What Is Medicaid? Know the Story
Since 2013 I have worked exclusively in Medicare insurance. Many people will ask me, however, ‘What is Medicaid?’ Some of my clients are on both Medicare and Medicaid. Those situations are more complex because you are dealing with two government agencies and a different setup in terms of insurance.
To help clients, I call Nebraska Medicaid or Access Nebraska frequently. During our initial meeting, I determine if prospective clients are eligible for Medicaid and LIS (Low Income Subsidy) through the EXTRA HELP Program. Medicaid and LIS are all based upon total income and assets.
Medicare & Medicaid do not require insurance agents to elp with Medicaid and LIS nor compensate agents for the work, but for those who qualify, the extra support is tremendous. I love to help clients get Medicaid and LIS when they qualify.
On top of figuring out how Medicare works, those who qualify for Medicaid, have an additional challenge as to how to apply for Medicaid. Each state has its own unique approach. But the big questions I hear are: what is Medicaid, where did it come from, what does it cover, how do I qualify, how do I apply for Medicaid, and why doesn’t it help me at my income level? Medicaid has a story, like Medicare.
The story of Medicaid began when Congress established Medicaid as part of Medicare in the Social Security Act of 1965 Title XIX. Individual states administer the federal program. The federal and state governments jointly fund Medicaid. The federal government sets the minimum standards for Medicaid, such as eligibility and coverage benefits, but the states implement and administer the plan. The state implements plans with a certain level of its own discretion.
For example, the state may expand eligibility to a wider group. It may also add additional benefits. Of course, the state will primarily bear the funding burden for those additional members and benefits. As it stands, the federal government covers fifty percent of the cost, except for states with lower per capita costs. The federal government may pay up to eighty percent. As it stands today, Medicaid covers 1 in 5 Americans. That’s a lot!
The benefits covered include inpatient and outpatient acute care services, but what many may not be aware of is that the federal government is also involved in long-term care. As a matter of fact, the federal government is the largest provider of long-term care coverage through Medicaid.
Reform & Leverage
In 1986 constituents complained to their representatives in Congress that nursing home facilities were treating loved ones poorly and not giving them adequate care. Congress commissioned the Institute of Medicine (IOM) to study nursing home care in the nation. IOM discovered widespread abuse, neglect, and inadequate care. The study resulted in sweeping reforms that became law in the Nursing Home Reform Act in the Omnibus Budget Reconciliation Act of 1987.
Patient Bill of Rights
The legislation’s goal was to ensure nursing home residents received quality care to enable them to maintain their “highest practicable” physical, mental, and psychosocial well-being. Congress mandated essential health benefits. Part of the legislation created a “Bill of Rights” for residences. You may have seen that bill displayed in some long-term care facilities when you visited.
- The right to freedom from abuse, mistreatment, and neglect;
- The right to freedom from physical restraints;
- The right to privacy;
- The right to accommodation of medical, physical, psychological, and social needs;
- The right to be treated with dignity;
- The right to communicate freely;
- The right to participate in the review of one’s care plan, and to be fully informed in advance about any changes in care, treatment, or change of status in the facility;
- The right to voice grievances without discrimination or reprisal.
Because the federal government pays so much money to long-term care facilities, the industry quickly complied.
Monitoring Care For Medicaid Beneficiaries
There is over 1.6 million elderly and disabled receiving care in over 11,000 institutions. Nursing homes must be certified to receive Medicare and Medicaid reimbursements. The law requires states to perform inspections of facilities and surveys of residents annually and conduct investigations of complaints. They are the primary enforcer of Medicaid.
CMS Means Business
When violations are found, remedies and penalties may be imposed. Everything from the closure of the facility, monetary and criminal penalties, to the retraining of staff depending on the severity and widespread nature of the problem. You can check out the star rating for nursing homes at this link on Medicare.gov.
Medicaid Is Not Perfect
The major challenge for nursing homes is they may become dependent upon federal and state funding for their operations. For those institutions with a large Medicaid population, the reimbursement is 75—80 percent of what private insurance residents pay. Maintaining a facility at the level that Medicaid requires with inadequate funding may result in a bare-bones operation. It can also result in slipping out of compliance with the federal guidelines.
Deficit Reduction Act of 2005 (DRA) attempts to address the issues of inadequate funding. Nursing home residents who are on Medicaid can no longer be evicted without due process. Nursing home workers undergo background checks and standardized levels of training. Those convicted of abusing residents are placed on a national register of workers who have abused nursing home patients.
Another idea in DRA is a provision for states to partner with private long-term care insurance companies. The rules allow for the amount of LTC policy, such as $250,000, to be used to protect an equal amount of the person’s assets. Instead of spending down a person’s assets to nothing so he/she can then go on Medicaid, an equal amount of assets would be protected if a person purchased nursing home insurance.
Medicaid Planning Techniques
DRA legislation enacted prohibitions again “Medicaid planning” techniques. Some attorneys and financial planners were devising ways to move assets out of a person’s estate so that Medicaid and the state would not make claims against nursing care costs after the person passed. They would also transfer assets to family members to reduce the individual’s net worth and more quickly impoverish the person to make them a county ward.
Clawback provisions and penalties going back some time as far as five years to discourage persons from moving or hiding assets were enacted.
Obamacare and Medicaid
The next big change to Medicaid came with the Patient Protection and Affordability Act of 2010 (ACA), a.k.a. Obamacare. The Affordable Care Act (ACA) required states to expand Medicaid to all citizens under 65 with incomes less than 138 percent of the federal poverty guideline. The federal government guaranteed funds for the first three years.
The U.S. Supreme Court ruled that provision of the ACA was unconstitutional because of its coercive nature to the states. The Medicaid expansion, however, remained intact but was left to the states to implement.
Nebraska implemented the ACA Medicaid provision in October of 2020 after state Initiative 427 was affirmed by the voters. Nebraska partners with private insurance companies to add managed care plans.
A major challenge for Medicaid is still reimbursement. Because the Medicaid reimbursement is so low, nursing homes, doctors, and other healthcare facilities are less enthusiastic about taking on more or even any Medicaid recipients. In 2012, CMS adjusted the payment amounts for primary care physicians, so they were paid and for Medicare beneficiaries as for Medicaid recipients. Doctor surveys, however, give the same consistent feedback that lower Medicaid reimbursements diminish access to medical providers.