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PACAH2015 Annual Conference. Medicaid Eligibility and Collections: Recognizing Problems and Finding Solutions. Friday, September 18, 2015. 10:30 a.m. 11:30 a.m. – PowerPoint PPT presentation

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Title: PACAH%202015%20Annual%20Conference

PACAH2015 Annual Conference
  • Medicaid Eligibility and Collections Recognizing
    Problems and Finding Solutions
  • Friday, September 18, 2015
  • 1030 a.m. 1130 a.m.

  • John N. Kennedy, Esquire
  • Benjamin J. Glatfelter, Esquire
  • Kennedy, PC Law Offices
  • P.O. Box 5100
  • Harrisburg, PA 17110
  • (717) 233-7100

Presentation Overview
  • Utilizing the admission agreement to resolve MA
    eligibility issues
  • Utilizing administrative remedies
  • MA eligibility appeals
  • Undue hardship waivers
  • Utilizing the court system
  • Civil litigation
  • Orphans Court
  • Estates
  • Opening an estate to recover a private balance
  • Opening an estate to complete the MA application
  • Reporting criminal activity
  • Best practices

Admission Agreements
  • Background
  • The Admission Agreement is a legally binding and
    enforceable contract between the parties.
  • Each party has respective duties and obligations.

Admission Agreements
  • Signed by
  • Resident, as individual responsible for his/her
    own obligations under the Admission Agreement,
  • Responsible Party, as third-party responsible for
    obligations set forth in the Admission Agreement.

Admission Agreements
  • What are the Responsible Partys (RP)
  • Cannot require RP to be a third-party guarantor.
  • RP can be required to pay the Facility from
    Residents resources.
  • Obligate the RP to notify Facility once
    Residents resources reach a certain dollar
    amount (i.e., 10,000).

Admission Agreements
  • Interest, Costs and Attorneys Fees
  • Add provision requiring Resident and/or RP to pay
    interest, costs of collection, and attorneys
    fees in the event of default.

Admission Agreements
  • Patient Pay Obligations
  • For Medicaid pending residents, Facility can
    require payment of estimated patient pay
    obligations from Resident and RP.

Admission Agreements
  • Duty to Cooperate with MA Process
  • Contractually obligate the RP and Resident to
    cooperate with the facility and the CAO in the MA
    eligibility process.
  • Including the MA application process, any
    requests for information, any appeals of denial
    or discontinuance of MA, and any undue hardship
    waivers and appeals.

Admission Agreements
  • Authorization to Apply for MA
  • Regulations allow the SNF to apply for MA if the
    resident is unable to do so because of illness,
    infirmity, or physical or mental handicap.
  • Authorization for MA applications therefore not
    absolutely necessary to be included in the
    admission packet, but it still may be beneficial
    to have the RP agree, in writing, to apply for MA.

Admission Agreements
  • Authorization to Appeal MA Denials
  • Regulations allow only the resident, legal
    representative, relative, or friend of the
    resident to file an appeal of a denial.
  • Case law Court held a SNF is not a friend of
    the applicant and therefore has no standing to
    file an appeal of MA denial.

Admission Agreements
  • Authorization to Appeal MA Denials (Cont.)
  • Written authorization is necessary requirement to
    allow the SNF to establish standing to pursue an
    appeal of the MA eligibility denial. The
    authorization can be a separate statement or part
    of the Admission Agreement, signed by Resident
    and/or RP.
  • Written statements should authorize the SNF to
    file and pursue the appeal.

Admission Agreements
  • Authorization to Appeal MA Denials (Cont.)
  • Written authorization is necessary requirement to
    allow the SNF to apply for an undue hardship
  • Written statements should authorize the SNF to
    also file and pursue the appeal.

Admission Agreements
  • Specific Performance Language
  • Require Resident and RP to specifically perform
    their contractual obligations.

Admission Agreements
  • Remedies for failure to cooperate
  • Breach of contract and damages.
  • Specific performance of contractual obligations.

  • Jackie Jones was admitted to the Facility on
    January 1. She signed the Admission Agreement.
    Her son James also signed the Admission Agreement
    as Responsible Party. No payments have been made
    and no MA application has been filed. The
    business office manager speaks to the resident,
    and also calls the son regarding the outstanding
    balance. Both deny any responsibility to help
    the facility obtain payment.
  • What can the Resident and RP be obligated to do
    by the Admission Agreement?

MA Eligibility Appeals
  • What can be appealed?
  • Denial
  • Suspension
  • Discontinuance
  • Change in the amount and
  • Undue delay in acting upon a request or

MA Eligibility Appeals
  • What are the appeal deadlines?
  • 30 days from the date on any written notice.
  • 60 days from a failure to act.
  • 6 months in certain circumstances.
  • Greater than 6 months in limited circumstances.

MA Eligibility Appeals
  • Nunc Pro Tunc Appeals
  • Latin for late appeal. Available in limited
    circumstances. Standard is whether there was
    fraud or any breakdown in the administrative
  • Notice problems, or when an administrative body
    is negligent, acts improperly, or unintentionally
    misleads a party.

MA Eligibility Appeals
  • What is an Appellant entitled to?
  • The CAOs case file.
  • A conference with the CAO to discuss settlement.
  • To examine documents prior to the hearing the CAO
    will introduce as evidence.
  • A hearing with opportunity to present evidence.

MA Eligibility Appeals
  • Standard Applied The question on appeal is not
    whether the CAO acted properly based on the
    information then available, but whether the
    Appellant was eligible for the period of time at
    issue based on evidence provided at or before

MA Eligibility Appeals
  • Two main reasons for rejections
  • Excess resources
  • Failure to provide verifications

MA Eligibility Appeals
  • Excess resources options
  • Voluntary spend down on appropriate expenses
  • Retroactivity issues with expenditures
  • Appoint a guardian
  • Civil litigation to compel cooperation
  • Orphans Court to compel POA cooperation
  • Estate spend down

MA Eligibility Appeals
  • Failure to provide verifications options
  • Release
  • BHA Subpoenas
  • Guardianship
  • Civil litigation
  • Orphans Court
  • Estates

MA Eligibility Appeals
  • Our goal Settle the matter with the CAO and
    have a Notice of Eligibility issued prior to the
    hearing before the Bureau of Hearings Appeals.
  • Stipulation issues the clock is ticking.

  • John Adams is admitted to the facility on
    January 1. He was admitted from his home where
    he had lived for 30 years. Other than the home,
    John has no resources and fixed income of monthly
    social security payments. Johns son signed the
    Admission Agreement as the RP. It is approaching
    the end of February and neither John nor his son
    filed an application for MA and there have been
    no payments made to the facility. John is
    competent but relies upon his son to handle most
    financial matters.
  • What steps should the facility take?

  • Same as prior Hypo, except neither John nor his
    son signed the Admission Agreement.
  • What steps should the facility take?

  • Katie Smith was admitted on January 1. She
    applied for MA and was denied for failure to
    obtain the verifications requested by the CAO
    within the requested timeframe. Katie filed an
    appeal. She informed the facility a hearing is
    scheduled on the matter for next week, but she
    needs additional time to obtain the
    documentation. She is very cooperative, and
    provides the facility with authorization to
    participate in the appeal.
  • What steps should the Facility take?

Undue Hardship Waivers
  • Options for Obtaining Payment in the Event of a
    Transfer Penalty
  • Appeal of Transfer Penalty Notice
  • Appeal to challenge the amount of the transfer
  • Appeal to challenge the presumption that the
    assets were transferred with the intent to
    qualify for MA benefits
  • Undue Hardship Waivers
  • Obtaining Payment from Private Resources

Undue Hardship Waivers
  • Deficit Reduction Act required states to
    establish undue hardship exception process if
    application of the penalty will
  • deprive an individual of medical care such that
    the individuals health or life will be
    endangered, or
  • the individual would be deprived of food,
    clothing, shelter, or other necessities of life.

Undue Hardship Waivers
  • CAO will
  • Apprise applicant he or she is eligible for
  • But not eligible for payment and
  • Apprise the applicant of the undue hardship
    waiver procedures.

Undue Hardship Waivers
  • Facilities can apply for the waiver with
    authorization of the individual or personal
    representative of the individual.
  • DPW published a specific form.
  • Revise admission agreement to give

Undue Hardship Waivers
  • Factors
  • Age
  • Health
  • Financial situation of applicant
  • Value of the asset transferred
  • Amount of compensation received
  • Date of asset transfer

Undue Hardship Waivers
  • Factors (contd)
  • Any pattern of gifting
  • Relationship of transferor to transferee
  • Reasons why asset cannot be returned
  • For home equity, reason the equity cannot be

Undue Hardship Waivers
  • Special Consideration Factors
  • Sudden unexpected onset of a serious illness or
    disability occurred after the date of transfer
  • Unexpected loss of other resources/income after
    the transfer occurred

  • Anna, 68, was admitted to the facility on August
    1, 2014 after she was severely injured in a car
    accident in July 2014. At the time of her
    admission, Anna had 300,000 in resources and a
    home worth 75,000. In August 2012, Anna
    transferred 60,000 to her great niece/POA,
    Nancy, to pay off Nancys college loans.
  • Will a penalty period be imposed for Annas MA
  • If so, what are Annas arguments for an undue
    hardship waiver?

  • Alex is 90 years old and was admitted to the SNF
    on January 1, 2015. Prior to Alexs admission to
    the SNF, he resided at home with his dog.
    Beginning on January 1, 2013, Alex began paying
    his son, Sam, 1,000.00/week to walk Alexs dog
    once a day. Alexs mental condition has been
    declining over the years and Alex is no longer
    able to handle his own financial affairs. The
    SNF filed an MA application on Alexs behalf.
  • Will a penalty period be imposed for Alexs MA
  • If so, what arguments can be made for an undue
    hardship waiver?

  • Adam, 95, suffers from severe dementia and was
    admitted to the SNF on January 1, 2015. An
    application for MA benefits was filed on Adams
    behalf on April 1, 2015. When bank statements
    were provided to support Adams MA application,
    it was discovered that Adams son/POA, Sal, wrote
    numerous checks to himself in December 2014
    totaling 50,000 to fund Sals gambling addiction
    by signing the checks as Adamss POA.
  • Will a penalty period be imposed for Adams MA
  • If so, what arguments can be made for an undue
    hardship waiver?

  • Potential actions for facilities to consider when
    dealing with Medicaid eligibility and/or payment
  • Administrative appeals
  • Civil Court litigation
  • Guardianships
  • Criminal Charges
  • Goal 100 payment through private resources or

Civil Litigation
  • Who are the potential defendants?
  • Resident
  • Responsible Party
  • Agent under Power of Attorney
  • Spouse, child, or parent
  • Recipient of transfer from resident

Civil Litigation
  • What are the potential causes of action?
  • Quantum Meruit
  • Breach of Contract against Resident and/or
    Responsible Party
  • Statutory Duty of Support
  • Fraudulent Transfer

Civil Litigation
  • Quantum Meruit
  • Facility provided services to Resident.
  • Facility expected compensation for the services
  • Resident accepted the services provided by the
  • Facility has an outstanding debt due and owing
    for the services provided.

Civil Litigation
  • Breach of Contract against Resident
  • Contract requires payment for services
  • If Resident signs the contract, receives services
    under the contract, and does not pay for the
    services, Resident can be held liable for a
    breach of the contract

Civil Litigation
  • Breach of Contract against Responsible Party
  • RP signed contract.
  • Contract obligated RP to pay Facility from
    Residents resources.
  • Contract obligated RP to cooperate in MA process.
  • RP did not arrange for payment.
  • RP did not cooperate in obtaining MA.
  • RP breached the contract.

Civil Litigation
  • Statutory Duty of Support
  • 23 Pa.C.S. 4603 Relatives liability procedure
  • . . .all of the following individuals have the
    responsibility to care for and maintain or
    financially assist an indigent person, regardless
    of whether the indigent person is a public
    charge (i) The spouse of the indigent person.
    (ii) A child of the indigent person. (iii) A
    parent of the indigent person. (emphasis added).

Civil Litigation
  • Fraudulent Transfer
  • Uniform Fraudulent Transfers Act
  • Action against transferor, and
  • Action against transferee

Civil Litigation
  • Fraudulent Transfer (Cont.)
  • Occurs if debtor made a transfer
  • 1) With intent to hinder, delay, or defraud any
    creditor OR
  • 2) Without receiving a reasonably equivalent
    value in exchange AND the debtor intended to
    incur, or reasonably should have believed the
    debtor would incur, debts beyond the debtors
    ability to pay as they become due.

Civil Litigation
  • Fraudulent Transfer (Cont.)
  • Remedies
  • Avoidance of the transfer to the extent necessary
    to satisfy the creditors claim
  • An attachment or other provisional remedy against
    the asset transferred or other property of the

  • Rhonda was admitted to the Facility on January 1,
    2015 and signed the facilitys Admission
    Agreement. During the admission meeting, Rhonda
    listed the amount of money in her bank account as
    20,000. During the MA application process, it
    was discovered Rhonda transferred the 20,000 to
    her daughter directly after the admission meeting
    on January 1, 2015 to avoid paying this money to
    the facility. The CAO assessed a 20,000
    transfer penalty resulting in a balance at the
  • What are facilitys options?

  • Randy suffered from severe dementia and was
    admitted to the facility on January 1, 2015.
    Since Randys son/POA, Sal, was on vacation at
    the time, no one signed the Admission Agreement.
    Sal is a local physician. Upon application for MA
    benefits, it was discovered Sal transferred
    50,000 of Randys money to himself in December
    2014. The CAO assessed a 50,000 transfer
  • What can the facility do?

Orphans Court
  • Potential actions
  • Petition to Compel Accounting of POA or Guardian
  • Guardianship

Orphans Court
  • Guardianship
  • Facility can file guardianship petition
  • Resident must be an incapacitated person
  • Guardian appointed to handle financial matters
    and/or make medical decisions
  • Differences between guardian and POA

Orphans Court
  • Guardianship
  • Possible triggers for guardianship
  • Assistance with MA application process
  • No one with authority to access Residents funds
    to pay bill
  • Current POA misappropriating Residents funds
  • No one available to make medical decisions for

Orphans Court
  • Guardianship
  • Standard of Incapacity In the physicians
    opinion, is the residents ability to receive and
    evaluate information effectively and communicate
    decisions in any way impaired to such a
    significant extent he or she is partially or
    totally unable to manage his or her financial
    resources and to meet essential requirements for
    his or her physical health and safety?

Orphans Court
  • Guardianship
  • Who acts as guardian?
  • Guardianship association
  • Family member
  • Friend

Orphans Court
  • Guardianship
  • Interplay with Medicaid Eligibility Process
  • Facility can apply for MA, file a petition for
    guardianship, and keep the MA application alive
    until the guardian is appointed.
  • May need a guardian to assert standing in
    Medicaid administrative appeals and/or civil
  • After guardian is appointed, the guardian will
    need time to liquidate assets, etc., and work
    with the facility and the CAO to establish MA

  • Resident was admitted to the facility on January
    1st and suffers from severe dementia. Residents
    son, Sam, is Residents POA. Resident is
    receiving MA benefits and has a patient pay
    obligation of 2,000/month due to a pension. Sam
    is receiving Residents pension but refuses to
    forward the income to the facility to meet
    Residents patient pay obligation.
  • What steps can the facility take?

  • Resident was admitted to the facility on
    January 1st with severe dementia. Residents MA
    application was recently denied due to the
    failure to provide the requested verifications.
    Residents only daughter, Debbie, does not
    respond to the facilitys phone calls or letters.
    The facility is unaware of any other individuals
    who could assist with the MA application process.
  • What steps can the facility take?

  • Nursing facility that petitions to open an estate
    is not required to act as Administrator
  • Benefits of appointing an unrelated third-party
  • Recommended Administrator An estate law attorney
    who is familiar with the estate administration

  • Administrator paid from the proceeds of the
  • Necessary to first evaluate costs vs. benefits of
    petitioning to open an estate for a deceased
    former resident

  • Once an estate is opened and an Administrator is
    appointed, the facility must file a Notice of
    Claim and wait for the estate assets to be

  • Carl, a former resident of the SNF, passed away
    leaving an outstanding balance of 20,000. At
    the time of Carls death, he was the sole owner
    of a house with no liens or encumbrances. The
    house has an estimated fair market value of
    100,000. Carls family indicated they do not
    intend to open an estate.
  • What steps should the SNF take to recover its

Opening an Estate to Complete the MA Application
  • For consideration when a resident passes away
    after a MA application is filed but before all
    verifications have been provided to the CAO.
  • Any other options to obtain the necessary
    verifications without opening an estate?

Opening an Estate to Complete the MA Application
  • Must consider two tracks
  • 1) The process of petitioning to open an estate
    as a creditor and seeking the appointment of a
    third-party administrator and
  • 2) Keeping the MA application alive until all
    outstanding verifications are obtained by the

  • Claire, a resident of a nursing facility, was
    incapacitated and Claires family refused to
    cooperate with the MA application process. An MA
    application was filed by the nursing facility on
    Claires behalf. Claires MA application was
    denied due to excess resources. An appeal of the
    MA denial was filed by the nursing facility. A
    BHA hearing has not yet been scheduled. Due to
    the lack of a representative willing to act on
    Claires behalf, the nursing facility petitioned
    for the appointment of a guardian for Claire.
    Claire passed away after the guardian was
    appointed but before the guardian could liquidate
    Claires assets and appropriately spend down
    excess resources. Claire's estate is worth
    20,000. The nursing facility is owed 50,000.
  • What steps should the Facility take?

Reporting of Criminal Activity
  • Reporting obligations under the Elder Justice Act
  • Requirement All Covered Individuals are
    required to report any reasonable suspicion of
    crimes committed against residents of the
    facility to local law enforcement and Dept. of

Reporting of Criminal Activity
  • Reporting obligations under the Elder Justice Act
  • Applies to SNFs receiving at least 10,000 of
    Federal funds annually
  • Covered Individuals include anyone who is an
    owner, operator, employee, manager, agent or
    contractor of the facility.
  • If crime results in serious bodily injury, report
    must be made within two hours. Otherwise, report
    must be made within 24 hours.

Best Practices
  • BEST PRACTICE Calendar the deadline for filing
    the MA application.
  • BEST PRACTICE If you cannot confirm an
    application has been filed, then the facility
    should prepare and file the application to
    preserve the retroactive date.

Best Practices
  • BEST PRACTICE Consider using the court system to
    compel cooperation with the MA application
  • BEST PRACTICE Identify the need for a guardian
    as soon as possible and begin the guardianship

Best Practices
  • BEST PRACTICE Include the authorization to
    appeal a MA denial within the Admission Agreement
    and/or a separate statement signed by Resident
    and/or RP.
  • BEST PRACTICE If there is no written
    authorization, file the appeal anyway and try to
    obtain authorization subsequently. Full
    disclosure, and argue later.

Best Practices
  • BEST PRACTICE Keep the administrative appeal
    open while parallel actions are proceeding until
    MA eligibility is obtained. Purpose is to
    preserve the retroactivity date.
  • BEST PRACTICE If there is a MA application
    alive, a facility should consider opening the
    estate for the purpose of establishing MA

Best Practices
  • BEST PRACTICE When a transfer is involved,
    appeal the transfer penalty, apply for an undue
    hardship, and take the necessary steps to get the
    money from the transferee. If it is proven to be
    impossible to get the money, you may be granted
    an undue hardship waiver.