Obamacare Wrinkle: Bill Seeks to Reduce State's Seizure of Medi-Cal Recipients' Assets

California politicians and federal bureaucrats are scrambling to iron out an unexpected wrinkle in the nation’s health care law that is forcing many Americans to choose between health coverage and depriving heirs of much of their inheritance.

By TRACY SEIPEL

California politicians and federal bureaucrats are scrambling to iron out an unexpected wrinkle in the nation’s health care law that is forcing many Americans to choose between health coverage and depriving heirs of much of their inheritance.

California is one of 10 states that recover a broad array of costs from recipients of Medicaid, the health program for the poor that is called Medi-Cal in California. The policy applies to recipients 55 and older — and only after they die.

The seizure of assets has been going on for years but has suddenly become a heated issue since millions of low-income American adults began enrolling in the expanded Medicaid program created by the Affordable Care Act, commonly known as “Obamacare.”

A bill in the California Legislature is aimed at reducing the amount of assets that can be “recovered” from recipients’ estates. But the proposal faces resistance from the administration of Gov. Jerry Brown, which says the state needs the millions of dollars it collects every year to help fund Medi-Cal.

The federal government, concerned that the issue is deterring many from signing up for Medicaid, is essentially telling states to back off and stop trying to recover much of the money.

In contrast to traditional Medicaid beneficiaries — low-income parents, children, seniors and people with disabilities — the new group includes adults without minor children. Many of them are homeowners who have been laid off or are unemployed and are now getting by on dwindling savings. They are eligible for Medicaid if they earn up to 138% of the federal poverty level, which in 2013 was $15,856 for an individual or $21,403 for a couple.

One of the Medi-Cal recipients is Campbell resident Anne-Louise Vernon, 59. She contends that California’s aggressive cost-recovery program is unjust because people whose higher income levels allow them to get subsidized private health insurance through the new Obamacare health care exchanges don’t have to pay back anything.

Vernon said she requires constant medical care because of severe nerve damage in her arms and arthritis in her legs –conditions that have prevented her from finding a job. The divorced mother of two said her home is her only real asset.

Medi-Cal, she said, has now essentially imposed a “reverse mortgage” on her home in exchange for health insurance.

“What is fair about that?” asked Vernon.

When Medicaid was signed into law by President Lyndon Johnson in 1965, “asset recovery” was optional. In 1993, however, the federal government began requiring all states to recoup the expenses of long-term care for Medicaid recipients ages 55 or older. States were given the option to recover all other Medicaid costs for those recipients — and California jumped at the chance.

State finance and health officials this week declined to comment on the pending legislation. But in the past, they have insisted that the provision doesn’t affect the vast majority of Medi-Cal beneficiaries — and noted that the average recovery amount is about $15,000.

Still, Vernon and Richmond resident Chris Darling, 62, who also enrolled in the expanded Medi-Cal program, worry that their future medical costs will eat up their estates. Darling even started an online petition on MoveOn.org to fight the state’s asset grab.

“It strikes me as horrible to have to choose between having health protection and your estate,” said Darling, who called the situation “Orwellian.”

Now, Darling and Vernon are pinning their hopes on both state and federal efforts to curtail asset recovery efforts.

On Tuesday, a state Assembly health committee will take up proposed legislation that would limit Medi-Cal recovery only to what’s required under federal law: the cost of long-term care in nursing homes.

Authored by state Sen. Ed Hernandez, D-West Covina, SB 1124 has already sailed through two Senate committees.

Should it pass Tuesday and then get the blessing of the Assembly appropriations committee in mid-August, it would be voted on by the Legislature by the end of August. Brown would have until the end of September to decide whether to sign it.

“I don’t know of any other program that demands repayment after a recipient dies,” said Hernandez, who chairs the Senate’s health committee. “We don’t do it for Medicare. We don’t do it for people getting coverage through the (Covered California health care) exchange, and most other states don’t require estate recovery. People are really frightened about this policy.”

In a Feb. 21 memo, the federal Centers for Medicare & Medicaid advised states to eliminate recovery of Medicaid benefits beyond long-term care services for the newest group of low-income adults Medicaid recipients, whose health care costs are being paid 100% by the federal government. That will be reduced to 90% in 2020.

Oregon and Washington have already eased off on their recovery efforts. Brown’s budget advisers, however, are urging him to oppose Hernandez’s legislation. An analysis by the state’s finance department says California would lose $15 million annually.

A Brown spokesman said the state won’t exempt the newest recipients from asset recovery because California has to prepare to cover the 10% of their Medi-Cal costs that the federal government won’t be picking up.

On average, the state in the last decade has collected about $60 million annually from Medi-Cal recipients’ estates. Half of that is returned to the U.S. Treasury because Medicaid is funded equally by the federal government and the states.

Considering that the state now spends more than $26 billion a year on Medi-Cal, Hernandez argues that $15 million is a negligible loss.

“I take my fiduciary responsibility to the state very seriously,” Hernandez said, but that’s “not a lot to spend to do away with a practice that unnecessarily scares needy people out of getting themselves covered.”

WHAT THE BILL WOULD DO

Limit seizure of assets of Medi-Cal recipients age 55 and older to amount spent on long-term care in nursing homes.

Eliminate asset seizure from estates of surviving spouses of deceased Medi-Cal recipients.

Require the state to provide Medi-Cal recipients, at no charge, a list of Medi-Cal expenses subject to “recovery.”

(Source: Office of State Sen. Ed Hernandez)

Article used by permission. Original article by Tracy Seipel appeared June 11 in the San Jose Mercury News.

More Homeless Eligible, More Mental Health Services Coming Under Expanded Medi-Cal Via ACA

Politics aside, the Affordable Care Act aka Obamacare is finally expanding health care to those who need it most—SLO County’s chronically homeless and mentally ill homeless.

acaPolitics aside, the Affordable Care Act aka Obamacare is finally expanding health care to those who need it most—SLO County’s chronically homeless and mentally ill homeless—and it’s giving SLO County health care officials and professionals a reason for some short-term optimism amid the many ongoing challenges.

Here’s what SLO County health care officials and professionals had to say about the Affordable Care Act in a February survey by The ROCK on the status of homelessness and mental health services in the county:

“There are some changes coming as a result of the Affordable Care Act that may expand both mental health and substance abuse treatment services available to people on Medi-Cal,” stated Laurel Weir, Home Services Coordinator, County Health Department.

“This has the potential to create additional mental health resources, particularly for homeless persons with mental health issues whose issues do not rise to the level of severe and persistent illness. Previously, such individuals generally were not eligible for Medi-Cal. Now, they will be eligible for Medi-Cal for the first time, which may create an opportunity for more mental health services for those persons.”

Grace McIntosh, Deputy Director, CAPSLO: “With expanded Medi-Cal now including mental health services, there will be the opportunity for qualifying individuals to receive these services. I think there may be difficulties with access given the limited number of providers in the county. The issue of a limited number of mental health providers is not only in our county—it is a national issue that I believe is going to need to be addressed in the very near future. “

While the recession has impacted County Health’s capacity to treat more people, Jeff Hamm, Director, and Anne Robin, Behavior Analyst, County Health Department, are optimistic about the immediate future, thanks to the ACA.

“The Medi-Cal expansion component of federal health care reform (Affordable Care Act) will allow previously ineligible persons (primarily childless adults) to become eligible, and the expanded scope of benefits will be of tremendous help to those with mild to moderate levels of mental illness.

“The Affordable Care act has increased funding for all levels of mental health services. In the past, only individuals with serious mental health needs have had access to care under Medi-Cal. Now there are additional levels of care available (individual and group psychotherapy, psychiatric consultation) for all Medi-Cal eligible individuals.This will allow the County services to focus more closely on those individuals and families who have the most serious illness and need for rehabilitative services. The ‘primary level of care’ for mental health services, for those individuals with mild to moderate illness, may also prevent individuals from becoming more seriously impacted by their symptoms.

“The Affordable Care Act is expected to have a tremendous positive effect on bridging the gap between demand and supply. The coming months and years will shed light on the extent to which the problem has been substantively reduced.”

District 3 Supervisor Adam Hill served as the founding chair of the HSOC and chair of the capital campaign for a new homeless services center: “The Affordable Care Act will allow us to increase capacity for both mental health services and for drug and alcohol treatment. A detox is needed, and proposals are being developed for how that could/should happen.”

Lee Collins, Director of the County’s Department of Social Services: “We believe that the Affordable Care Act will be instrumental in expanding access to Mental Health services. More persons are eligible, yes, but more services—and especially MH services—now must be included in health plans in order to implement ‘parity’ provisions. We believe that CHC (Community Health Center) will become—and certainly should become—a primary resource to serve both children and adults. They will not need to consider the ‘medical necessity’ threshold that serves to deny so many children the ‘specialty services’ that our County’s MH staff provide, even though we believe that most of our children in care really do meet the standard of care. The expectation is that CHC will build capacity—and already have begun to do so—and that a certain momentum may be created to help expand care on a community-wide basis.”

“Mental healthcare can be expected to expand now because of the ACA,” responded Pearl Munak, President, Transitional Food & Shelter in Paso Robles.

“Medi-Cal is being expanded thru ACA to cover mental health care, but the pay rate is low. CHC takes Medi-Cal and is about the only doctor that will. Maybe CHC will hire some mental health professionals or County Mental Health will be able to hire more. Counselors at Mental Health are usually licensed clinical social workers.

“The ACA expands Medi-Cal to cover not just families with children and those on SSI, but also any person whose income is below 133% of poverty level, a huge expansion in California and other states which have accepted this expansion. Texas and other Southern states have refused to accept this expansion even though it is 100% paid for by the feds for the first year and maybe beyond that; maybe first two or three years and then it goes down to 90%. … The county will save a bundle because they are phasing out County Medical Services Program because of ACA, since all poor people can now get Medi-Cal and go to CHC. CHC will probably be expanding.”