Maine could face a drastic surge in Medicaid spending for long-term medical care if nothing is done to address a broken estate recovery system, according to a report released on Thursday by the nonpartisan Center for Long-Term Care Reform (CLTCR).
The current system, according to CLTCR President Stephen A. Moses, allows individuals to artificially self-impoverish – i.e. hide their wealth – in order to be eligible for taxpayer-funded long-term care coverage under MaineCare.
“Maine should look at this problem through the windshield and not the rearview mirror, because you’re speeding headlong toward a brick wall of fiscal reality,” said Moses during a Maine Heritage Policy Center (MHPC) luncheon in Portland. “The way Medicaid covers long-term care is problematic and it’s only going to be a bigger problem in the future,” said Moses.
The report, “Maximizing NonTax Revenue from MaineCare Estate Recoveries,” is a detailed look at how the state funds MaineCare coverage for long-term care. It was produced through the collaboration of CLTCR, MHPC and the Maine Health Care Association (MHCA).
The report examines how state can prevent a future fiscal catastrophe by strengthening its recovery of assets from deceased recipients of MaineCare, Maine’s Medicaid program.
MaineCare is a means-tested public assistance program, partially funded by the state and federal governments. It is the dominant payer for institutional, home and community-based long-term care in Maine. When a long-term care patient covered by MaineCare dies, federal law mandates that the state recover the cost of care provided from that individual’s estate or from the estates of surviving relatives.
According to the report, Maine’s current estate recovery system is “lean and effective,” capturing roughly $25 for every $1 spent on recovery. Yet despite this remarkable return on investment, the system is still too lax and allows individuals to game system by hiding assets from the state, meaning relatively wealthy individuals can use simple accounting gimmicks in order to avoid paying for long-term care out of their own pockets.
The problem was first highlighted by a 1988 report of the Inspector General of the U.S. Department of Health and Human Services. According to that report, Medicaid’s original authorizing legislation “severely limited State authority to restrict asset transfers, impose liens, or recover the cost of care from recipients. For many years, anyone in need of long-term care could give away everything and qualify for nursing home institutionalization paid for by Medicaid without any concern for repayment.”
Although several attempts have been made at the federal level to prevent people from hiding assets in order to receive long-term care at taxpayers’ expense, Moses says additional reforms are needed in Maine in order to stem a growing problem.
By interviewing experts in eight of the leading Medicaid estate recovery states, Moses identified numerous ways in which MaineCare might increase its estate recoveries by as much as double or triple the amount of current recoveries to a total of $13.4 million or $20.1 million.
The report recommends that policy makers seek new statutory authorities such as an expanded definition of “estate,” the ability to place liens on real property during a MaineCare recipient’s lifetime, and the elimination of the current “family allowance” which prevents recovery from estates with less than $10,000 in most cases.
Read the full report below: