Illinois is the latest battleground state where Stotler Hayes Group (SHG) has brought the fight for post-Medicaid eligibility income deductions for recipients of long-term care Medicaid benefits. In an ideal world, residents would have all of their financial affairs in order prior to being admitted to a skilled nursing facility so that they secure Medicaid benefits as soon as they exhaust their insurance coverage or private resources. Anyone in the long-term care industry knows, however, that many residents are unable to secure the Medicaid start-date that they need, which leaves the resident – and their provider – with unpaid bills for services rendered prior to their Medicaid eligibility.

Medicaid is a cooperative Federal and State program intended to assist needy and indigent individuals with the costs of care. In order to receive federal funding, State plans for Medicaid must comply with Federal requirements. The Centers for Medicare and Medicaid Services (“CMS”) has long interpreted unpaid expenses incurred prior to Medicaid approval as “not covered” under the State plan for Medicaid. As a result, Federal law requires State Medicaid programs to deduct unpaid medical expenses incurred prior to Medicaid eligibility when determining the amount of income that a resident is required to contribute toward the cost of his or her care; this amount is known as a resident’s “Cost Share” or “Patient Pay Liability.” In other words, Federal law provides Medicaid recipients the ability to apply their Cost Share/Patient Pay Liability towards uncovered pre-eligibility medical expenses. States are permitted to impose reasonable restrictions and many states have done so – allowing deductions, for example, only for uncovered medical expenses incurred three months (or, in some states, six months) prior to the month of the Medicaid application. Some states have elected to impose no time restrictions and allow for deductions in Cost Share/Patient Pay Liability for uncovered medical expenses regardless of when the expenses were incurred prior to the month of the Medicaid application.

In Illinois, State regulations authorize post-eligibility income deductions for Other Medical Expenses (“OME”) that are not subject to third-party payment and not covered under the Medicaid program. SHG has submitted a number of requests to the Illinois Department of Human Services (“DHS”) for deductions in post-eligibility income to apply towards pre-eligibility long-term care and nursing facility expenses (“OME Requests”). The DHS has systematically failed to process and approve such requests, leaving residents without any means of paying for the costs of their care that were incurred prior to their eligibility for Medicaid benefits.

Currently the DHS’s policy disallows OME Requests for income deductions towards unpaid pre-eligibility long-term care and nursing facility expenses because the DHS views such expenses as “covered services” under the Illinois State Medicaid plan. SHG has encountered and successfully challenged such incorrect policy interpretations in other states. In Texas, for example, the state Medicaid agency previously refused to allow post-eligibility income deductions for nursing home room and board charges that were incurred prior to Medicaid eligibility, in violation of Federal law and the Texas State Plan. SHG attorneys, Nathan Peters, Esq. and Alyssa Desgranges, Esq., brought this issue to the attention of the Texas state Medicaid agency and the CMS in 2015 and demanded corrective action. In 2019, the CMS issued a Corrective Action Letter to the Texas state Medicaid agency and threatened to withhold portions of Medicaid funding until state policies were corrected.

Similarly, the Mississippi state Medicaid agency previously had a policy that a Medicaid recipient could not obtain an income deduction for pre-eligibility medical expenses. In 2018, SHG attorney, Katie Van Lake, Esq., issued a Corrective Action Letter to the CMS demanding that a resident be allowed to apply her Patient Pay Liability to her pre-eligibility uncovered medical expenses. As a result, the Mississippi state Medicaid agency ultimately amended its State Plan to allow Medicaid recipients to apply their income toward uncovered medical expenses incurred prior to eligibility.
As in Texas and in Mississippi, SHG intends to submit a Corrective Action Letter to the CMS regarding Illinois policy on OME Requests and the DHS’ continued and systematic failure to process and approve such requests. Charges for long-term care incurred prior to the resident’s Medicaid eligibility which remain unpaid are allowable deductions from a recipient’s Cost Share obligation under Federal and Illinois State law. Medicaid recipients in Illinois must be afforded the ability to address their uncovered pre-eligibility expenses in accordance with Federal and State law, and SHG intends to fight until the DHS complies with this right.

Check back with SHG for updates on the progress with OME in Illinois. For more information, please contact SHG attorney Melissa Siew, Esq. at [email protected].