State may reach back six years for patient’s assets

Medical Assistance -- a government health care program for the poor -- helps pay for roughly two out of three residents in Minnesota nursing homes. Proposals are swirling at the capitol to contain its costs.

Gov. Tim Pawlenty has proposed cutting Medical Assistance nursing-home payments by 4 percent, a plan that would save the state $31 million in the biennium -- but one the nursing homes said would cause staff cuts.

The Department of Human Services (DHS) will propose restricting seniors' ability to give money to their kids and get Medical Assistance for their nursing-home care.

A leading group of nursing-home providers said the state should do more to encourage people to buy long-term care insurance -- which would pay for extended nursing-home stays -- instead of banking on Medical Assistance.

"We have created incentives for people to use Medical Assistance instead of long-term care insurance. We need to rethink that," said Rick Carter, president of Care Providers of Minnesota, a nursing-home organization. "What if every single car had to be insured by government? We don't do that for any sector of our economy except nursing homes."

In 2002, Medical Assistance paid $890 million for Minnesota nursing-home care -- half state dollars, half federal dollars, according to state figures. For comparison, that's more than three times the city of Minneapolis's 2003 general fund budget, which pays for everything from parks and libraries to police and fire service.

Many people, including those well-off, see nursing homes as an entitlement, said a lawyer who helps people do financial planning around long-term care

"We got people feeling as if nursing-home care should be paid for like Medical Assistance and Social Security," said attorney David K. Porter. "It is really 180 degrees from what I saw when I started out 25 years ago, where people figured, hell no, I'll pay for myself as long as I possibly can. I am not going on welfare. It was part of their pride. These are depression survivors. They have died out."

Looking back for assets

DHS has several proposals to prevent people from going on Medical Assistance when they have given away assets that could cover the cost, said Maria Gomez, assistant commissioner with DHS.

One would extend something called the look-back period, she said. When a senior applies for Medical Assistance, the state "looks back" three years to see what uncompensated gifts they made. The state then imposes a penalty period, effectively denying them Medical Assistance coverage for a period of time.

DHS will seek to extend the look-back period from three to six years, Gomez said.

State Sen. Linda Berglin (DFL-Minneapolis) favors such legislation.

"The Medical Assistance program was definitely never designed [to] be an inheritance-protection program," Berglin said.

The state had passed the legislation before, but the federal government denied a needed waiver, Berglin said. Gomez said DHS would try again.DHS will also try to toughen the Medical Assistance "penalty period."

For example, consider a senior who spent all his or her assets and applies for Medical Assistance, yet gave a child $100,000 during the look-back period.

The state pegs the average cost of a nursing-home bed at $3,702 a month. It divides the $100,000 by $3,702 and gets a 27-month "penalty period" -- the senior has to wait 27 months from the time of the gift before he or she is Medical Assistance-eligible.

If the senior made the gift 36 months before applying for Medical Assistance, the penalty period has expired. If they made the gift 12 months prior to applying, they have to wait 15 months before they are eligible (that's the 27-month penalty period minus the 12-month age of the gift.)

DHS wants the penalty to start the day the senior goes into the nursing home instead of the day of the gift, Gomez said.

The change "is a powerful one," she said. "It cannot be escaped."

Medical Assistance cuts

Jonathan Lundberg is executive director for health care and therapy services at Walker Methodist Health Center, 3737 Bryant Ave. S., a 488-bed nursing home. He said the Governor's proposed budget would reduce Walker's funds by $1 to $2 million out of the center's $46 million budget.

State cuts would result in fewer staff, he said. Staff costs 75 percent of the center's budget. Walker could eliminate non-direct-care positions, but that shifts administrative duties to direct-care-givers and affects the quality of care, he said.

Studies show nursing-home staffing levels should be higher, not lower, Lundberg said. The state sets staffing minimums, and most places operate at 125 percent to 150 percent of those minimums.

"There isn't anybody I know in the nursing-home industry that operates to that minimum," he said. "It would not be a standard that any of us would accept."

As an alternative to rate cuts, Carter said he would like the state to require all Medicare-supplement insurance policies to include long-term care coverage.

Medicare, a federal health-care program for seniors, covers nursing-home costs for short-term stays, such as rehabilitation from hip replacement surgery, a state official said. It does not pay for nursing-home care if the senior is senile or debilitated.

Most seniors (86 percent) have supplemental insurance policies to pay for services outside of Medicare, "but they aren't worth the paper they are printed on" for long-term care, Carter said.

The state could require Medicare supplement policies to include some long-term care coverage, he said. It would force premiums higher; how much would depend on the coverage required.

If nothing changes, younger taxpayers end up subsidizing nursing-home care for seniors, some of whom could otherwise afford it if they planned for it, he said.

"If that premium scares people away and they drop their supplemental coverage, that is not a good idea," Carter said. "However, if seniors don't like an additional premium, we are going to have intergeneration warfare. You and I will pay for what they don't want to pay for insurance."