BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1124 (Hernandez) - Medi-Cal: estate recovery.
Amended: March 26, 2014 Policy Vote: Health 7-1
Urgency: No Mandate: No
Hearing Date: May 23, 2014 Consultant: Brendan McCarthy
SUSPENSE FILE.
Bill Summary: SB 1124 would limit recovery from the estate of a
deceased Medi-Cal beneficiary, to only those costs for health
care services that the state is required to recover under
federal law. Specifically, the bill would eliminate estate
recovery for Medi-Cal costs incurred on behalf of beneficiaries
over 55 years of age associated with skilled nursing care and
related services.
Fiscal Impact:
One-time costs likely less than $100,000 to revise
regulations by the Department of Health Care Services (50%
General Fund, 50% federal funds).
Annual revenue loss up to $30 million per year (50% General
Fund, 50% federal funds) 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.
By limiting the categories of services that the Department
can claim from deceased beneficiaries' estates, the bill
will reduce future collections. Over the last decade, the
Department has collected between $50 million and $60 million
per year from deceased beneficiaries' estates. The
Department does not track claims based on the types of
services that were provided, thus, there is uncertainty
about the loss of claims revenue that would occur under the
bill. Based on the share of current Medi-Cal expenditures on
behalf of beneficiaries over 55 years of age for services
that would no longer be subject to estate claims, the
Department indicates that roughly half of current claims
would no longer be allowed under the bill.
Unknown future revenue loss from foregone claims on the
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estates of deceased Medi-Cal beneficiaries eligible under
the Medi-Cal expansion beginning in 2017 (5 - 10% General
Fund, 95 - 90% federal funds). As part of its implementation
of the Federal Affordable Care Act, the state has expanded
Medi-Cal coverage to childless adults with incomes up to
138% of the federal poverty line. Under current law, in
future years, health care costs for members of this
population over 55 years of age would be subject to cost
recovery, including health care costs for which recovery is
optional. Under this bill, the state will forego some of
those revenues. The size of this impact is not known, as
information about the cost to insure this population and the
likelihood that there will be recoverable assets is not
known at this time.
It is important to note that for the Medi-Cal expansion
population, the federal government will pay 100% of the cost
at first, declining to 90% of costs over time. Any cost
recovery made by the state from this population would
largely be returned to the federal government. Therefore,
the General Fund impact from eliminating some cost recovery
from this population is limited.
Unknown future revenue loss, to the extent federal recovery
requirements are changed (General Fund and federal funds).
In addition to specifically eliminating cost recovery for
certain services, the bill also prohibits the Department
from making cost recovery for any Medi-Cal costs for which
the federal government authorizes the state to eliminate
from cost recovery. The fiscal impact of this provision is
unknown, as it would depend on future federal action. For
the existing Medi-Cal population, the maximum foregone
revenue could be up to $30 million per year (50% General
Fund and 50% federal funds) if the federal government
authorized the state to eliminate all estate recovery.
Background: Federal law requires state Medicaid programs
(Medi-Cal in California), to make a claim against the estate of
a deceased beneficiary to recover the costs of certain services
provided to that beneficiary. Federal law requires state to
recover the costs of health care services provided to
beneficiaries of any age who are permanently institutionalized
and the costs of nursing facilities, home and community based
services, and related hospital and prescription drug costs for
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beneficiaries over 55 years of age. Federal law authorizes state
to seek recovery for other health care services provided to
beneficiaries over 55 years of age.
Current state law requires the Department of Health Care
Services to seek estate recovery for all health care services
provided to Medi-Cal beneficiaries over the age of 55. Estate
recovery is prohibited during a surviving spouse's lifetime,
when there is a surviving child under age 21, or if there is a
surviving child of any age who is blind or disabled.
Proposed Law: SB 1124 would limit recovery from the estate of a
deceased Medi-Cal beneficiary, to only those costs for health
care services that the state is required to recover under
federal law.
Specific provisions of the bill would:
Limit estate recovery to the costs incurred by Medi-Cal to
pay for health care costs of permanently institutionalized
beneficiaries of any age and the costs of providing nursing
facility care, home and community based services, and
related hospital and prescription drug benefits for
beneficiaries over 55 years of age;
Prohibit estate recovery against the estate of a surviving
spouse;
Prohibit estate recovery for any Medi-Cal expenditures that
the federal government authorizes the state to eliminate
from recovery. (In other words, if future federal action
reduces the scope of costs states are required to recover,
under this bill the Department would eliminate those cost
from the recovery program.);
Limit the collection to either actual expenditures by a
Medi-Cal managed care plan or the per member per month
payment made to the plan by the Department, whichever is
less;
Require the Department to provide information to Medi-Cal
beneficiaries, upon request, about the actual expenditures
made on their behalf.
Staff Comments: As noted above, the bill prohibits the
Department from recovering any costs for services that the
federal government authorizes the state to eliminate from
recovery. In the future, if the federal government, through law
or guidance, reduces the services that states are required to
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recover, the Department would be required to eliminate the costs
of those services from recovery. The impact of that provision of
the bill is unknown, as it will depend on future federal action,
if any.