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 Guardianship And Medicaid: The Ins And Outs

Two attorneys offer advice on the benefits and drawbacks of guardianship and Medicaid application processes.

 


As the long term and post-acute care profession braces for fallout from implementation of the Affordable Care Act and multiple statewide initiatives aimed at curbing the cost of providing care to the elderly, it has become increasingly important for providers to maximize every possible receivable dollar.

Coupled with the changing scenery in the profession is the growing trend for residents and their families to maximize strategies to attempt to limit their personal exposure to contributing to the cost of their own care. Many facilities struggle to develop a sound policy with respect to the level and extent to which assistance is provided to residents and their families in applying for Medicaid.

Statutes Differ By State

While private-pay rates are typically higher than Medicaid reimbursement rates, the Medicaid reimbursement is a (relatively) secure and consistent source of payment and does not usually require any collection activity.

Nursing homes utilize a range of resources in assisting with Medicaid applications. Some have dedicated staff members who assist applicants with the cumbersome task of assembling the records, while some outsource the responsibility to independent contractors paid for either by the resident or the provider.

An increasing problem under these scenarios is residents with little to no family, or family members who refuse to provide any assistance.

In these cases the facility is left struggling to make an application for a resident who cannot communicate the information required to successfully obtain Medicaid coverage, usually because of a diagnosis of dementia or Alzheimer’s disease. The question becomes: What does the facility do in this scenario? There is a range of answers, but the one many providers find most practical is to make an application for guardianship on behalf of the resident.

The guardianship statutes differ widely state by state, and although most states have enacted the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act, which seeks to provide a mechanism for resolving multi-state jurisdictional disputes when people subject to guardianships migrate, the complicated fabric of substantive guardianship statutes still varies.

Resources A Knotty Issue

The federal law governing the state-by-state management of Medicaid programs, 42 U.S.C. §1396a(a)(17), and the section that controls the extent of resources that a Medicaid applicant or recipient can retain says that the Medicaid program should take into account “only such income and resources as are…available to the applicant or recipient…”

In most states, once an application for guardianship is filed, the person with the alleged incapacities is deemed to no longer have access to his or her resources and income.

The practical implication is that for a resident who is in the throes of applying for Medicaid, a pending guardianship application will force the Medicaid department to review that application as though the resident has no income and resources.

As long as the rest of the Medicaid application is complete, this could be a relatively quick path to Medicaid qualification. The rub, so to speak, occurs once the guardianship application has been resolved.
At that point, the Medicaid department would return to the application and determine from the resources and income of the applicant whether they are indeed eligible for Medicaid coverage under the traditional means-tested approach.

This strategy works well when the nursing home has a good indication that the resident’s resources are in line with the levels required by Medicaid. In other cases, available resources may be difficult to determine, especially when a resident has diminished or no capacity and/or an uncooperative family.

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Guardianship Ups And Downs

The guardianship application may go a long way toward resolving this issue. If the nursing home is appointed as guardian, which is allowed in most states, it will have wide-ranging authority to investigate the resident’s income and resources. This authority usually allows the facility to obtain the information necessary to complete the Medicaid application.

Although near-immediate Medicaid qualification with a pending guardianship application may be a great approach for some residents with nominal personal resources, this could serve as a trap when a resident has excess resources that will eventually disqualify him or her for Medicaid coverage.

Assume the facility files for guardianship for a resident with advanced Alzheimer’s and then files a Medicaid application. Medicaid approves the application and begins reimbursing the facility. Once the guardianship is resolved, a few months later, it is discovered that the resident has sufficient resources and cannot qualify for Medicaid. In this case, the facility will be forced to disgorge the payments received by Medicaid.

Theoretically, this would not be the worst problem in the world, because the facility then would have discovered the resident’s resources, which would, again in theory, be available for privately paying the facility.

However, as Yogi Berra once said, “In theory, there is no difference between theory and practice. But in practice, there is.” It is not always that cut-and-dried once the facility discovers the resident has resources. If the guardianship application is unsuccessful for some reason, the facility may know about the resource but need to employ additional strategies to collect it.

Example Offers Insight

An example may be helpful: Recently Dolly was admitted to a nursing home from the hospital where she was sent by the local adult protective unit because she was found to be living in an unsafe condition in her home. The nursing center knew she owned her home, but had no idea whether she had any other assets.

Dolly’s only child was living in a group home himself and was unable to assist Dolly in any way and could not help with a Medicaid application. Since there did not appear to be anyone to manage Dolly’s affairs and because it was clear she would not be able to return to her home, the nursing home applied for and was granted guardianship over Dolly, which gave them the authorization to go through her house and try to assemble a list of her assets.

In the meantime, the nursing home had applied for Medicaid coverage while the guardianship application was pending, and Dolly was approved for Medicaid coverage, which allowed the nursing home to be reimbursed for her care.

After the guardianship was approved, it was discovered that Dolly owned her home (where the taxes were three years delinquent) and had a small bank account. As her resources were well within the limits for Medicaid, her Medicaid application was approved and there was an adjustment made based on her income for her contribution to the cost of her care.

Although the nursing home absorbed the expense of the guardianship proceeding, in the face of a family and a resident who could not assist in the process, it was the only way to ensure that the home could find a way to pay for Dolly’s care.

Using the guardianship application is not a panacea when a facility needs to get a resident on Medicaid, especially if his/her level of functioning does not make the resident an appropriate candidate to have a guardian appointed. However, using the guardianship application in tandem with a Medicaid application is one method nursing homes are using to secure a guaranteed source of payment for many residents.

Josephine Yang-Patyi and Anthony Marrone II, are attorneys with Menter, Rudin & Trivelpiece, in Syracuse and Watertown, N.Y. Reach them at (315) 474-7541, jyangpat@menterlaw.com or amarrone@menterlaw.com.

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