BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1124|
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THIRD READING
Bill No: SB 1124
Author: Hernandez (D)
Amended: 3/26/14
Vote: 21
SENATE HEALTH COMMITTEE : 7-1, 4/9/14
AYES: Hernandez, Anderson, Beall, DeSaulnier, Evans, Monning,
Wolk
NOES: Nielsen
NO VOTE RECORDED: De Le�n
SENATE APPROPRIATIONS COMMITTEE : 6-1, 5/23/14
AYES: De Le�n, Gaines, Hill, Lara, Padilla, Steinberg
NOES: Walters
SUBJECT : Medi-Cal: estate recovery
SOURCE : California Advocates for Nursing Home Reform
Western Center on Law and Poverty
DIGEST : This bill limits Medi-Cal estate recovery to only
those services required to be recovered under federal law.
Exempts from estate recovery any health care services that
federal law or guidance authorizes the state to eliminate from
recovery. Eliminates estate recovery against the estate of a
surviving spouse of a deceased Medi-Cal beneficiary. Requires
the Department of Health Care Services (DHCS) to only collect
for health care services actually received by the deceased
beneficiary. Requires DHCS to provide a current or former
beneficiary with the total amount of Medi-Cal expenses that have
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been paid on behalf of that beneficiary that are subject to
estate recovery.
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:
(1) A surviving spouse during his/her lifetime;
(2) A surviving child who is under age 21; or
(3) A surviving child who is blind or permanently and
totally disabled.
1.Requires DHCS to waive its 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
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and excludes services provided to the deceased Medi-Cal
beneficiary through the In-Home Supportive Services (IHSS)
Program. Services required to be recovered under federal law
are nursing facility services, home and community-based
services, and related hospital and prescription drug services.
2.Exempts from estate recovery any health care services that
federal law or guidance authorizes the state to eliminate from
recovery. Requires DHCS to adopt emergency regulations as
necessary to implement this requirement.
3.Eliminates estate recovery against the estate of a surviving
spouse of a deceased Medi-Cal beneficiary when the surviving
spouse dies.
4.Requires DHCS to only collect amounts identified as being
spent by either DHCS or a Medi-Cal managed care plan for
health care services actually received by the decedent, or the
per member per month payment made to the Medi-Cal managed care
plan, whichever is less in that month.
5.Requires DHCS to provide a current or former beneficiary, or
his/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, upon
request and free of charge.
6.Requires DHCS to permit a beneficiary to request the
information described in (5) above via the Internet, by
telephone, by mail, in person, 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.Repeals estate recovery statute struck down in court that
requires "proportionate share" recovery from a former Medi-Cal
beneficiary's estate when there are decedents entitled to an
exemption from recovery and decedents who are not.
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Background
The federal Affordable Care Act (ACA) Medicaid changes and
federal guidance on application of estate recovery . ACA expands
Medicaid coverage to previously ineligible adults under age 65
with incomes under 138% of the federal poverty level. In
addition, the ACA also changes income counting and asset
eligibility rules for parents, children, and pregnant women, who
were already eligible for Medicaid. Eligibility for these
categories of recipients is now calculated based on "modified
adjusted gross income," or MAGI, and there is no asset test for
persons who become eligible for Medicaid under MAGI rules.
Estate recovery is likely to affect more individuals than before
because the number of people eligible under Medi-Cal has
increased, but also because some of the new beneficiaries may
have assets, such as a home or a savings account, but are now
Medi-Cal-eligible if their income has declined from some reason,
such as a job loss.
States, advocates, and members of Congress began raising the
issue as to whether existing estate recovery requirements apply
to persons eligible for Medicaid based on MAGI. On February 6,
2014, the Democratic Congressional leadership wrote to
Department of Health and Human Services Secretary Kathleen
Sebelius, stating that Congress did not intend for estate
recovery to apply to working-age uninsured individuals for whom
Medicaid provides basic health insurance coverage.
On February 21, 2014, the federal Centers for Medicare and
Medicaid Services (CMS) issued a State Medicaid Director Letter
that indicated estate recovery applies to individuals whose
income is determined based on MAGI who were 55 years old or
older when they received Medicaid. However, CMS also stated
that, "Due to the potential barrier to enrollment that future
estate recovery may create for some individuals, CMS intends to
thoroughly explore options and to use any available authorities
to eliminate recovery of Medicaid benefits consisting of items
or services other than long term care and related services in
the case of individuals who are determined eligible for Medicaid
benefits using the MAGI methodology."
Deletion of proportionate share recovery language . This bill
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deletes language in existing law that has been struck down in
court. That language allowed DHCS to claim against a deceased
former Medi-Cal beneficiary's estate for the "proportionate
share" of the estate left to individuals who did not quality for
an exemption. In Dalzin v. Belshe (1997), two separate deceased
Medi-Cal beneficiaries left their estates to their children.
Both Medi-Cal beneficiaries had sons who were disabled and thus
entitled to an exemption from estate recovery. DHCS filed an
estate claim against the non-disabled children of the families.
The court granted a permanent injunction, prohibiting DHCS from
claiming against the non-disabled child's portion of a
beneficiary's estate.
Previous Legislation
AB 2493 (Lieber, 2004) would have prohibited the Department of
Health Services (DHS was the predecessor to DHCS) from claiming
against the surviving spouses of Medi-Cal beneficiaries, would
have deleted the "proportionate share" recovery from a former
Medi-Cal beneficiary's estate, required DHS to adopt regulations
defining "substantial hardship" exemptions from estate recovery,
required DHCS to grant estate recovery waivers consistent with
regulations adopted by DHS, and would exempt from estate
recovery services provided through the IHSS program. The bill
was held on the Assembly Appropriations suspense file.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time costs likely less than $100,000 to revise regulations
by DHCS (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-ACA expansion.
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, 90
- 95% federal funds). As part of its implementation of the
Federal ACA, the state has expanded Medi-Cal coverage to
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childless adults with incomes up to 138% of the federal
poverty line. Under existing 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.
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 DHCS 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 will 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.
SUPPORT : (Verified 5/22/14)
California Advocates for Nursing Home Reform (co-source)
Western Center on Law and Poverty (co-source)
American Federation of State, County and Municipal Employees,
AFL-CIO
Asian Americans Advancing Justice
Asian Law Alliance
Bet Tzedek Legal Services
California Association of Physician Groups
California Health Advocates
California Pan-Ethnic Health Network
Consumers Union
Disability Rights California
Disability Rights Education and Defense Fund
Health Consumer Alliance
Legal Aid Society of Orange County
Legal Aid Society of San Mateo County
Long Term Care Ombudsman Services of San Luis Obispo County
National Health Law Program
National Senior Citizens Law Center
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Private Essential Access Community Hospitals
SEIU California
ARGUMENTS IN SUPPORT : This bill is jointly sponsored by the
California Advocates for Nursing Home Reform (CANHR) and the
Western Center on Law and Poverty (WCLP) which argue, this bill
would go 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. WCLP states it has heard
of many instances of consumers simply not signing up for
coverage as a result of estate recovery.
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%
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 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.
JL:e 5/25/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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