BILL ANALYSIS �
SB 1124
Page 1
SENATE THIRD READING
SB 1124 (Ed Hernandez)
As Amended August 18, 2014
Majority vote
SENATE VOTE :30-5
HEALTH 18-0 APPROPRIATIONS 12-0
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|Ayes:|Pan, Maienschein, |Ayes:|Gatto, Bocanegra, |
| |Bonilla, Bonta, Ch�vez, | |Bradford, |
| |Chesbro, Gomez, Gonzalez, | |Ian Calderon, Campos, |
| |Roger Hern�ndez, | |Eggman, Gomez, Holden, |
| |Lowenthal, Mansoor, | |Pan, Quirk, |
| |Nazarian, Nestande, | |Ridley-Thomas, Weber |
| |Patterson, Ridley-Thomas, | | |
| |Rodriguez, Wagner, | | |
| |Wieckowski | | |
| | | | |
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SUMMARY : Limits state 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, 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, home and community-based services,
and related hospital and prescription drug services.
2)Eliminates estate recovery against the estate of a surviving
spouse of a deceased Medi-Cal beneficiary when the surviving
spouse dies.
3)Requires the Department of Health Care Services (DHCS), upon
request and free of charge, 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. Requires DHCS to permit a beneficiary to request
the information on expenses by the Internet, telephone, mail,
or in person, to post on its Internet Web site directions for
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requesting the information, and to include this information in
its pamphlet for the Medi-Cal Estate Recovery Program and any
other notices DHCS distributes to beneficiaries regarding
estate recovery.
4)Repeals the estate recovery statute struck down in court that
requires "proportionate share" recovery from a former Medi-Cal
beneficiary's estate when there are both decedents entitled to
an exemption from recovery and decedents who are not.
5)Provides that the provisions of this bill apply only to
individuals who decease on or after January 1, 2015.
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.
2)Prohibits DHCS from claiming in any of the following
circumstances:
a) The deceased Medi-Cal beneficiary was under 55 years of
age 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 a surviving spouse during his or her
lifetime, a surviving child who is under age 21, or, a
surviving child who is blind or permanently and totally
disabled.
3)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.
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FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs to DHCS, likely less than $100,000, to revise
regulations (50% General Fund (GF)/ 50% federal).
2)One-time administrative costs in the range of $50,000 to DHCS
to develop procedures and make Information Technology system
changes necessary to provide personalized information to
beneficiaries upon request. There will also be some level of
ongoing administrative costs to provide such information. If
5,000 people per year request such information, at a cost of
$25, annual costs will be $125,000 (25% GF/ 75% federal).
3)Based on narrower estate recovery rules, potential
administrative cost savings from fewer staff working on estate
recovery. The current budget for estate recovery is
approximately $4.5 million (25% GF, 75% federal). The effect
of the bill on these administrative costs is unknown, but it
could result in a significant reduction in the need for estate
recovery staff.
4)Annual revenue loss of about $17 million per year (50% GF/ 50%
federal). This revenue loss would likely grow in future
years.
5)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% to 10% General Fund,
95% to 90% federal funds). Any cost recovery made by the
state from this population would largely be returned to the
federal government. Therefore, the GF impact from eliminating
some cost recovery from this population is limited.
6)Minor revenue reduction
COMMENTS : According to the author, Medi-Cal estate recovery is
a deterrent to signing people up for Medi-Cal, and is counter to
state and federal efforts to enroll people into health coverage.
By recovering for health care services beyond those required by
federal law, the author states 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. The author
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argues 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, and is
inequitable as it primarily applies to individuals age 55 and
older 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. The author concludes
by stating that, for the new 100% 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.
The state's estate recovery is governed by the state's Medicaid
State Plan. Estate recovery claims are filed when the state
pays more than $750 for health care services. Claims can also
be filed for amounts less than $750 when the state expects to
recover more than the cost of recovery. In 2013, Medi-Cal
estate recovery collected $59.4 million in total funds. Total
fund Medi-Cal expenditures in 2012-13 were $55.8 billion in that
year, so estate recovery revenue offset .001% of Medi-Cal
expenditures. In 2012-13, the average estate recovery claim
amount was $95,000 and the average recovery amount was $15,000.
Federal regulations require states to pay the federal government
a portion of the estate recovery collection amounts that is
determined in accordance with the federal matching rate (known
as Federal Medicaid Assistance Percentage) for the state. Under
this provision, California would generally return 50% of the
amounts collected, except for programs which have a higher
matching rate, such as the Patient Protection and Affordable
Care Act expansion population, which is entirely federally
funded for the first three years of the expansion and declines
to 90% by 2020 and thereafter.
States have the option to recover from individuals age 55 and
older for health care services beyond the nursing facility and
home and community based services required by federal law.
California collects for all Medi-Cal paid services received on
or after an individual's 55th birthday, with certain exceptions.
DHCS indicates it does not track recoveries on a per
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beneficiary basis by whether the services are mandatory versus
optional to be collected under federal law. When a Medi-Cal
beneficiary is enrolled in a Medi-Cal managed care plan, DHCS
collects based on the amount it paid to the plan, and not based
on the amount of services a person received.
Spousal estate recovery is also optional for states, and this
bill would eliminate 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. Medi-Cal beneficiaries can 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 could
mean that individuals generally subject to estate recovery are
those who are unaware of and/or unable to afford legal advice on
how to transfer their home.
DHCS states 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' Third Party Liability and
Recovery Division upon request. DHCS indicates information on
Medi-Cal managed care premium/capitation payments may not be
readily available. 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 this report
is $25.
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 would help reduce Medi-Cal
enrollment barriers by eliminating the optional portions of
estate recovery. WCLP states that 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. WCLP states it has heard of many
instances of consumers simply not signing up for coverage as a
result of estate recovery. 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. CANHR argues
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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 liens on homes that have been in their families for years.
There is no known opposition.
Analysis Prepared by : Kelly Green / HEALTH / (916) 319-2097
FN: 0005081