AF­TER DEATH, MEDI-CAL BILL

Leg­is­la­tion would limit col­lec­tions from es­tates

Los Angeles Times - - BUSINESS - By Stu­art Pfeifer

The state’s Medi-Cal pro­gram has long looked to the es­tates and heirs of de­ceased Cal­i­for­ni­ans to re­coup public money spent on their health­care in the last years of life.

But the prac­tice — in­clud­ing su­ing sur­vivors and fil­ing liens against the homes of poor fam­i­lies — is com­ing un­der attack in Sacra­mento.

On Thurs­day, the state Se­nate ap­proved, 33 to 0, a bill by state Sen. Ed Her­nan­dez (D-West Cov­ina) to or­der ma­jor changes in the Medi-Cal re­cov­ery pro­gram. It now goes to the As­sem­bly.

If signed into law, Se­nate Bill 33 would limit the state’s abil­ity to go af­ter homes “of mod­est value,” al­low­ing sur­vivors hard­ship ex­emp­tions for homes with fair mar­ket value of 50% or less of the county av­er­age. It would also pro­hibit seek­ing money from the es­tates of sur­viv­ing spouses.

The bill tar­gets Cal­i­for­nia-spe­cific pro­vi­sions of the re­cov­ery pro­gram, which are more ag­gres­sive than re­quired by fed­eral Med­i­caid reg­u­la­tions.

Her­nan­dez took in­ter­est af­ter learn­ing that many poor fam­i­lies were re­luc­tant to sign up for Medi-Cal be­cause they didn’t want the state col­lect­ing af­ter they died. Tak­ing from es­tates and heirs “need­lessly pro­longs poverty,” he said Thurs­day.

“Cal­i­for­ni­ans shouldn’t be forced to put their house on the line in or­der to re­ceive ba­sic health­care ser­vices,” he said.

Since 1993, Cal­i­for­nia has re­cov­ered more than $1 bil­lion from Medi-Cal re­cip­i­ents’ es­tates — and that num­ber could swell as thou­sands more low-in­come peo­ple sign up for Medi-Cal as part of the Af­ford­able Care Act. Al­most a third of all Cal­i­for­ni­ans get some kind of as­sis­tance from Medi-Cal.

The $1 bil­lion seized came from the es­tates of Medi-Cal re­cip­i­ents who died leav­ing be­hind as­sets, of­ten their homes. If heirs do not vol­un­tar­ily pay off the Medi-Cal debt, or win hard­ship ex­emp­tions, Cal­i­for­nia of­fi­cials file law­suits to col­lect the debt in court.

The state’s re­cov­ery ef­forts take many sur­vivors by sur­prise. Linda Con­der, a 67year-old Whit­tier woman, said she had no idea she could have taken steps to pro­tect her mother’s as­sets from col­lec­tion.

The state sued her in March, seek­ing $120,000 her

‘Cal­i­for­ni­ans shouldn’t be forced to put their house on the line in or­der to re­ceive ba­sic health­care ser­vices.’ —ED HER­NAN­DEZ, state se­na­tor

mother held in a bank ac­count when she died in 2010. Medi-Cal had paid that amount to cover her mother’s care be­tween 1999 and 2003.

“If you’re wealthy enough, you can set it up in a cer­tain way” to avoid col­lec­tion, she said. “We didn’t know that. We don’t have at­tor­neys work­ing for us. That’s not the way ev­ery­day Amer­ica works.”

Pro­po­nents of na­tional col­lec­tion ef­forts note that Med­i­caid (called Medi-Cal in Cal­i­for­nia) was in­tended as a last re­sort for peo­ple with no means to pay for health­care — not a way to pre­serve as­sets they hope to pass down to heirs.

“Med­i­caid has been and should be the pro­gram of last re­sort for peo­ple who re­ally have nowhere else to go,” said Matt Salo, ex­ec­u­tive direc­tor of the Na­tional Assn. of Med­i­caid Di­rec­tors. “For peo­ple who do have op­tions, for peo­ple who do have means, you re­ally shouldn’t be re­ly­ing on Med­i­caid for long-term care cov­er­age.”

This year, the state also sued the chil­dren of Trinidad and Maria Acosta to col­lect the $160,000 that Med­i­Cal paid for the cou­ple’s nurs­ing home stays be­fore they died. The Acostas left be­hind one as­set, their home in the Cy­press Park neigh­bor­hood of Los An­ge­les.

The im­mi­grants from Guadala­jara, Mex­ico, had worked hard to reach that goal — Trinidad as a welder, Maria a seam­stress. One day, they thought, the twobed­room home would be passed down to their five chil­dren: Maria, Juan, Rigob­erto, Fran­cisco and Gabriela.

But af­ter the Acostas died, the state Depart­ment of Health Care Ser­vices sued their chil­dren, seek­ing more than $160,000, money that could come from only one place: the 1,056-square-foot home in which they were raised.

Fed­eral law re­quires states to re­cover from the es­tates of de­ceased peo­ple who re­ceived Med­i­caid as­sis­tance for long-term med­i­cal care, in­clud­ing nurs­ing homes.

But Cal­i­for­nia takes it one step fur­ther, col­lect­ing for nearly all med­i­cal ser­vices for peo­ple 55 and older cov­ered by Medi-Cal.

There are ex­cep­tions. The state doesn’t col­lect if the per­son who died has a child un­der age 21, or a child who’s dis­abled. If there’s a sur­viv­ing spouse, the state holds off un­til that spouse dies.

When Trinidad Acosta died in 2000, the state didn’t col­lect the $72,000 that Medi-Cal had spent to cover his stay in a nurs­ing home be­cause his wife was still alive. But af­ter Maria Acosta died in 2011, the state put in a $162,000 claim against her es­tate — for the $90,000 Medi-Cal spent on her health cov­er­age, plus the money it had spent on her hus­band.

The cou­ple’s daugh­ter Maria Vil­le­gas said the only way they can pay that bill is to sell their par­ents’ home on Arvia Street. It’s a shame, she said, be­cause her par­ents had worked hard to pay off the home.

“I saw my par­ents strug­gle to buy that home and pride they had in keep­ing that house,” Vil­le­gas said. “It was a le­gacy they left to us.”

Sell­ing the home to pay the Medi-Cal col­lec­tors would not be easy; two of her broth­ers live in the home and are un­em­ployed, she said.

“God will­ing, they have a lot of years ahead of them. Where will they go? They’ll be home­less,” she said.

Mar­garet Hoffeditz, chief of the re­cov­ery branch of the state Depart­ment of Health Care Ser­vices, said the state will not evict heirs from a home. Rather, the state would place a lien on the prop­erty and col­lect only when the home is sold — even if it’s decades later.

“We’ve never forced the sale of a home.... We’re not in the busi­ness of toss­ing peo­ple out onto the street,” Hoffeditz said.

The depart­ment also al­lows heirs to make hard­ship claims and will, in some cases, re­duce or for­give Medi-Cal debts, she said. In the fis­cal year that ended June 30, the depart­ment granted more than 100 hard­ship claims, agree­ing to re­duce or elim­i­nate the debt.

The state’s com­pas­sion­ate col­lec­tion ef­forts are of lit­tle com­fort to Anne-Louise Ver­non, a 60-year-old un­em­ployed woman who said she was forced to choose Medi-Cal when she signed up for in­sur­ance un­der the Af­ford­able Care Act be­cause she did not make enough to be el­i­gi­ble for other poli­cies.

Now, the pre­mi­ums that Medi-Cal pays for her pol­icy with Kaiser Per­ma­nente — about $600 a month — are ac­cu­mu­lat­ing as a bill that will be col­lectible from her es­tate, which would in­clude a home near San Jose.

“Re­mem­ber, now it’s against the law not to get health in­sur­ance,” Ver­non said. “To be forced into a debt against your will, it’s ugly.”

Gov. Jerry Brown ve­toed a sim­i­lar bill from Her­nan­dez last year. Lim­it­ing Medi-Cal es­tate col­lec­tion could cost the state about $25 mil­lion a year, by some es­ti­mates.

Her­nan­dez said he is op­ti­mistic about the bill’s chances this year. “Gov. Brown has the power to stop es­tate re­cov­ery,” he said Thurs­day, “ei­ther through the bud­get or by sign­ing this bill. I trust that he will make the right choice this year.”

‘Med­i­caid has been and should be the pro­gram of last re­sort for peo­ple who re­ally have nowhere else to go.’

—Matt Salo, ex­ec­u­tive direc­tor, Na­tional Assn. of Med­i­caid Di­rec­tors

Ch­eryl A. Guer­rero

THE STATE sued Linda Con­der, shown with hus­band Mike, to re­cover $120,000 her mother had in a bank ac­count when she died in 2010. Medi-Cal had paid that amount for her mother’s care from 1999 to 2003.

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