ALERT: New Medicaid Regulations

Issue Alert – Six month housing allowance for short stay Medicaid-funded nursing home residents (BEM 100)

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Date: 05/05/2010

Program Area: Medicaid (MA)

Issue Summary: Medicaid funded nursing home residents whose doctors certify they are likely to remain in the nursing home six months or less can apply for a “Special Director” or “Olmstead” Exception to permit them to divert income to pay necessary expenses to maintain their home rather than using their income for their patient pay obligation to the nursing home. Directions for caseworkers regarding how and when to adjust beneficiaries’ patient pay amounts after an exception has been granted are now included in BEM 100, p. 9, effective May 1, 2010.

Persons Affected: Medicaid funded nursing home residents whose doctors certify they are likely to return home within six months.

For More Information: Michigan Poverty Law Program, 3490 Belle Chase Way, Suite 50, Lansing, MI 48823. Phone: (517) 394-2985, x 231. Fax: (517) 394-4276

Pursuant to 42 CFR 435.725(d), states may permit Medicaid funded nursing home residents to use their income to maintain their homes for up to six months instead of paying the majority of their incomes to their nursing homes as their patient cost of care. During the last year, Michigan’s Medical Services Administration (MSA) has begun implementing this federal option as a benefit available through a Special Medicaid Director’s or “Olmstead” exception. MSA may eventually expand this option so that individual caseworkers are permitted to adjust the beneficiary’s patient pay amount without first obtaining approval from the Medicaid Director.

What’s Happening?

Although MSA has already granted a number of special exceptions to permit beneficiaries to divert income to maintain their homes, directions for caseworkers regarding how to proceed in these cases after the exception has been granted have just been included in BEM 100, p. 9. The policy does not clarify how beneficiaries can seek the Special Director’s or “Olmstead” exception initially and contains confusing directions for caseworkers how to proceed once the exception has been granted by the Medicaid Director. Moreover, the policy set forth in the BEM appears more restrictive than MSA had initially proposed and may not accurately reflect current policy and practice.

According to the BEM, caseworkers should divert income for maintenance of the home, up to the amount of the shelter expense set forth in BEM 546, if:

– The Medicaid Director has approved the exception
– A physician has certified that the individual is medically likely to return home within six months
– The individual is currently Medicaid eligible and residing in a nursing facility
– The home is not occupied by a community spouse
– The individual has a legal obligation to pay the housing expenses and had provided verification of the expense
– The request is being made by the resident or an individual authorized to act on behalf of the resident.

Moreover, the effective date of the exception is the first day of Medicaid eligibility as a nursing facility resident.

These provisions are confusing because exceptions will be granted by the Medicaid Director only if the request is made by the resident or an authorized representative and includes the medical certification, proof of housing expenses, and other information necessary to obtain an exception. Once the exception is granted, the caseworker’s role should be merely recalculating the patient pay amount after deducting the amount of income the Medicaid Director has approved to be diverted for legitimate housing expenses. By identifying the standard that needs to be met for approval of the exception, the provision appears to require caseworkers to obtain and re-examine the same information that has already been provided to the Medicaid policy staff and that was deemed sufficient by the Medicaid Director to approve the request for an exception. Requiring caseworkers to duplicate this effort will lead to delay, unnecessary burdens on caseworkers and clients, and the possibility of a denial at the caseworker level despite approval by the Medicaid Director.

Moreover, the policy includes restrictions that were not initially imposed by the Medicaid Director. Requests for exceptions may be granted even if the individual does not have a legal obligation to pay housing expenses if he or she can provide evidence that he or she routinely pays those expenses or that circumstances have changed and that his or her housing would be imperiled if he or she failed to pay that expense. Moreover, some individuals who have already left nursing facilities have been able to obtain retroactive adjustments to their patient pay amount if they used their income to maintain their homes while in the facility and therefore incurred a debt to the nursing home for failing to pay their patient pay amounts.
Contrary to the language of the BEM, the Medicaid Director may approve exceptions for individuals for up to six months for a period beginning after the first day of Medicaid eligibility as long as a doctor certifies that the resident is likely to go home within six months from the date the benefit is effective. This could be important if a resident is able to pay housing expenses out of savings or through family contributions or other means for some period of time. In that case, he or she may wish to utilize the six month housing allowance only at the point where other sources of funding are no longer available to maintain housing. This may be permissible as long as it is within six months of when the doctor certifies the resident is likely to go home.

What Should Advocates Do?

Advocates for Medicaid beneficiaries in nursing home who seek to maintain their homes and whose doctors are willing to certify they are likely to go home within six months should request an exception. To do so they must provide:

1.Authorization to disclose protected health information, DCH-1183 available
2. Proof of housing expenses, such as rent or mortgage payments, utilities, telephone. Expenses such as car payments or auto insurance and internet fees are not countable as a Medicaid expense.
3. Physician statement verifying this individual is medically likely to return home within six months. The information should be submitted to:
Special Director Exception
Eligibility Policy Section
P.O. Box 30479
Lansing, MI 48909

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