis, e.g., life estates, IHSS, hardship waiver criteria, etc. (See CANHR v. Bonta, 106 Cal. App. 4th 498 (2003)).

Regulations covering annuities were exempted from Executive Order S-2-03 and are expected to be released for public comment around the beginning of May. The Department has until June 2004 to submit the comprehensive regulations, and until December 2004 to submit the disability regulations. Meanwhile, there is no prohibition on recovery activities by the Department, although there is no present authority permitting recovery from annuities. We will keep you informed as soon as the first regulation package is released, and your comments are encouraged.

Status of Medi-Cal Eligibility Regulations

Most of you have read about or received a copy of the two draft Medi-Cal regulation packages that propose to implement the OBRA’ 93 provisions. The regulations from the first draft were initially scheduled to go into effect on March 1, 2004. The Governor then issued Executive Order S-2-03, which stayed all activity on regulatory actions for 180 days. An exemption from the Executive Order is likely, and some version of the regulations is expected to be submitted to the Office of Administrative Law by May 2004.

The 9/2/03 draft contained few surprises, addressing the OBRA’ 93 provisions such as the 36-month look back, the aggregation of transfers, more stringent provisions regarding annuities and restrictions on spouse-to-spouse transfers.

However, the 1/5/04 revised draft included other, very restrictive, requirements, such as the elimination of the ability to transfer the home as an exempt asset, no safe haven to protect from retroactive application, and very onerous undue hardship provisions, among others (See the 1/5/04 regulations and CANHR’s comments on this draft on the CANHR web site). It is common knowledge that a later, revised draft of these regulations is now being reviewed. However, they have not been made available to CANHR or even to some of the counties as of the end of March.

Emergency Regulations

The Department is planning to file the transfer regulations on an “emergency” basis, which means that the regulations will go into effect immediately, with public comment afterward. CANHR is planning a lawsuit to prevent the release of the regulations on an emergency basis, in light of the fact that their release has been delayed for over 11 years already.

Medi-Cal Hysteria

There is great cause for concern, as “Medi-Cal hysteria” has hit Sacramento, with the nursing home industry pushing and legislators caught up in the myth that thousands of applicants are divesting assets to qualify for Medi-Cal. (What better way to divert attention from Medi-Cal fraud by providers?) For example, the California Association of Homes and Services for the Aging (CAHSA)—the association of non-profit nursing homes—told CANHR staff that they would be sponsoring legislation to “reform” the Medi-Cal program to prevent transfers of assets. One change they were seeking is a 60-month look back period, rather than the 36 months. It is CAHSA’s view that, by restricting transfers, more private pay money would be available to their member facilities.

Their bill, AB 2937 (Nation) would require recovery from annuities purchased within 60 months of an application for Medi-Cal. The bill is a confusing mixture of eligibility and recovery, and ironically would be less restrictive regarding recovery than the Department’s own proposed regulations. As of the end of March, however, the bill has not been scheduled for Committee hearing.

In addition, at the Assembly Health Committee hearing on CANHR’s recovery bill, AB 2493 (Lieber), CAHF—the for-profit industry group—opposed the bill on the basis that exempting surviving spouses from recovery would deprive their members of needed Medi-Cal money.

Budget Trailer Bills

Not content with regulatory packages, the Governor has also drafted budget trailer bill language to require DHS to claim against annuities as part of a Medi-Cal beneficiary’s estate. Additional draft trailer bill language protects DHS’ liens against trusts and makes it more difficult for individuals to qualify for Medi-Cal by using annuities or loans to reduce a potential beneficiary’s assets (See Assembly Health Committee analysis of AB 2493, March 23, 2004).

Like the 1993 provisions that implemented the recovery program, Medi-Cal changes included in budget trailer bills are difficult to lobby against, avoid the open hearing process and legislators are not likely to defeat an entire budget bill because of a few Medi-Cal changes.

Medicaid Waiver/Medi-Cal Redesign

It is widely known as well that the Governor is seeking a broad Medicaid waiver from the federal government by the end of 2004 so that DHS can “redesign” the Medi-Cal program to save up to $400 million. Since the Medicaid waiver is aimed at restructuring various programs of Medi-Cal and restricting benefits, it is also likely that the waiver will seek more stringent transfer rules.

Kim Belshe, the Director of the Department of Health and Human Services, has been convening a number of Medi-Cal Redesign Stakeholders Workgroups, purportedly for the purpose of seeking input prior to the waiver request as to how to redesign the Medi-Cal system to make it more efficient and achieve cost savings, while protecting current eligibles. Starting on March 16 and running through April 28, the workgroups are divided into components including benefits and cost sharing, eligibility, managed care, aging and disability issues and financing.

For details on the workgroups, the Medi-Cal Redesign updates, schedules or to submit your own input, see dhs.ca.gov.

So What’s It All About?

The providers don’t want their Medi-Cal funds cut, so they try to divert attention by blaming greedy consumers who give away assets to qualify for Medi-Cal. The Governor wants to cut $400 million from Medi-Cal, but doesn’t want to take responsibility for cuts that kill. So get “stakeholders” involved and pretend that they were involved in the process so they can’t scream too much when the cuts come. The legislators? Most don’t know the difference between Medi-Cal eligibility and recovery. Nor will they realize until after they pass a bill the impact their votes will have on their constituents.

Thus, it is our responsibility to pay attention, write our legislators and educate them.