Essay: Ahlborn’s importance to LCPs, MSA specialists, attorneys

by • May 1, 2007 • UncategorizedComments Off on Essay: Ahlborn’s importance to LCPs, MSA specialists, attorneys1849

• The Gist: Medicare Set Aside specialists and life care planners are qualified to complete the set asides for both Medicaid and Medicare. It is important to be trained in the area due to the regulations and rules concerning the reports and what is needed.

© The Medical-Legal News 2007

By Dorajane Apuna, BSN, MA, RN, CCM, CNLCP

The subject today is basic information concerning Medicaid, and how new legal changes will affect our practices. The following basics of Medicaid are not meant to be used as the total presentation of the Medicaid laws and statutes, only as a very basic understanding of the foundation of the requirements. For a more detailed overview, please read in more detail the www.cms.org web site for all the laws and requirements. The column wishes to think John J. Campbell Esq.1 for assisting with information to make this difficult subject clearer.

What is Medicaid?

Medicaid is a financial aid program furnished in some form in every state, which is funded cooperatively by both the federal and state governments to assist those in need of medical assistance.

Medicaid does not provide medical assistance for all people with limited incomes and resources. Even under the broadest provisions of the federal statute (except for emergency services), the Medicaid program does not provide healthcare services for everyone. Each applicant must qualify for Medicaid in their respective states, under the laws of that individual state. Low income is only one test for Medicaid eligibility —assets and resources are also tested against established thresholds. 2

Who is considered to be in need of this assistance?

The general rule of thumb includes the following:

• Supplemental Security Income (SSI) recipients (or in states using more restrictive criteria — aged, blind and disabled individuals who meet criteria that are more restrictive than those of the SSI program and which were in place in the state’s approved Medicaid plan as of Jan. 1, 1972);

• Infants born to Medicaid-eligible pregnant women. Medicaid eligibility must continue throughout the first year of life so long as the infant remains in the mother’s household and she remains eligible, or would be eligible if she were still pregnant;

• Limited income families with children, as described in Section 1931 of the Social Security Act, who meet certain eligibility requirements in the state’s Aid to Families with Dependent Children (AFDC) plan in effect on July 16, 1996, certain people with Medicare, and special protected groups who may keep Medicaid for a period of time. Some examples include people who lose SSI payments due to earnings from work or increased Social Security benefits, and families who are provided six to 12 months of Medicaid coverage following loss of eligibility under Section 1931 due to earnings, or four months of Medicaid coverage following loss of eligibility under Section 1931 due to an increase in child or spousal support.3

• Children under age six and pregnant women whose family income is at or below 133 percent of the federal poverty level. (The minimum mandatory income level for pregnant women and infants in some states may be higher than 133 percent, if as of certain dates the state had established a higher percentage for covering those groups). States that participate in Medicaid are required to extend Medicaid eligibility until age 19 to all children born after Sept. 30, 1983, in families with incomes at or below the federal poverty level. Once eligibility is established, pregnant women remain eligible for Medicaid through the end of the calendar month in which the 60th day after the end of the pregnancy falls, regardless of any change in family income. States are not required to have a resource test for these poverty level related groups. However, any resource test imposed can be no more restrictive than that of the AFDC program for infants and children and the SSI program for pregnant women.

• Recipients of adoption assistance and foster care under Title IV-E of the Social Security Act.

Each state has derived specific criteria to establish who can receive this funding. Many states (32) and the District of Columbia have the 1634 rule (see table), and the applicant is already eligible if he or she meets the criteria of SSI. Seven other states also agree with the SSI criteria, but each person must individually apply for the funding — it is not automatic. When assisting your client, you should check the state of residence for the qualifications for eligibility. In eleven states (209b states), the federal government has permitted more stringency than the other states. They are governed by the 209b statutes of the Social Security Act.

Ahlborn: What it means

The second part of this column involves the discussion concerning the basic ruling of the U.S. Court of Appeals for the 8th Circuit Court. In this decision, it supported the idea that a state’s “right to recover” from a third party suit (a Medicaid lien) was limited to that portion of a settlement representing only the past medical expenses. A state could not receive funds from the other parts of the settlement such as “pain and suffering, vocational loss, etc.”

Ms. Heidi Ahlborn was a 17-year-old girl injured and permanently disabled in a car accident in 1996 due to left-side brain injuries and multiple trauma fractures.6 She had received Medicaid payments totaling $215,645 through the Arkansas Department of Human Services (ADHS) to pay for her medical treatment during her rehabilitation from this accident. In order to be eligible for the Medicaid payments she needed, Ahlborn had to agree to give the Arkansas Department of Human Resources the “right to any settlement, judgment, or award” she might receive because of the accident, up to the amount Medicaid had paid for her treatment.

Several years after the accident, Ahlborn, through a third party suit, received $550,000 in a settlement with the parties liable for her injuries. This sum had covered her medical treatment as well as pain and suffering, lost earnings and her lost earning potential in the future. In the actual settlement, her attorneys only asked for $35,581 for her medical treatment. When the ADHS demanded that she repay the full $215,645 that had actually been spent for her medical treatments to date, Ahlborn refused, so the issue went to a federal district court in Arkansas. The district court judge sided with the ADHS, ruling that the amount asked by the ADHA was not unreasonable. At that time, Ahlborn was told to pay Arkansas the full amount of her Medicaid expenditures for her medical treatments from any settlement she might receive in order to be eligible, even if the portion allocated for medical treatment was less than the amount demanded by Medicaid.

Ahlborn disagreed and took the matter to the 8th Circuit Court of Appeals, with her lawyers citing federal statues requesting that ADHS could only take that which had been “set aside” for past medical expenses. The panel reversed the federal district court decision citing that seizing money from her settlement that had not been earmarked for medical treatment would violate federal Medicaid regulations that forbid state governments from seizing the property of Medicaid recipients in order to recover money spent on treatment. The panel therefore ordered that Ahlborn repay just the amount of $35,581 to the ADHS.

Why is this decision important?

When taking a third party suit to court, it is important that the attorneys involved have the appropriate “set aside” in place prior to the settlement so that the medical expenses are paid reasonably. This affects the need for the Medicaid set aside developers or life care planners to ensure this is done correctly for both sides.

Conclusion

In the decision authored by Justice John Paul Stevens, the Supreme Court ruled that federal Medicaid statutes will only allow a state to recover the part of a third-party settlement earmarked for medical expenses. In this case, the justices agreed with the Circuit Court that the statutes did not permit Arkansas to require Ahlborn to repay Medicaid expenses from the non-medical portions of the settlement. The “set aside” was not enough to cover the money expenditures for Ahlborn’s medical treatments, however she was not required to make up those monies from the other parts of the settlement. Important: The Court found that Arkansas’s arguments to the contrary were unconvincing due to the “internal inconsistency with a conscious disregard for the statutory text.” •

For a chart of Medicaid by state, click here.

1. www.jjcelderlaw.com/NewMedicaidDRAMSABull.hm

2. www.cms.hhs.gov/MedicaidEligibility/09_SpousalImpoverishment.asp#TopOf Page

3. Center for Medicaid and Medicare web site, www.cms.org

4. www.cms.hhs.gov/MedicaidEligibility/Downloads/POV07ALL.pdf

5.www.cms.hhs.gov/MedicaidEligibility/09_SpousalImpoverishment.asp#TopOfPage

6. http://docket.medill.northwestern.edu/archives/003279.php

7. www.supremecourtus.gov/opinions/05pdf/04-1506.pdf

• See www.cdec1.com for information about certification in this field.

• The University of Florida offers LCP and MSA training: Contact Sheri Jasper at 407-977-3112 or by email at sherijasper@ufl.edu.

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