Posts Tagged ‘Nursing Homes’

Guardianship Fees Deducted From Patient’s “Share of Cost”


Mary Perry was admitted to a Massachusetts hospital in 1991. After treatment was completed, the hospital sought her discharge to a nursing home that November. Unfortunately, Ms. Perry lacked both capacity and resources.

The Massachusetts court appointed a guardian to make placement decisions for her, and she was promptly placed in an appropriate nursing home. A Medicaid application was completed, and Ms. Perry qualified for government assistance with her nursing home expenses.

Once Ms. Perry’s care was arranged and eligibility obtained, the Medicaid agency turned to the question of how much Ms. Perry would need to contribute (from her monthly Social Security check) toward her care. Ms. Perry’s “share of cost” was calculated, and payments began.

Meanwhile, Ms. Perry’s guardian sought approval of the fees and costs incurred in securing the guardianship, making (and implementing) the placement decisions and applying for Medicaid coverage. The Massachusetts court approved the guardian’s fees, and ordered that payments could be made from her monthly Social Security check.

Unfortunately, Ms. Perry’s personal needs allowance (the state Medicaid program was leaving her only a small amount each month) was insufficient to both provide for her personal needs and pay the accumulated guardianship fees. Ms. Perry’s guardian therefore applied for a reduction in the “share of cost” amount to permit the guardian’s fees to be paid. In support, the guardian argued that the fees were required to obtain medical care, and that medical expenses may be deducted from the share of cost amount.

Massachusetts’ Medicaid agency denied the request, citing HCFA (Health Care Financing Administration) regulations categorizing guardianship expenses as not related to medical costs. The guardian appealed to the state courts.

The Massachusetts judge has now ruled that guardianship costs are “necessary medical expenses” when they are required to obtain consent to medical treatment. Under the law of informed consent, Ms. Perry’s treatment could not be undertaken without approval from a surrogate; since she had made no provision for surrogates herself (such as by executing a power of attorney for health care), the guardianship was required before treatment decisions could be made. Perry v. Bullen, Mass. Super. Ct., May 31, 1996.

Arizona law is similar to Massachusetts’ provisions, and a similar result might be expected. ALTCS regulations provide that the share of cost may be reduced by a “noncovered medical or remedial expense” incurred during the three months before application, but then makes a list of allowable expenses. Not surprisingly, guardianship (or legal) fees are not included. ALTCS does permit “other non-covered medically necessary services which the member petitions AHCCCS for and which the Director approves,” (ALTCS Eligibility Policy and Procedure Manual §1016.2.C.2.b.vii) but it seems unlikely that would quickly concede the point.

Nonetheless, guardianship may legitimately be required before nursing home placement can be secured and an ALTCS application completed. How can these expenses be paid if the ward has no assets? One obvious choice is to make a referral to the Public Fiduciary’s office, but if family are actively involved they may be instructed to initiate their own proceeding. If family members are reluctant (or have insufficient resources to pay for the guardianship themselves), the facility may find itself at an impasse.

Relying on the logic of the Perry case, an argument can be made that the costs of securing the guardianship should be paid from the patient’s ultimate share of cost calculation. While this result might not be easily obtained, Perry gives valuable support.

Gifts By Medicaid Applicants Are Not The Problem, Study Says


It is (as of January 1) a federal felony for those facing nursing home placement to make gifts for the purpose of becoming eligible for Medicaid (in Arizona, ALTCS) coverage. Much has been written about the ambiguity and unenforceability of the new law. For example, Elder Law Issues, November 25, 1996, and August 19, 1996, focused on the meaning, history and poor drafting of the new enactment.

Now Congress is considering repeal of the two-week old criminalization provision. Congressman Steven La Tourette, a second-term Republican from Ohio, has introduced House Resolution 216, which would strike the new section of Medicaid law before the first prosecution could be threatened. Powerful forces in Washington, including the AARP and other advocacy groups, have lobbied forcefully for the repeal. Indications are that the threat of jail for middle-class seniors will now fade away.

The legislative assumptions underlying the original enactment of this punitive law have remained unchallenged, however. According to some in Congress (and, more importantly, lobbyists for the long-term care insurance industry), the practice of making gifts to qualify for Medicaid is widespread and is costing state and federal governments millions of dollars. Sadly, Congress appears to have bought into this myth without question, and in spite of the actual evidence.

In a study prepared for publication in the periodical Generations, Washington researcher Joshua Wiener of the Urban Institute has analyzed the actual incidence of transfers by seniors. His conclusion: both the numbers of persons making transfers and the amount of money transferred to obtain Medicaid eligibility are much lower than commonly thought.

Wiener notes earlier research which shows that three quarters of nursing home admittees are already impoverished, with less than $50,000 in assets other than their homes. Over half had less than $10,000 of cash available. In other words, the typical nursing home admittee is able to pay for less than six months of nursing home care (and less than two months in many communities, with sharply higher nursing home costs) in any event. It is unrealistic to expect any substantial cost savings for the Medicaid program from further restrictions on transfer rules.

Furthermore, historical data indicates that seniors infrequently give away their assets to become eligible for nursing home assistance. Between 1988 and 1992, Congress substantially liberalized the rules for married couples to become eligible for Medicaid, while simultaneously clarifying the transfer rules. During that time, the portion of nursing home residents covered by Medicaid increased by only two percentage points. Wiener notes that the increase should be almost entirely attributable to the change in married couple rules, suggesting that the number of people making gifts to become eligible must be almost insignificant.

Finally, Wiener notes that the administrative costs attendant on any plan to reduce transfers must be considered. In the case of Congress’ ill-conceived plan to criminalize gifts, for example, the costs of administrative rule-making, prosecution and incarceration might exceed any reduction in Medicaid costs.

On a related issue, Wiener also assesses the effect of new, stronger federal rules on estate recovery. As a practical matter, estate recovery programs rely on Medicaid recipients retaining an interest in their homes throughout their nursing home stay; research suggests that only 14% of Medicaid recipients own their homes at the time of institutionalization, so the possibilities for recovery are not high. In Oregon, the state with the best record of estate recovery, about 2.5% of Medicaid costs are recovered.

California Nursing Chain Must Change “Guarantee”


Eunice Walker, an elderly California resident, suffered a massive stroke in August, 1990. She was admitted to a local hospital for a short period, but when the treatment failed to return her to her former level of independence the hospital informed her that she would need to find a nursing home placement.

Because Ms. Walker was not able to make her own placement arrangements her daughter, Darlene Brozovich, actually made the contacts with nursing homes and selected a suitable placement for her mother. Her choice was to place Ms. Walker in Hillhaven Hospital of Orange, California.

When Ms. Brozovich arrived at Hillhaven to sign her mother in, she was presented with a stack of admitting papers. The director of Hillhaven told her she would need to sign all the forms, and that they were “routine.” She was also told that Medicare would “cover” her mother’s care. What she was not told was that she signed a “Guarantee of Payment” promising to pay for her mother’s care in the event that other sources were unavailable or insufficient.

Ms. Brozovich’s situation was not unique. In fact, the Hillhaven nursing home chain (which owns 42 California nursing homes) routinely included a guarantee of payment in their admission forms, and scores of family members unknowingly signed such forms. When Hillhaven sought to secure payment from Ms. Brozovich, she joined with other family members of Hillhaven patients to sue the chain over its admission practices.

Hillhaven, in turn, pointed out that its “Guarantee of Payment” form clearly provided that the person applying for admission “is not required, and cannot be required, to sign a Guarantee of payment as a condition of admission” to the facility. The chain also noted that family members received some benefit from guaranteeing payment, since the form provided that the patient would be given an additional 15 days notice before discharge for nonpayment (federal law already required 30 days notice), and would be provided copies of all billings.

Ms. Brozovich and the other plaintiffs had several counter-arguments. Since the patients were already entitled to copies of billings, they said, agreeing to give an additional copy to family members was not much of a concession on the part of Hillhaven. Similarly, agreeing to extend the 30-day period for notice of discharge to 45 days was not much additional benefit. Since Hillhaven had not given family members any additional benefit, Ms. Brozovich argued, the “agreement” to guarantee payment was unenforceable.

More importantly, the plaintiffs insisted that Hillhaven’s practice of including the guarantee in a thick packet of “routine” forms was a deceptive practice. Last week, the California Court of Appeals agreed. The Court objected to “an admissions process in which a stack of documents was hurriedly presented with little or no explanation.” The Court also found that the practice of calling the family member securing admission a “responsible party” confused the issue; family members were led to believe that they had no choice but to pay for their loved ones’ care.

The Court of Appeals sent the matter back to the trial court for further action, but with instructions. Among the requirements imposed by the Court of Appeals: Hillhaven must fully and completely explain the guarantee form both orally and in writing, and must clearly tell applicants that they need not sign the form. Podolsky v. National Medical Enterprises, Inc., Oct. 29, 1996.

[Editor’s note: Arizona law provides an additional defense against “third-party guarantees” where the family member signing the form is married, but the practice of securing signatures from “responsible parties” is widespread.]

Nursing Home Costs, Hospital Admissions and Hospice Use

APRIL 29, 1996 VOLUME 3, NUMBER 44

This week, Elder Law Issues reports a number of trends, statistics and individual items which we have been collecting for weeks. None warrants its own Issues article, and yet each is interesting enough to justify mention.

Nursing Home Costs

Figures have been released for the cost of nursing home (and other health care) in 1993. More recent statistics are not yet available.

Nursing home expenses totaled $69.6 billion in 1993. Money for nursing home care came from both private and government sources. Among the latter, Medicaid (including Arizona’s ALTCS program) paid 51.7%, Medicare 6.5% and all other government sources (including the Veteran’s Administration) 4.4%. The remaining (private) sources of nursing home funds consisted mostly of insurance payments (2.5% of the total) and out-of-pocket payments by private individuals, which accounted for 33% of the costs.

These figures reflect an increase in the share paid by private insurance, though it remains a small part of the nursing home financing picture. The government’s share of nursing home expenses (as well as all other medical expenses) continues to increase. Although nursing home figures for 1994 are not yet available, total medical expenses increased by about $50 billion, or just under 6%. Of that increase, government sources accounted for $33 billion, though remaining slightly smaller than the share paid by individuals and insurance companies.

While Medicare pays a small fraction of nursing home costs, the picture is quite different for home care services. Medicare accounted for 38.8% of such payments in 1993, while Medicaid paid only 15.5% and other government programs picked up .5% of home care costs. Private insurance paid another 12.2% of the cost of home care, and patients’ out-of-pocket expenses totaled 20.8%.

Hospital Admissions

According to the American Hospital Association, hospital use by elderly patients increased in the first quarter of last year. Quarterly statistics show that utilization is highest in the first quarter of each year, but that the increase in 1995 over 1994 utilization was about 4%. Nonetheless, the total number of hospital days actually dropped; the average length of stay for elderly patients fell from 8 days to 7.3 days during that time period.

Critics of the efforts to reduce hospital costs in recent years frequently refer to current discharge practices as getting patients out of the hospital “sicker and quicker.” Utilization statistics clearly support the “quicker” part of the formulation, in any event. One result of this trend: defying recent trends, medical costs increased less than the consumer price index.

Hospice Underutilized

According to the National Hospice Organization, hospice services continue to be implemented in a small minority of cases where they would be appropriate. The Organization estimates that in 1994 fewer than 15% of eligible Medicare patients actually enrolled in hospice.

Many Medicare recipients are unaware of the terms of the hospice benefit, which is considerably more generous than other Medicare programs. In most circumstances, hospice enrollees pay no co-payments or deductibles, and have all prescription drugs provided. By contrast, Medicare beneficiaries (except those enrolled in Medicare HMOs) usually pay for all their own medications, and 20% of the approved cost of most other outpatient medical treatment.

Because of the perceived underutilization of hospice programs, federal law now requires hospitals and nursing homes to specifically consider hospice benefits at the time of discharge. The new law became effective in November, 1995.

Family Caregivers: Elder Care in a Post-Federal Era?

APRIL 15, 1996 VOLUME 3, NUMBER 42

Since the adoption of Medicare and Medicaid in the mid-1960s, nursing home placement has become the norm for seniors needing nursing services. Now that legislators are actively working to scale back the cost and scope of both federal and state programs providing elder care, new approaches to caregiving are being considered.

According to a recent Wall Street Journal article, one of those “new” approaches to elder care is decidedly old-fashioned. The article reports on a budding trend toward family members providing care in their own homes.

The article reports on the Bodlander family in Washington, D.C. Mother Lucy Bodlander, 80, requires assistance with activities of daily living, but family members have decided to provide that assistance at home. Mrs. Bodlander’s two children, Deborah and Gerald, alternate caring for their mother, moving her between their homes each month. Along with Mrs. Bodlander’s personal effects, they transfer one other thing each month: a full-time caretaker who lives with Mrs. Bodlander at whichever child’s house she currently calls home. The children also pay the cost for the caregiver, which averages about $2,000 to $3,000 per month.

With federal cutbacks in Medicaid and Medicare, such arrangements may become more commonplace. Currently, elders and their families pay about two-thirds of in-home care costs (up from slightly over half in the early 1980s). Elders, family and friends account for over three-quarters of all long-term care already, much of that through unreimbursed caregiving.

The Wall Street Journal article also reported on several trends which may assist with family caregiving in the future:

  • Better support for caregivers. Government, employers and others are recognizing the importance of family caregiving and the need for support and respite.
  • More flexible long-term care insurance. Home care benefits are becoming more common and more flexible, though the cost of policies remains high.
  • Technology. In-home monitors, telemedicine and other technologies promise to make care more effective and less expensive.
  • Innovative programs. In-home services, ranging from snow removal to home repair, are being developed in select elder markets.

(Elder) Figures Never Lie …


Discussions about the future of long-term care in the United States are obviously dependent on the current and projected extent of the need for care. While many working in the field have an intuitive feel for the frequency of use of nursing homes, the statistics can nonetheless be surprising.

Admission Rates

According to a 1991 article in the New England Journal of Medicine, 33% of men turning 65 in the prior year would spend at least some time in a nursing home. For women, that number grew to 52%.

While total admissions for women are significantly higher, short-term admissions are much less sex-dependent. Of that same 65-year-old group, 21% of women and 19% of men will be admitted for stays of less than one year. But for longer stays, women begin to dramatically outnumber men.

10% of men and 18% of women will spend between one and five years in the nursing home. Only 4% of the 65-year-old men will spend more than five years in the nursing home, while 13% of their female counterparts will do so.

Nursing Home Financing

According to the American Association of Retired Persons, over half of the cost of nursing home care is paid by the federal-state Medicaid program (ALTCS in Arizona). The actual figure is 51.7% of all nursing home costs, compared to 8.8% for the Medicare program and 2.2% for other public programs.

Long-term care insurance and medical insurance account for 2.4% of nursing home costs, with private programs (such as charities) provide 2.2%.

The remaining 33% of nursing home costs are paid by patients from their income and savings. It is not clear, however, whether the patients’ “share of cost” contributions to Medicaid coverage are included in this statistic.

1996 Medicare and Social Security Rates

Although numbers may change as the budget compromise takes final shape, 1996 numbers for Medicare and Social Security are currently in place. Until further changes, the following figures apply:

Medicare Part A

Hospital Deductible $736/illness
Daily Coinsurance (Hospital)
Days 1-60 $0
Days 61-90 $184
Lifetime Reserve $368
Daily Coinsurance (Skilled Nursing)
Days 1-20 $0
Days 21-100 $92
Premium (for those not otherwise qualified) $289/month

Medicare Part B

Premium $42.50/month
Deductible $100/year
20% of approved charge
Balance Billing
15% of approved charge

Social Security

Cost of Living Adjustment 2.6%
Retirement Earnings Limits
Age 65-69 $11,520/year ($960/month)
($1 in benefits withheld for every $3 of earnings over the limit)
Under 65 $8,280/year ($690/month)
($1 in benefits withheld for every $2 of earnings over the limit)
Maximum SSI Benefit
Individuals $470/month
Couples $705/month

Support for Spouses of Medicaid Recipients


In two recent cases, courts have dealt with support for the spouses of nursing home patients receiving benefits through Medicaid. In both cases, despite court orders the support actually provided to the spouses was diminished.

Share of Cost Calculated

Gustav Gomprecht resided in a New York nursing home while his wife lived in their home. After he became eligible for Medicaid subsidies, the Human Resources Administration determined that Mrs. Gomprecht was entitled to receive $307 per month from her husband, and that the remainder of his income must be paid to the nursing home.

Mrs. Gomprecht brought an action in Family Court (New York’s divorce and separation court) for support. The Family Court awarded her $3,339 per month in spousal maintenance, noting that it was not bound by Medicaid calculations.

The New York Court of Appeals reversed the Family Court. Noting that Mr. Gomprecht was being cared for at public expense, the Court ruled that the former standard of living of Mrs. Gomprecht was not the important consideration for determining support.

Alimony Order Ignored

Ruby Ussery sued her husband for divorce just before he entered a Kansas nursing home in 1993. She was awarded $495 per month in spousal maintenance, and Mr. Ussery then filed for Medicaid assistance.

Mr. Ussery qualified for Medicaid, but the Department of Social and Rehabilitation Services calculated his share of the nursing home cost without deducting the spousal maintenance. The two rulings, taken together, required him to pay $1,465 per month, though his total income was only $1,060.

Mrs. Ussery asked the Kansas Supreme Court to reduce the Medicaid share of cost by an amount sufficient to secure her spousal maintenance payments. The court declined, noting that the Medicaid rules do not permit consideration of spousal maintenance payments. The court also noted, however, that Mrs. Ussery would have been protected if she had not secured a divorce; the case was remanded to the trial court for a determination of whether Mrs. Ussery’s constitutional right to equal protection of the laws had been abridged by the treatment afforded former spouses.

Arizona law in both instances would probably lead to the same result, though community property principles might help in the Ussery case. Arizona recognizes legal separations (such as in the Gomprecht case) as well as divorces (like the Usserys’).

Securing a spousal maintenance order in an Arizona legal separation would not lower the share of cost. Although it is frequently advised by well-meaning friends, divorce is seldom helpful for resolving Medicaid eligibility issues. Still, there is the possibility of securing a new determination of the share of cost after a “fair hearing,” particularly in cases with widely disparate incomes or assets between the marriage partners.

Group Homes, Retirees Win in Separate Court Decisions


Two recent U.S. Supreme Court cases, though each dealing with a limited population, may have an effect on clients. In one, the Court dealt with group homes and boarding homes; in the other, the Court addressed long-standing state tax inequities.

Group Home Regulation

Oxford House, a Washington drug and alcohol treatment program, tried to open a group home in the city of Edmonds. Local planners objected, citing a city ordinance which prohibited more than five unrelated individuals from living together.

Oxford House appealed the denial through the federal court system, losing in the District Court but winning in the Ninth Circuit Court of Appeals. Now the Supreme Court has agreed that Edmonds’ rule is too restrictive.

The American Association of Retired People (AARP) joined Oxford House in opposing the rule. Though the proposed use in this case was a drug and alcohol rehabilitation program, AARP noted that it would restrict the ability of boarding homes, foster homes and similar facilities to care for elderly clients in residential areas. The Supreme Court agreed.

The Oxford House decision relies on the federal Fair Housing Amendments Act of 1988, which prohibits zoning ordinances restricting occupancy limits unless they are reasonable. The Supreme Court noted that the Edmonds ordinance did not restrict the number of family members who could live in one residence, so deduced that the limitation was based on something other than a desire to control the size of households. Since the limit was different for unrelated housemates, it was inherently unreasonable. Edmonds v. Oxford House, 115 S. Ct. 1776 (1995).

[Note: Tucson had a similar zoning provision until the mid-1980s]

Taxes on Federal Retirees

In the 1980s, Georgia (along with Arizona) was one of about 20 states that tried to impose state income taxes on federal pensions while exempting state pension income. Those tax efforts were struck down after only a few years of collections.

Georgia (like Arizona) initially argued that refunds for the illegally collected tax should be limited to those taxpayers who protested the tax at the time of payment. Since few had protested, this rule would have saved Georgia an estimated $100 million in refunds to 50,000 retirees. The Supreme Court, in its 1994 term, ruled Georgia’s proposal unacceptable, and ordered the state to adopt “meaningful backward-looking relief” for taxpayers who were illegally taxed. Reich v. Collins, 115 S.Ct. 547 (1994).

[Note: Arizona has grappled with the same problem, and has now adopted legislation to permit taxes to be recovered. Many of the taxpayers have now died, and the claims for repayment must be pursued by heirs.]

Jury Awards On Rise For Elderly Victims of Poor Nursing Care


When Walter Spilman entered the Eastbrooke Health Care Center in Brooksville, Florida, he was terminally ill. At 88, he had been diagnosed as suffering for Alzheimer’s disease and cancer, and he was not expected to live long.

After Mr. Spilman’s death, his estate brought an action against Eastbrooke for the mental anguish he suffered, claiming he was denied the kind of mattress and bedding he required to prevent bedsores, that he was not turned frequently enough, and that he was made to lie in his own urine and feces. Even the attorney for the nursing home conceded at trial that it had violated some of Mr. Spilman’s rights and some verdict should be entered in favor of the estate. One of the points conceded by the nursing home: Mr. Spilman had not been fed for one six-day period.

After a two-day trial featuring photographic evidence of Mr. Spilman’s condition, the Florida jury awarded over $2½ million in damages to his estate. Some jurors indicated they would have gone as high as $10 million.

Previous Elder Law Issues have reported on a trend toward larger jury awards for older plaintiffs in more traditional personal injury cases. Mr. Spilman’s case and a handful of others reflect another recent trend: jury verdicts for negligent nursing care are also on the rise. A recent article in The Wall Street Journal focused on the trend.

According to independent jury research, the mean award in nursing home negligence cases has doubled in the past seven years, going from less than $250,000 to over $500,000. Experts in the field ascribe the increase to a growing public perception that moving to a nursing home need not consign one to oblivion, and that it is both important and possible to die with dignity, regardless of the setting.

One reason cited for the increase in nursing home negligence cases: recent regulatory changes requiring careful documentation of all nursing home problems and regular written surveys. That makes it easy to demonstrate a pattern of abuse or neglect, if one exists. It also makes it easy to demonstrate when a nursing home has failed to take steps to remedy problems with the quality of care in other cases.

In a Cumberland County, North Carolina, case, state surveys were instrumental in securing a settlement of $850,000 for the estate of Easter West. Attorneys for the estate argued that they should be able to use the state evidence of over 200 instances of failure to follow physician’s orders, improper medication administration and failure to assess patients’ needs.

The increase in jury verdicts surprises some who indicate that decline and death are the usual result of institutionalization. The attorney for one nursing home told the Journal: “Guess what? People don’t go to nursing homes to get better and check out. They go there to die.”

Annual Increases Predicted for Medicare Premiums


Republicans in Congress have made it clear they hope to trim $270 billion from anticipated Medicare increases in future years, but have so far failed to explain how they intend to accomplish this result. It has become clear, however, that they expect about $60 billion of that savings to come from higher premiums charged to Medicare participants.

Currently, Medicare beneficiaries pay $46.10 per month for Part B. Usually, this premium is deducted from Social Security benefits. On average, this premium pays 31.5% of the government’s cost to provide Part B coverage.

Congressional Republicans have proposed indexing Medicare premiums so that the percentage of remains fixed at 31.5%. Based on best estimates of future Medicare costs, that means premiums would jump to $97.50 per month by 2002.

Medicare’s premium rates were originally set to cover 50% of the cost of the program, but rising costs led to a reduction in the percentage recovered through premiums in recent years. Current premium rates were set five years ago and were intended to provide 25% of the cost of coverage; since costs increased more slowly than expected, the premiums actually covered a larger share of the cost than intended.

The White House has proposed returning the premium level to 25% of the cost of Medicare. Under that proposal, beneficiaries could expect to pay about $77.40 per month by 2002. Clinton’s plan would only raise $16 billion to help reduce the anticipated Medicare shortfall in the next five years, but would save beneficiaries slightly more than $20 per month in premiums.

Restraints In Nursing Homes

About one of every five elderly nursing home residents will be restrained for some part of their nursing home stay. At least that is the estimate of Professor Marshall Kapp, recognized as a leading expert on long-term care issues.

Nursing home rights advocates have fought for reduction of the use of restraints for several years. Among the arguments Kapp makes:

  • Serious injuries are more common when mechanical restraints are used long-term. Residents are often hurt when they become agitated and attempt to escape from the restraints, or when staff fails to monitor and adjust restraints in time.
  • Facilities using restraints frequently provide inadequate training in how to use, monitor and adjust the devices.
  • Nursing homes have made more dramatic strides in reducing restraints than hospitals or other acute care facilities.
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