Committee vote on nursing-home assets threatens Medicaid funds, state says

DEAN OLSEN

SPRINGFIELD -- A state official warned Tuesday that Illinois is at risk of losing at least $1 billion a year in federal Medicaid funds because of a legislative panel’s decision Tuesday on how senior citizens needing nursing-home care can shelter assets.

If not reversed, the decision by the Joint Committee on Administrative Rules could prompt the federal government to deny Illinois between $1 billion and $7 billion in Medicaid funds, according to James Parker, a deputy administrator at the Illinois Department of Healthcare and Family Services.

“We’re very concerned,” Parker said.

Officials from Gov. Pat Quinn’s administration hope to get JCAR to reverse its decision or persuade lawmakers to override JCAR, Parker said.

State officials hope to receive confirmation from the federal government by the end of next week that JCAR’s stance will mean a cutoff of federal matching funds.

Penalize seniors

On a 10-0 vote, JCAR Tuesday stopped HFS’ proposed rules from taking effect. The commission sided with opponents— including elder-law lawyers and senior groups — who said the provisions would penalize seniors and went beyond what is required to implement the federal Deficit Reduction Act of 2005.

One critic of the proposed rules, elder law attorney Diana Law of Aurora, said the potential loss of federal funding is an “empty threat” by the Quinn administration.

But Parker said the administration has been told by the federal Centers for Medicare & Medicaid Services that opponents of the proposed Illinois rules are wrong.

“The people we got the answers from last week, they’re the decision-makers,” Parker said.

State Rep. Angelo “Skip” Saviano, R-Elmwood Park, a co-chairman of JCAR, said JCAR members don’t believe Illinois is at risk of losing federal funds.

Illinois is one of the last states to consider rules needed to comply with the Deficit Reduction Act. The law was designed to save the Medicaid program $3.9 billion over a nine-year period.

The law shrinks loopholes that allow seniors to transfer assets to family members and friends and still qualify for Medicaid. Illinois and California are the last two states working to enact rules.

Law said the department “needs to start over from scratch.”

‘Lookback period’

HFS should “write rules that are fair, write rules that are clear and easy to understand, and … not rules that are just designed to attack, as they say, ‘clever Medicaid planners,’ when they’re hurting the seniors,” Law said.

A key objection to the rules raised by critics focuses on the federal law’s change in the “penalty period,” or the period of time during which the person transferring assets within a “look-back” period will be ineligible for Medicaid.

The look-back period changes to five years from the current three years under the law. The law also changes the way the penalty amount is computed.

The rules proposed by the Quinn administration would extend the new method of computing the penalty amount to asset transfers going back three years from Nov. 1, 2011.

Law and other critics want retroactive enactment of the rules eliminated. They said the new Medicaid eligibility formula should apply only to asset transfers made after the rules take effect.

“There’s going to be the argument that we’re trying to protect rich people,” Saviano said. “Rich people could protect themselves. They’ve got the best lawyers. They’ve got trusts. These are middle-class people we’re trying to protect.”

Dean Olsen can be reached at (217) 788-1543.

Medicaid eligibility for people needing long-term care

*What happened Tuesday: The bipartisan Joint Committee on Administrative Rules stopped the implementation of rules that would retroactively impose a new method of determining Medicaid eligibility for people needing nursing-home care.

*Rationale: The motion adopted by JCAR says the proposed rules would cause nursing home residents “to be penalized with loss of eligibility for Medicaid long term care assistance for actions that, when they were taken, did not violate rules.”

*Response: The Illinois Department of Healthcare and Family Services believes the proposed rules can’t be watered down without jeopardizing billions of dollars in federal Medicaid funds.