Government researchers scratched the surface of the claim that nursing-home residents defraud the government by transferring assets to qualify for Medicaid and concluded that states do little to monitor transfers, according to a Government Accountability Office report released this month.
Congressional Democrats used the report to criticize the Medicaid Commission's proposed changes to rules governing asset transfers and said in a news release the report shows that states need to increase their ability to track transfers. The proposed changes would leave providers stuck with bills, create discharge problems for hospitals and do little to change the gaming of the system, the critics said.
The Democrats' news release was sent out by members of House Energy and Commerce Committee's Health Subcommittee and cited Reps. John Dingell of Michigan, Sherrod Brown of Ohio and Henry Waxman of California. Republican representatives didn't respond to requests for comment by deadline.
The GAO issued the report because tightening rules on asset transfers has been targeted as a way to reduce spending on Medicaid, which is increasingly being used to fund nursing-home care. In 2004, spending on long-term care accounted for $93 billion, or 31.5%, of Medicaid's $295 billion in expenditures, and the spending is expected to more than double in 10 years, according to the report.
Anecdotal evidence suggests that improper transfers add to Medicaid spending; in those cases, individuals shelter assets by transferring them out of their name or into an annuity to qualify for Medicaid long-term-care coverage, according to the GAO report. To qualify, applicants must meet financial and functional eligibility criteria, which vary among the states. Based on interviews with nine states, the GAO said they mostly rely on applicants' self-reporting of asset transfers.
The Medicaid Commission, which was asked to submit a plan to cut the program by $10 billion over five years, suggested changes to the asset-transfer rules that could save $1.5 billion over five years, according to the commission's proposal sent to HHS in September.
The proposed changes would extend the look-back period-the time Medicaid applicants' asset transfers are reviewed-to five years from three years. They would also shift the start of the penalty period-the time Medicaid won't pay for long-term care because of improper transfers-to the date the beneficiary applied for Medicaid as opposed to the date the transfer was made.
Transfers are considered improper when individuals receive less than fair-market value in return.
Paul Cotton, a senior legislative representative for the AARP, said closing loopholes that allow transfers that aren't calculated into Medicaid eligibility would be a better way of making sure individuals who can afford long-term care don't qualify for Medicaid, he said.
The commission's proposal would leave low-income nursing home residents without needed Medicaid coverage, Cotton said, while providers wouldn't be reimbursed for services and hospitals would face discharge problems.
Hospitals will have trouble discharging patients to nursing homes because the long-term-care provider won't likely accept patients who have no means to pay for their stay, he said.