BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 1124
Author: Hernandez (D)
Amended: 8/18/14
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
SENATE FLOOR : 30-5, 5/27/14
AYES: Anderson, Beall, Berryhill, Block, Cannella, Corbett,
Correa, De Le�n, DeSaulnier, Evans, Fuller, Gaines, Galgiani,
Hancock, Hernandez, Hill, Hueso, Jackson, Lara, Leno, Lieu,
Mitchell, Monning, Padilla, Pavley, Roth, Steinberg, Torres,
Wolk, Wyland
NOES: Huff, Knight, Morrell, Nielsen, Walters
NO VOTE RECORDED: Calderon, Liu, Vidak, Wright, Yee
ASSEMBLY FLOOR : 78-0, 8/25/14 - See last page for vote
SUBJECT : Medi-Cal: estate recovery
SOURCE : California Advocates for Nursing Home Reform
Western Center on Law and Poverty
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DIGEST : This bill 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.
Assembly Amendments (1) delete the provision that health care
services federal law or guidance authorize the state to
eliminate from recovery shall also be exempted; (2) delete the
provision that the Department of Health Care Services (DHCS)
shall 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, whichever is less in that month; and (3) make other
technical changes.
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.
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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. 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 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 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.
Background
The federal Affordable Care Act (ACA) Medicaid changes and
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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
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
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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 Assembly Appropriations Committee:
One-time costs to DHCS, likely less than $100,000, to revise
regulations
(50% General Fund/ 50% federal).
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% General Fund/ 75%
federal).
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% General Fund, 75% federal).
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The effect of this bill on these administrative costs is
unknown, but it may result in a significant reduction in the
need for estate recovery staff.
Annual revenue loss of about $17 million per year (50% General
Fund/ 50% federal). This revenue loss will likely grow in
future years.
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 will largely be returned to the
federal government. Therefore, the General Fund impact from
eliminating some cost recovery from this population is
limited.
Minor revenue reduction.
SUPPORT : (Verified 8/26/14)
California Advocates for Nursing Home Reform (co-source)
Western Center on Law and Poverty (co-source)
AARP
AFSCME, AFL-CIO
Asian Americans Advancing Justice
Asian Law Alliance
Bet Tzedek Legal Services
California Association of Physician Groups
California Commission on Aging
California Health Advocates
California Pan-Ethnic Health Network
California School Employees Association
Community Health Councils
Congress of California Seniors
Consumer Federation of California
Consumers Union
Disability Rights California
Disability Rights Education and Defense Fund
Executive Committee of the Trusts & Estates Section of the State
Bar
Legal Aid Society of Orange County
Health Access California
Health Consumer Alliance
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Housing California
Latino Coalition for a Healthy California
Legal Aid Society of San Mateo County
Long Term Care Ombudsman Services of San Luis Obispo County
Maternal and Child Health Access
National Health Law Program
National Senior Citizens Law Center
Private Essential Access Community Hospitals
SEIU California
OPPOSITION : (Verified 8/26/14)
Department of Finance
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
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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.
ARGUMENTS IN OPPOSITION : The Department of Finance (DOF)
opposes this bill because they say it significantly reduces
estate recoveries that offset General Fund expenditures in the
Medi-Cal program. DOF states that recovery of past health care
expenditures from the estates of decedents helps fund necessary
health care benefits for additional beneficiaries, most of whom
have little or no assets. DOF further states that while the
intergenerational transmission of assets for low-income Medi-Cal
beneficiaries may be hindered by the estate recovery process,
reducing this significant source of funding for the program
would result in General Fund costs or lead to reductions in
health care services for other beneficiaries.
ASSEMBLY FLOOR : 78-0, 8/25/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Holden,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, John A.
P�rez, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Donnelly, Vacancy
JL:e 8/26/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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