Stotler Hayes Group Attorney, Nathan Peters, presented at the Texas Healthcare Association’s Board of Directors meeting on August 21st. Nathan shared two updates on how Stotler Hayes Group’s (SHG) Texas-based attorneys are successfully fighting to recover every Medicaid dollar available for our clients, and all Texas providers. SHG attorneys won two major victories in recent months, and both could significantly impact future Medicaid payments in Texas. The cases deal with the Texas Health and Human Service Commission’s (THHSC) failure to exclude (certain personal) resources for Incapacitated Medicaid Applicants and, THHSC’s improper restrictions on Incurred Medical Expenses (IME). (The IME payments could alone boost Medicaid provider payments over $40 million annually.)
Unlike most state Medicaid authorities, THHSC is currently refusing to exclude certain resources when reviewing Medicaid applications for incapacitated individuals. This policy is leading to a significant loss in payments for providers, because affected providers are left without a payor source until the incapacitated resident can secure a guardian and spend down their resources. Unfortunately for these providers, securing a guardian and spending down resources for incapacitated individuals is a lengthy and complicated process. However, SHG’s recent victory in the case of Anna Marroney v. Texas may force THHSC to change its policy and start excluding certain resources for incapacitated residents.
Anna Marroney v. Texas
Ms. Marroney was totally incapacitated and did not have a legal agent or POA when she was admitted to a nursing home in a Fort Worth Suburb. THHSC denied her Medicaid application after they discovered that Ms. Marroney had three whole life insurance policies with a cash value of over $5,000. SHG filed for guardianship at the same time and the Probate Court appointed a Guardian ad Litem (GAL) to liquidate Ms. Marroney’s life insurance policies. Over the next sixteen months, the GAL and an Emergency Temporary Guardian (appointed by the Probate Court) were both unable to liquidate the insurance policies, and the nursing home received no Medicaid benefits for Ms. Marroney.
After exhausting the administrative remedies through the THHSC Hearing Officer and Administrative Review, SHG successfully petitioned the District Court of Travis County to reverse THHSC’s administrative decisions. The Texas Third Court of Appeals affirmed the District Court’s decision in late-May. The court of appeals justices unanimously held that because neither Ms. Marroney nor her representatives could access or spend down the value of her life insurance policies, that the policies could not meet the federal and state definitions for resources for Medicaid eligibility. THHSC has since petitioned the Texas Supreme Court to review the court of appeals decision, but SHG is actively fighting to have the THHCS petition denied by the Supreme Court. If necessary, we are prepared to argue Ms. Marroney’s case at the Supreme Court. Our ultimate success would have enormous implications for all LTC providers in Texas—facilities will no longer have to wait for a guardian to be appointed and excess assets spent down before incapacitated residents could qualify for Nursing Facility Medicaid benefits.
Incurred Medical Expenses
THHSC’s current policy is to deny the deduction of Incurred Medical Expenses (IME) for nursing home room and board (“Vendor Payments”) from patient liability and applied income calculations. This THHSC policy is inconsistent with the Texas State Medicaid Plan, federal Medicaid laws and regulations, and Center for Medicare Services Medicaid policies. The policy is also inconsistent with how most states treat IME—many states allow unlimited IME. THHSC is specifically denying the room and board costs incurred during the three months prior to the approval of Medicaid benefits, or the time patients were not eligible for Medicaid (often due to excess resources or income). Unfortunately, the policy also allows THHSC to withhold an estimated $43 million in IME payments from Texas providers each year.
SHG attorneys brought this issue to the attention of CMS in 2015 and demanded that they issue a “Corrective Action Letter” to THHSC. After THHSC failed to amend their IME policies, CMS finally issued a Corrective Action Letter to THHSC and threatened to withhold portions of the Medicaid funding until THHSC corrected its policies. THHSC has since appealed the Corrective Action Letter and requested a CMS hearing. However, SHG was granted permission to participate in the hearing as amicus curiae (a “friend of the court” who can offer additional information to help a court make its decision) and we have submitted a brief to the CMS Hearing Officer on behalf of our Texas clients.
The CMS hearing should be set for September or October and SHG will be attending as amicus curiae in support off CMS’s effort to enforce its Corrective Action Letter. If CMS successfully enforces its letter, THHSC will be forced to amend its policy and stop denying the deduction of room and board costs incurred during the three months prior to an application for Medicaid benefits.