State Medicaid offices target dead people's homes
WASHINGTON >> As Salvatore LoGrande fought cancer and all the pain that came with it, his daughters promised to keep him in the white, pitched roof house he worked so hard to buy all those decades ago.
So Sandy LoGrande thought it was a mistake when, a year after her father's death, Massachusetts billed her $177,000 for her father's Medicaid expenses and threatened to sue for his home if she didn't pay up quickly.
“The home was everything,” to her father said LoGrande, 57.
But the bill and accompanying threat weren't a mistake.
Rather, it was part of a routine process the federal government requires of every state: to recover money from the assets of dead people who, in their final years, relied on Medicaid, the taxpayer-funded health insurance for the poorest Americans.
A person's home is typically exempt from qualifying for Medicaid. But it is subject to the estate recovery process for those who were over 55 and used
Medicaid to pay for longterm care such as nursing home stays or in-home health care.
This month, a Democratic lawmaker proposed scuttling the “cruel” program altogether. Critics argue the program collects too little — roughly 1% — of the more than $150 billion Medicaid spends yearly on long-term care. They also say many states fail to warn people who sign up for Medicaid that big bills and claims to their property might await their families once they die.
LoGrande says that's how she ended up in a two-year legal battle with Massachusetts after her father died. Several years before he died in 2016, she had turned to a local nonprofit for advice on caring for her elderly father. The group suggested she sign him up for Medicaid. She even remembers asking about the house, but was assured the state would only seek the house if it sent her father to a nursing home.
“He never would have signed on with anything that would put his home in jeopardy,” she said.
For years, her father got an annual renewal notice from the state's Medicaid office. She says it wasn't until after his death, when the state's demand for $177,000 arrived, that she saw the first bill for his care, which included a brief stint in the hospital for pain from cancer, medications and hospice.
“That's what ripped my guts out,” LoGrande said. “It was dishonest.”
The state settled with the LoGrandes in 2019 and released its claim on the house.
State policies around this recovery process vary widely, according to a 2021 report from the Medicaid and CHIP Payment and Access Commission, which makes policy recommendations to Congress.
Some states will put a lien — a legal right — on a home while others don't. Meanwhile, some Medicaid offices try to recoup all medical costs from patients, like doctor visits or prescriptions, while others just pursue the costs for long-term care. Alaska and Arizona pursued just dozens of properties in recent years while other states go after thousands of homes, totaling hundreds of millions of dollars.
New York and Ohio topped the country for such collections, recovering more than $100 million combined in a single year, a Dayton Daily News investigation found.
An investigation into the Kansas program, released Tuesday by the Health and Human Services inspector general, found that program was cost-effective — yielding $37 million while only spending $5 million to recover the money, But the state didn't always collect the money from estates that were eligible.
Last month, a foundation for one of the industry's biggest health insurance giants called on Massachusetts to overhaul its process, which includes collecting reimbursement for most Medicaid costs, beyond the federal government's minimum requirement to recover long-term care expenses. The Blue Cross Blue Shield Foundation of Massachusetts recommended the state Legislature pass a law that would prohibit those additional collections.
Estate recovery “has the potential to perpetuate wealth disparities and intergenerational poverty,” said Katherine Howitt, a Medicaid policy director with the foundation.
Earlier this month, Democratic Rep. Jan Schakowsky of Illinois reintroduced legislation that would end the federal government's mandate. Schakowsky believes the rule is a losing proposition for families, who give up their homes, and taxpayers, who don't see big returns from the recovery efforts.
“It is one of the most cruel, ineffective programs that we see,” Schakowsky told The Associated Press. “This is a program that doesn't work for anybody.”
In a gridlocked Congress, where some Republicans are clamoring to trim Medicaid entitlements, the bill is unlikely to garner the bipartisan support needed to become law.
There's at least one person who acknowledges the rule isn't working: the man who engineered it.
Many people don't know about the decades-old mandate, which was intended to encourage people to save for long-term care — or risk losing the equity from their home, explained Stephen Moses, who now works for the conservative Paragon Health Institute.