BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 33|
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THIRD READING
Bill No: SB 33
Author: Hernandez (D)
Amended: 6/1/15
Vote: 21
SENATE HEALTH COMMITTEE: 8-0, 3/25/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Pan, Roth,
Wolk
NO VOTE RECORDED: Nielsen
SENATE APPROPRIATIONS COMMITTEE: 5-0, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NO VOTE RECORDED: Bates, Nielsen
SUBJECT: Medi-Cal: estate recovery
SOURCE: California Advocates for Nursing Home Reform
Western Center on Law & Poverty
DIGEST: This bill 1) limits Medi-Cal estate recovery to only
those services required to be recovered under federal Medicaid
law; 2) eliminates estate recovery against the estate of a
surviving spouse of a deceased Medi-Cal beneficiary; 3) requires
the Department of Health Care Services (DHCS) to waive its
estate recovery claim when the estate is a homestead of modest
value in determining the existence of a substantial hardship; 4)
narrows the definition of "estate" to mean all real and personal
property and other assets that are required to be subject to a
claim for recovery under federal law; and 5) limits the amount
DHCS can charge a current or former beneficiary who is subject
to estate recovery to up to $5 once per year.
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Senate Floor Amendments of 6/1/15 allow DHCS to levy a fee of up
to $5 for requests for estate-recovery related information,
allow additional time for DHCS to respond to requests for estate
recovery-related expenditure information from Medi-Cal
beneficiaries, and delete the ability of individuals to make an
"in person" request for estate recovery-related information.
These amendments address DHCS concerns that the elimination of
the existing $25 fee would increase the amount of requests DHCS
receives, allow DHCS additional time to provide the requested
information, and delete the requirement that individuals be
allowed to make requests for information in person as DHCS does
not currently provide this option. In addition, the amendments
narrow the definition of "estate" in response to DHCS concerns
that the existing definition is not consistent with the federal
law.
ANALYSIS:
Existing law:
1)Requires DHCS to claim against the estate of a deceased
Medi-Cal beneficiary, or against any recipient of the property
of that beneficiary by distribution or survival, by an amount
equal to the payments for the health care services received or
the value of the property received by any recipient from the
deceased Medi-Cal beneficiary by distribution or survival,
whichever is less. This is referred to as "Medi-Cal estate
recovery."
2)Prohibits DHCS from claiming in any of the following
circumstances:
a) The deceased Medi-Cal beneficiary was under 55 when
services were received, except in the case of an individual
who had been an inpatient in a nursing facility; or,
b) Where there is any of the following:
i) A surviving spouse during his or her lifetime;
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ii) A surviving child who is under age 21; or,
iii) A surviving child who is blind or permanently and
totally disabled.
3)Requires DHCS to waive its estate recovery claim, in whole or
in part, if it determines that enforcement of the claim would
result in substantial hardship to other dependents, heirs, or
survivors of the individual against whose estate the claim
exists. Requires DHCS to notify individuals of this waiver
provision and the opportunity for a hearing to establish that
a waiver should be granted.
This bill:
1)Limits the health care services subject to estate recovery to
only those services required to be recovered under federal
law. Services required to be recovered under federal law are
nursing facility services (NFS), home and community-based
services (HCBS), and related hospital and prescription drug
services.
2)Limits the definition of "estate" for purposes of estate
recovery to mean all real and personal property and other
assets that are required to be subject to a claim for recovery
under federal law. Excludes from the definition of "estate"
any other real and personal property or other assets in which
the individual had any legal title or interest at the time of
death, to the extent of that interest, consistent with federal
law. Makes a conforming change to eliminate a reference to
claims against a recipient of property of the decedent by
survivorship.
3)Eliminates estate recovery against the estate of a surviving
spouse of a deceased Medi-Cal beneficiary when the surviving
spouse dies.
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4)Requires DHCS, in determining the existence of a substantial
hardship, to waive its claim when the estate subject to
recovery is a homestead of modest value. Defines a "homestead
of modest value" as a home whose fair market value is 50
percent or less of the average price of homes in the county
where the homestead is located, as of the date of the
decedent's death.
5)Requires DHCS to provide a current or former beneficiary, or
his or her authorized representative, with the total amount of
Medi-Cal expenses that have been paid on behalf of that
beneficiary that would be subject to estate recovery once per
year, upon request for a reasonable fee of up to $5 if the
person is a current or former Medi-Cal beneficiary subject to
estate recovery. Requires DHCS to provide the information
requested within 90 days after receipt of the request.
6)Requires DHCS to permit a beneficiary to request the
information described in 5) above via the Internet, by
telephone, by mail, or through other commonly available
electronic means.
7)Requires DHCS to conspicuously post on its Internet Web site,
a description of the methods by which a request may be made,
including, but not limited to, DHCS' telephone number and any
addresses that may be used for this purpose. Requires DHCS to
also include this information in its pamphlet for the Medi-Cal
Estate Recovery Program and any other notices DHCS distributes
to beneficiaries regarding estate recovery.
8)Caps the DHCS assessed voluntary post-death lien interest rate
at the rate equal to the monthly average received on
investments in the Surplus Money Investment Fund or simple
interest at seven percent per annum, whichever is lower (the
current interest rate charged is seven percent in regulation).
9)Repeals estate recovery statute struck down in court that
requires "proportionate share" recovery from a former Medi-Cal
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beneficiary's estate when there are decedents entitled to an
exemption from recovery and decedents who are not.
Comments
1)Author's statement. According to the author, Medi-Cal estate
recovery is unfair to Medi-Cal beneficiaries, is a deterrent
to signing people up for Medi-Cal, and is counter to state and
federal efforts to enroll people into health coverage.
California currently implements several federal options to
collect from Medi-Cal beneficiaries beyond what is required
under federal law, and has failed to implement a federal
option to establish a "homestead exemption" that would allow
Medi-Cal beneficiaries to pass a home of modest value on to
their heirs. By recovering for health care services beyond
those required by federal law, California forces low-income
individuals age 55 and older to choose between signing up for
basic health care services and passing on their home and other
limited assets they possess to their children. California's
estate recovery program undermines the idea of Medi-Cal as a
health care entitlement program by essentially turning
Medi-Cal coverage for basic medical services into a loan
program, with collection taking place at death. This unfairly
places part of the burden on financing the cost of health care
in Medi-Cal on the estates of deceased Medi-Cal beneficiaries
with limited assets. By using a broader definition of "estate"
than is federally required, California forces people on
Medi-Cal to choose between leaving something for their heirs
and surrendering their property while they are still living.
Estate recovery is also inequitable as it primarily applies to
individuals age 55 and over, and does not apply to
tax-subsidized coverage in Covered California or to the
broadly financed federal Medicare program. In addition,
California does not adequately inform individuals on how to
obtain information on the amounts that will be collected from
their estate when they die. For the new 100 percent federally
funded Medi-Cal expansion population, estate recovery
effectively makes the state a collection agency for the
federal government, as all funds collected by the state for
this population are required to be returned to the federal
government.
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2)Scope of services subject to Medi-Cal estate recovery. Under
federal law, states must seek recovery for medical assistance
paid on behalf of the following individuals:
a) Permanently institutionalized individuals (of any age);
and,
b) Individuals age 55 and older receiving NFS, HCBS, and
related hospital and prescription drug services.
States have the option to recover from individuals age 55 and
older for health care services (services beyond NFS and HCBS),
including the total amount spent on a beneficiary's behalf for
any or all other items or services under the state's Medicaid
plan. This includes capitation payments paid on behalf of the
beneficiary to a Medi-Cal managed care plan.
DHCS currently collects all payments made by the Medi-Cal
program on behalf of the decedent, including NFS and other
long-term care services, HCBS, inpatient/outpatient services,
durable medical equipment, related hospital and prescription
drug services, health care and insurance premiums, and
payments to managed care plans. DHCS indicates it does not
track recoveries on a per beneficiary basis by whether the
services are mandatory versus optional to be collected under
federal law.
3)Elimination of spousal recovery. DHCS currently collects from
the estates of a surviving spouse only when he or she dies,
and only against what the surviving spouse received from the
deceased Medi-Cal spouse "by distribution or survival." For
example, if a husband who was on Medi-Cal died, and the home
was in both of the husband and wife's name when he died, DHCS
can file an estate claim against his half of the property
after the surviving spouse (the wife) dies. The federal
Centers for Medicare and Medicaid Services has indicated
spousal estate recovery is optional for states. Medi-Cal
beneficiaries can currently avoid spousal recovery through
estate planning. For example, when a Medi-Cal beneficiary
transfers a jointly owned home to his or her surviving spouse
while the Medi-Cal beneficiary is still alive, the home is not
subject to estate recovery. This effectively means the only
individuals subject to estate recovery are individuals who are
unaware of this option, and/or unable to afford legal advice
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on how to transfer their home.
4)Definition of "estate." Estate is defined under federal
Medicaid law to include all real and personal property and
other assets included within the individual's estate, as
defined for purposes of State probate law. At state option,
"estate" can be more broadly defined to include any other real
and personal property and other assets in which the individual
had any legal title or interest at the time of death,
including assets conveyed through joint tenancy, tenancy in
common, survivorship, life estate, living trust, or other
arrangement. California adopted the broader federal definition
of "estate," and also included annuities purchased on or after
September 1, 2004, a life insurance policy that names the
estate as the beneficiary or reverts to the estate, or any
retirement account that names the estate as the beneficiary or
reverts to the estate. The practical effect of limiting the
definition of estate as this bill proposes is to allow
individuals to establish a living trust or own a jointly owned
home so Medi-Cal beneficiaries do not have to establish an
irrevocable trust or transfer their homes and assets prior to
death to avoid estate recovery.
5)Hardship exemption from estate recovery. Existing state
regulations require DHCS to waive an applicant's proportionate
share of the claim if the applicant can demonstrate through
submission of a written, completed Application for Hardship
Waiver that enforcement of the DHCS' estate recovery claim
would result in substantial hardship to the applicant.
Existing regulations require DHCS, in determining the
existence of substantial hardship, to waive an applicant's
proportionate share of the claim if one or more of six factors
apply.
The federal Medicaid manual gives states the option to exempt
a "homestead of modest value" from estate recovery. DHCS
estate recovery regulations do not include this federal
hardship exemption option, and this bill requires DHCS to
waive its claim in this instance as part of a hardship
exemption.
6)Individuals seeking estimates on Medi-Cal expenditures related
to estate recovery. The DHCS estate recovery Web site and the
current estate recovery brochure do not have guidance on how
to obtain information on amounts expended by Medi-Cal that are
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subject to estate recovery. DHCS indicates individuals can
contact DHCS' fiscal intermediary (currently Xerox) for
information on services rendered by fee-for-service providers.
Denti-Cal and Medicare premium information is provided by
DHCS's Third Party Liability and Recovery Division upon
request. To request information, individuals can file a form
requesting a claim detail report which contains claims paid by
Medi-Cal for services received. The cost of obtaining this
report is $25 for each request. Under this bill, DHCS would
instead be required to provide a current or former beneficiary
with this information once per year, upon request for a
reasonable fee of up to $5, if the person is a current or
former Medi-Cal beneficiary subject to estate recovery.
Prior legislation. SB 1124 (Hernandez, 2014) would have limited
Medi-Cal estate recovery to only those services required to be
recovered under federal law, would have eliminated recovery
against the estate of a surviving spouse of a deceased Medi-Cal
beneficiary, and would have required DHCS to provide a current
or former beneficiary with the total amount of Medi-Cal expenses
that have been paid on behalf of that beneficiary that would be
subject to estate recovery. SB 1124 was vetoed by Governor
Brown. In his veto message, the Governor stated that allowing
more estate protection for the next generation may be a
reasonable policy goal, but the cost of this change needs to be
considered alongside other worthwhile policy changes in the
budget process next year.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
Annual revenue loss up to $50 million per year in foregone
claims on the estates of Medi-Cal beneficiaries who would
have been eligible for Medi-Cal under the pre-Affordable
Care Act expansion (50% General Fund, 50% federal funds).
Unknown future revenue loss from foregone claims on the
estates of deceased Medi-Cal beneficiaries eligible under
the Medi-Cal expansion beginning in 2017 (5 - 10% General
Fund, 95 - 90% federal funds).
Ongoing administrative costs of about $3 million per year
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to provide information to Medi-Cal beneficiaries on the
costs that they have incurred and would be subject to estate
recovery, upon request (General Fund and federal funds).
One-time costs likely less than $100,000 to revise
regulations by DHCS (50% General Fund, 50% federal funds).
SUPPORT: (Verified5/27/15)
California Advocates for Nursing Home Reform (co-source)
Western Center on Law & Poverty (co-source)
AARP California
American Federation of State, County and Municipal Employees,
AFL-CIO
Asian Americans Advancing Justice - Los Angeles
Asian Law Alliance
California Association of Health Plans
California Association of Physician Groups
California Commission on Aging
California Health Advocates
California Immigrant Policy Center
California Long-Term Care Ombudsman Association
California Pan-Ethnic Health Network
California Primary Care Association
California Retired Teachers Association
California Rural Legal Assistance Foundation
California School Employees Association
California State Association of Counties
California State Council of the Service Employees International
Union
California Teachers Association
Central California Legal Services
Consumers Union
County Health Executives Association of California
County of Santa Clara
County Welfare Directors Association
Disability Rights Education and Defense Fund
Having Our Say
Health Access California
Jewish Family Service of Los Angeles
Justice in Aging
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L.A. Care Health Plan
National Health Law Program
Older Women's League
Pacific Islander Cancer Survivors Network
Private Essential Access Community Hospitals
Several individuals
OPPOSITION: (Verified5/27/15)
None received
ARGUMENTS IN SUPPORT: This bill is jointly sponsored by the
California Advocates for Nursing Home Reform (CANHR) and the
Western Center on Law & Poverty (WCLP) which argue this bill
goes a long way toward fixing this enrollment barrier by
eliminating the portions of estate recovery which are optional.
WCLP states that, under the ACA, most individuals are required
to have health coverage or they will face a financial penalty.
With the expansion and streamlining of Medi-Cal and the
availability of tax credits through Covered California, there is
an unprecedented push to enroll Californians in public and
subsidized health coverage programs. However, when consumers
learn about estate recovery, they are fearful that if they
enroll in Medi-Cal, they will lose their homes to pay for the
care they received while on Medi-Cal, effectively turning
Medi-Cal into a long-term loan and not a safety net program.
WCLP states that, though some people would rather enroll in
Covered California and pay a small premium rather than be
subject to Medi-Cal estate recovery, it has heard of many
instances of consumers simply not signing up for coverage as a
result of estate recovery.
WCLP states that, while not eliminating Medi-Cal estate recovery
altogether, this bill limits it as much as is federally
allowable. Consumers would be assured that their estates would
only be recovered against for long-term care and related
services and not simply for having basic health coverage. It
would also help consumers know the amount their estate may be
recovered against by requiring that DHCS provide them or their
representative with this information as consumers currently have
no way of knowing how much the monthly capitation cost for their
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Medi-Cal plan is or what other costs they are responsible for
and, consequently, have no way of knowing how much their estate
could be recovered against.
WCLP concludes that seeking estate recovery from the new ACA
adult expansion population makes little fiscal sense for the
state, as the cost of Medi-Cal for this new group is 100 percent
federally funded and any sums recovered against from this group
must be turned over to the federal government. Consequently,
recovery against this group effectively turns the Medi-Cal
program into a collection agency for the federal government.
CANHR states it has received numerous emails and phone calls
from low income and minority homeowners who are reluctant to
enroll in Medi-Cal if they are aged 55 or older, even if they
eventually go off of Medi-Cal, as the estate recovery claim
stays with them all of their lives. CANHR argues Medi-Cal
recovery disproportionately affects minority homeowners who
enroll in Medi-Cal, as they are often not informed of their
rights, they are unable to afford costly estate planning
attorneys to avoid recovery in the first place, and they end up
with "voluntary" liens at a seven percent interest rate on homes
that have been in their families for years. CANHR concludes that
this bill not only addresses a major barrier to enrollment, but
it brings fairness and equity to a recovery system that has for
too long preyed on the inability of low-income consumers and
their spouses to assert their rights under the law.
Prepared by:Scott Bain / HEALTH /
6/2/15 21:27:59
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