Sad End for Penn Treaty Insurance — Reblog

Jeff Marshall, a highly-respected colleague in Williamsport, Pennsylvania, documented the failure of Penn Treaty Insurance’s long-term care insurance products in “Sad End for Penn Treaty Insurance.”  The column is interesting and informative in describing the problems of the LTCI industry as the costs of long-term care steeply increased, while interest rates plunged and customers held on to their policies at much higher rates than expected.  Jeff’s column is also an excellent backgrounder to my post, “Long-Term Care Insurance — Smart Buy or Not?

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2017 John B. Payne, Attorney

 

 

Vital Information about Medicaid and Long-Term Care

Please read this crucial explanation of the importance of Medicaid to long-term care residents and their families from the Long Term Community Coalition:  ltccc-medicaid-middle-class

Quest for Quality Care

brooklyn-convalescent-home-therapy-roomWhen it becomes necessary to look for nursing home placement for a loved one, the Nursing Home Compare tool on the medicare.gov website is an important starting point for screening facilities. However, it is only a starting point and it has serious shortcomings. It is necessary to do further investigating and review prospective placements.

Effective February 20, 2015, the Centers for Medicare & Medicaid Services (CMS) made some changes to Nursing Home Compare. The Quality Measures (QMs) were recalibrated, antipsychotic drug use was factored into the QM star rating, and staffing criteria were changed. These changes made the tool better, but far from excellent.

Three measures are rated: (1) health survey measure, based on unannounced annual surveys and complaint surveys conducted by state survey agencies; (2) staffing, based on self-reported nurse staffing, and (3) QMs, based on resident assessments. The weakness in the rating system is reflected in the high scores prior to the latest round of improvements. Approximately 80% of facilities received four or five stars on their QMs because high scores on the self-reported staffing measure and QMs will inflate a facility’s overall rating. According to The New York Times there was considerable gaming of the rating system. Katie Thomas, “Ratings Allow Nursing Homes To Game System; Medicare’s Five Stars; Data Taken at Face Value Often Fails to Reflect Real Conditions,” The New York Times, page 1 (Aug. 25, 2014),

The new changes include recalibration of the QMs to identify the number of points to achieve different star ratings. CMS claims that the change will raise the standard for skilled-care or long-term care facilities and differentiate the facilities to make the system more accurate. In 2009 only one in ten facilities received five stars and one- through four-star ratings were roughly equal. By 2013, one-star ratings had decreased by approximately 85% and five star ratings had increased from 10% to 35%. This is like a school that consistently awards A grades to 35% of the students. No matter how you slice it, no more than half of any student body can be above average and no more than half of LTCFs should be graded at three stars or better. After recalibration, half of all facilities will still be receiving four or five stars on QMs, which indicates a rigged system.

Four-star staffing ratings are awarded to facilities that score four stars on both the registered nurse component and the staffing category. A facility cannot receive a four-star staffing rating if either of the individual measures is three stars. Staffing had been self-graded by the facilities, which made it an unreliable measure of quality, but CMS has announced that it would require facilities to submit direct-care staffing information electronically.

All this suggests that medicare.gov ratings may not be relied on exclusively in choosing a nursing home. The ratings are very approximate and are based on sporadic inspections by an under-staffed federal agency.

It is necessary for the family to investigate beyond looking at the ratings. This involves visiting facilities, talking to residents’ families and employees, checking reviews on the Internet and consulting a geriatric care manager if the family can afford it.

It is not sufficient to rely on the hospital social work staff. Hospital discharge planners are generally overworked and may be under great pressure to empty hospital beds for new admissions. On Friday afternoons, discharge planners are expected to clear as many beds as possible for weekend admissions. At such times, discharge “planning” often consists of finding the first skilled nursing facility that will take the patient.

Presumably, the Joint Commission http://www.jointcommission.org provides a standard for discharge planning, but there is almost no way for someone who is not in hospital administration to review the standard and demand that the service be properly delivered. This places the responsibility for finding a good rehabilitation facility or nursing home squarely on the shoulders of the patient’s family and friends.

While visiting skilled care and nursing facilities, try to observe resident-staff interactions, as well as the cleanliness of the facility. Take time to talk to residents and see whether those who appear distressed receive prompt care.

The 1987 Nursing Home Reform Law includes many guaranteed rights for nursing home residents:

A) The right to be fully informed of available services and the charges for them, facility rules and regulations, including a written copy of resident rights, contact information for the state ombudsman and state survey agency, state survey reports and the nursing home’s plan of correction, advance notice of a change in rooms or roommates, assistance if a sensory impairment exists, and the right to receive information in a language they understand.

B) The right to present grievances without fear of reprisal and with prompt resolution by the facility, to complain to the ombudsman program, to file a complaint with the state survey and certification agency, and to participate in the resident’s own care.

C) The right to receive adequate and appropriate care, to be informed of changes in medical condition, to participate in assessment, care-planning, treatment, and discharge, to refuse medication, chemical and physical restraints, and treatment.

D) The right to private and unrestricted communication with anyone regarding medical, personal, or financial affairs, and to refuse visits.

E) The right to remain in the nursing facility unless a transfer or discharge is for good cause and is preceded by adequate notice and due process.

F) The right to be treated with consideration, respect, and dignity, free of mental and physical abuse, corporal punishment, involuntary seclusion, and physical and chemical restraints, to self-determination and security of possessions, and to visits by the resident’s personal physician, representatives from the state survey agency and ombudsman programs, and by relatives, friends, and others of the residents’ choosing.

hospitalWhen visiting facilities, enquire of the admissions and administration representatives, other visitors, and staff about the facilities’ attention to resident rights. Most facilities allow free access to lobbies and common areas in the facility. It should be possible to talk to a variety of staff, contractors providing services, and other visitors. If the facility restricts access, that may be a sign that the care they provide is substandard.

Almost no one wants to go to a nursing home, but there is a high probability that the patient in skilled care will go to an LTCF at the end of rehabilitation, not home. One of the most important criteria in choosing a rehabilitation or skilled-care facility (SNF) is whether all beds are certified for both Medicare and Medicaid. Many SNFs use up the patient’s highly-profitable Medicare days, then tell the family to search elsewhere for a Medicaid bed. This makes it very difficult to find a preferred placement. Facilities are eager to accept patients who are eligible for the 20 to 100 days of skilled care that Medicare covers, but will turn away persons who rely on Medicaid.

Finding good care is a complex process. Engaging a fee-paid geriatric care manager is worth many times the cost. They can be located through the National Association of Geriatric Care Managers.  An experienced elder law attorney can also be very helpful.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney

Long-Term Care Insurance – Smart Buy or Not?

In another blog, a man in his late 60s was complaining that long-term care insurance (LTCI) he bought at age 65 was costing him $3,600 per year. He bemoaned not buying it younger so it would cost less.

It would have cost less because he would have paid premiums longer. Very few find themselves in nursing homes before age 85 — less than 4%. That is a 96% chance that if you buy LTCI at age 65 you will pay on it for 20 years – assuming that you do not get priced out of the market in that time.

Some agents selling LTCI promise that there will be no “rate” increase. However, that does not mean that the premium cannot go up. The company is still free to increase the cost of insurance for a class of customers. Insurance companies intend to make a profit. The executives would rather tarred and feathered than absorb increased claims costs without commensurate premium increases.

As a result of the run-up in claims in the last decade, longstanding customers have been subjected to large hikes in the premiums they pay. Many octogenarian insureds have been faced with the choice of absorbing a 100% increase in premiums or accepting a 50% decrease in promised benefits. A 65-year-old LTCI customer may be able to afford the premiums initially, but there is no guarantee he or she will not lose the coverage due to increased cost at the age it would likely be needed.

If invested, $3,600 per year would grow to almost $90,000, even at a measly 2% rate of return. Granted, the same policy might only cost $2,160 per year if purchased at age 55, but by age 85 the total paid in would be the same.

Compare the LTCI market 20 years ago to today’s. Many insurers no longer carry LTC policies and those that are still in that market charge much higher premiums. Do you think that LTCI will not change over the next 20 years? Consider investing an amount equal to the LTCI premium regularly instead of buying LTCI. For examples and further discussion, see “FAQ – Long-Term Care Insurance” at http://law-business.com/long-term-care-insurance/.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney

Surviving Spouse as Medicaid Victim

Estate recovery has been mentioned in this blog several times, most recently “Heavy-Handed Estate-Recovery.”  The following excerpt from Payne, Michigan Probate discusses the special case of the spouse of a nursing home resident who dies while on Medicaid, leaving an estate that must be probated:

The estates of deceased Medicaid recipients who are survived by their spouses present a special problem. Federal Medicaid law states that estate recovery “may be made only after the death of the individual’s surviving spouse, if any, and only at a time when he has no surviving child who is under age 21, or . . . is blind or permanently and totally disabled.” 42 USCA § 1396p(b)(2). Michigan Medicaid policy similarly states that recovery “will be made only after the death of the individual’s surviving spouse, and only when the individual has no surviving child who is either under age 21, blind, or disabled.” BAM 120, p 8 (January 1, 2016).

One would expect this limitation to poleax estate recovery where there is a surviving spouse. It is difficult to see how an estate-recovery claim would survive closure of the probate estate of the deceased Medicaid recipient after the residue is distributed, but that circumstance is not deterring the assistant attorneys-general representing DHHS Medical Services Administration from filing civil complaints for estate recovery.

While the State may impose a lien on, for example, the marital home before the surviving spouse’s death, the lien must provide for release on the surviving spouse’s demand for a sale or mortgage. The lien must provide clear and unequivocal notice that it is limited to the government’s interest in the property and must include mandatory release provisions. Dept. of Human Resources v. Estate of Ullmer, 120 Nev. 108, 87 P.3d 1045 (2004). These limitations would severely hamper the enforceability and utility of such a lien on real estate. Pursuing recovery from a financial account would be far more difficult.

As of this writing, the estate-recovery program is such a recent development that it was not possible to locate any case where this type of claim has been resolved in the probate court, let alone tested in the court of appeals. If the state develops a viable mechanism for enforcing estate recovery claims against the estates of surviving spouses, the potential reach is quite broad.

In addition to Nevada, courts in Minnesota and Ohio have ruled that federal Medicaid law authorizes recovery from the surviving spouse’s estate of assets in which the deceased Medicaid recipient had a legal interest at the time of death. In re Estate of Barg, 752 N.W.2d 52 (Minn., 2008). This includes the value of assets that were marital or jointly owned property at any time during the marriage. In re Estate of Jobe 590 N.W.2d 162, 164 (Minn. App.,1999). See also Ohio Dept. of Job & Family Serv. v. Tultz 152 Ohio App.3d 405 N.E.2d 1262 (Ohio App. 9 Dist., 2003). However, the Illinois Supreme Court reached the opposite conclusion, holding that estate recovery is prohibited by federal law when there is a surviving spouse and the state may not file a claim for estate recovery from the estate of the deceased surviving spouse. Hines v. Department of Public Aid, 221 Ill.2d 222, 850 N.E.2d 148 (2006). Accord, In re: Estate of Bruce, 260 S.W.3d 398 (Mo. App. 2008).

The evolution of Michigan’s estate recovery program will be a challenging adventure for the personal representatives of deceased Medicaid recipients and their attorneys, as well as AAGs representing MSA. Where the decedent is survived by a spouse, the issues are likely to be particularly thorny.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2016 John B. Payne, Attorney and Thomson Reuters

Medicaid Processing Delays Hurt Applicants and Nursing Homes

Kansas Public Radio reports that Kansas nursing homes are being financially hamstrung by six- to eight-month delays in Medicaid approvals. If they accept residents who have not been approved for Medicaid, they may be stuck caring for them for months without being paid. As a result, nursing homes try to avoid accepting prospective residents unless they are already approved for Medicaid or have sufficient funds to pay for their own care. This makes it tough for families to place their loved ones where they can be properly cared for.

Residents of nursing homes who are pending Medicaid cannot be required to pay for their care at the rate charged residents who are paying privately. In most states, nursing homes charge upwards of $8,000 per month for care. However, Medicaid applicants and recipients do not pay more than their income – usually less than $2,000 per month. A six-month delay leaves the nursing home out on a limb for $36,000 or more per resident. Add to this the possibility that the resident may be determined ineligible for Medicaid due to a small asset discovered late in the application process and it is easy to see why Kansas nursing home operators are as nervous as Col. Sanders at a PETA rally.

The Kansas problem resulted from two bone-headed bureaucratic decisions that were not quite as catastrophic as Flint’s switch in water sources, but equally lame. The decisions also exacerbated serious fiscal and administrative problems in the state Medicaid program, which Gov. Sam “Trickle-down” Brownback privatized in 2013.  Last July the state made a botched switch to new eligibility determination software and this January – while the software change had the application process tied up in knots – eligibility processing was moved from the Department for Children and Families to the Kansas Department of Health and Environment. The unreasonable delays are not likely to end soon.

Michigan Medicaid pulled an equivalent blunder two years ago when it decreed that all applications and eligibility documents for the whole state should be transmitted to a Lansing fax number. The idea was to make the eligibility process paperless, but the software used was woefully inadequate to processing the volume of documents coming in. The system choked on the massive flow of data and much of what was sent in got lost in a virtual labyrinth for months. As later happened in Kansas, thousands of Medicaid applicants in nursing homes were subjected to months of delay or were wrongfully denied. To make matters worse, the “smart” system devised to sort the pages sent in did not recognize the types of verification it was seeing. Therefore, carefully organized applications with dozens of attachments went to the workers a jumbled mess.

Why can governors and high-level state administrators not understand that effecting massive changes in state government functions is not as easy as modifying the organizational chart? They get bright ideas and implement them without proper planning. In some cases, they move agencies between departments to reward friends or punish opponents. In others, they make changes for no more significant reason than that it makes the chart appear more balanced. Changing the names of departments and other organizational components is a favorite amusement.

The problem is that governors do not want to hear bad news and they certainly do not want to hear that their ideas are not brilliant. Michigan governor Rick “Let Them Drink Pepsi” Snyder will probably duck blame for the Flint water crisis because he was not told about it directly. The responsible parties in the Department of Environmental Quality and Department of Health and Human Services knew better than to inform him of the aquatic catastrophe.

Assume that a governor says, “These school shootings make me wonder if we shouldn’t arm safety-patrol members.” His chief-of-staff and other aides will know better than to ask if he knows that safety-patrols are made up of 10-year-old fifth-graders. They will know that what he wants to see is feasibility studies proving that it is a great idea.  Blasé disregard of responsible management is unfortunately the rule, rather than the exception. It is the reason our state governments are always lurching from crisis to crisis. That, and the tendency of voters to elect politicians who are neither smarter nor more perceptive than a fifth-grader.

John B. Payne, Attorney
Garrison LawHouse, P.C.
1800 Grindley Park Street, Suite 6
Dearborn, Michigan 48124
313 563 4900

Pittsburgh Office:
9853 Old Perry Highway
Wexford, Pennsylvania 15090
800 220 7200
http://www.law-business.com

Heavy-Handed Estate Recovery

One of the scariest and most frequent questions when a person goes into a nursing home is, “Will the state take my home?” The answer is, “No and yes.” A Michigan homestead is exempt while the person in a nursing home on Medicaid, but if the person dies and does not have a surviving spouse, the state will claim against the estate. Usually, the probate estate of a deceased Medicaid recipient consists of the homestead. So, yes, the homestead may be subject to the state’s claim.

The Michigan Medicaid estate-recovery law was enacted on September 30, 2007, but did not become effective until July 1, 2011, with retroactive coverage for services received on or after July 1, 2010. The legislature included what seemed to be a straightforward exemption from estate recovery for “the portion of the value of the medical assistance recipient’s homestead that is equal to or less than 50% of the average price of a home in the county in which the medicaid recipient’s homestead is located.” MCLA 400.112g(3)(e)(I). However, because the homestead exemption was included under “hardship,” the Michigan Department of Health & Human Services (DHHS) has constructed a set of administrative obstacles that is practically impossible to penetrate.

greatdepressionAt the outset, DHHS requires that “an applicant must file the [undue hardship] application with the department not later than 60 days from the date the department sends the Notice of Intent to the personal representative or estate contact.” Bridges Administrative Manual (BEM) 120, at 8.  This, in itself is a huge problem. The “Notice of Intent” is mailed to wherever Medicaid notices were sent before the person died. This might be a relative, or it might be an employee at the nursing home, an attorney, or a social worker. Many times Medicaid notices are sent to the recipient at the nursing home. This is about as effective as addressing it to the cemetery.

The Notice of Intent to file a claim against the deceased Medicaid recipient’s estate is mailed very shortly after DHHS is notified of the death – usually well before an estate is opened. There is no personal representative until the estate is opened, but the Department covers its bets by sending the Notice of Intent to what it calls “an estate contact.” To request a hardship exemption, the applicant must provide information about the estate that may not be available until a personal representative – the person designated by the statute to communicate with the Department – is appointed. The Department has set an artificial deadline that may be impossible for the family to meet.

To make matters more bizarre, DHHS policy states, “An undue hardship exemption is granted to the applicant only and not the estate generally.” The policy also limits the exemption to applicants who personally have income no more than 200% of the federal policy level and “total household resources” that are not more than $10,000.00. This is contrary to the estate recovery statute. The homestead exemption is separate from the poverty exemptions and should apply without regard to the beneficiaries’ financial status.

Unless there is a sole heir, the situation is this: An undetermined group of beneficiaries have 60 days to respond to a notice that they may or may not receive. By the deadline, the beneficiaries, who are by definition in poverty themselves, must compile a well-documented case for hardship based on information they may or may not have to meet mysterious criteria that they must research. If they miss the deadline, they lose out.

I don't hafter read it; I'm White!

I don’t hafter read it; I’m White!

Clearly, the rules are designed to make it impossible for anyone to qualify. This is reminiscent of Jim Crow voting laws. In addition to paying a poll tax, Black voters were required to provide extensive proof of identity and citizenship and pass “literacy” tests that would have stymied most White citizens in the same municipality.

The hardship rules devised by DHHS are not the rules of a social service agency dedicated to the protection and improvement of the vulnerable and financially constrained. They are the rules of a greedy and overbearing bureaucracy intent on excluding as many heirs from the benefit of the statutory exemption as possible, without regard to eligibility.

The Federal Estate Tax threshold for an individual is $5.43 million and twice that for a couple, but many in this country still oppose the tax because they claim it threatens “family farms.” They also believe that family wealth should pass down generation after generation and protecting $10.86 million from tax for a couple is too limiting.

Just as there is strong sentiment about family farms, many families are very attached to the family home. They do not want to sell the home where the children were raised and the parents grew old. It is not unusual for single men and women in their 60s or 70s to remain in the homes where they grew up.

Because of their sensitivity to the attachments families have to the parental homes and to help less affluent families preserve at least a small amount of wealth, the Michigan legislature protected family homesteads from Medicaid estate recovery up to the exemption amount mentioned above – half of the average cost of a residence in the county. However, DHHS is determined to deprive families of this modest protection through its voracious administrative procedure.

Appallingly, the Michigan Court of Appeals is letting DHHS get away with its rape of estates. In an unpublished opinion, the court held that the personal representative could not assert the homestead exemption in probate court without first seeking a hardship exemption through the futile DHHS administrative process. The case, Department of Community Health v. Estate of Clark, Docket No. 320720 (Mich. Ct. App., May 28, 2015), does not establish precedent because it is unpublished, but it may be an important indication of which way the court is leaning on the issue. Unless other panels of court of appeals judges hold otherwise, the statutory estate recovery homestead exemption will be a dead letter. That would be a sad misfortune for the families of those needing state assistance for the cost of their long-term care.

This blog has previously advised ignoring estate recovery notices and questionnaires.  Where there is no homestead and no probate estate that is still valid advice, although the family should discuss this with an experienced elder law or probate attorney.  A homestead that will require the opening of a probate estate greatly complicates matters.  Estate of Clark, if it is good law, would clearly require the family to file an administrative request for hardship within the 60-day time limit.  Until there is a published opinion, Estate of Clark is the only indication of how the court of appeals views the issue.  If within the 60-day time frame, the family will need to decide whether to request a hardship exemption that will almost assuredly fail, or claim the exemption in probate court.  Many families will miss the deadline for lack of notice or because a probate estate was not opened in time.  The resulting cases will give the court of appeals many opportunities to clarify the requirement to exhaust administrative remedies.

An issue that is not addressed in either Estate of Clark or DHHS policy is the tolling of all periods of limitation under MCLA 600.5852 until two years after a personal representative is appointed.  Therefore, any “applicant” should have two years from the date a personal representative is appointed  to request an administrative determination of “hardship.”

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2015 John B. Payne, Attorney