State to recoup Medicaid costs

Granholm expected to sign bill ending exemption for homes owned by deceased nursing home patients.

Kim Kozlowski / The Detroit News

Michigan officials will soon go after the homes of deceased senior citizens who relied on state assistance for their nursing home care, following passage of a controversial bill Thursday by the state Senate.

Gov. Jennifer Granholm is expected to sign the estate recovery bill, which requires the Department of Community Health to develop a program within six months to recoup costs paid by the state for people who lived in nursing homes or received in-home services paid for by Medicaid prior to their death.

Medicaid is a federal-state health insurance program that pays for long-term care of the elderly and disabled when they deplete their assets to $2,000. Homes are currently exempt, but that is expected to change when the bill is sent to Granholm. It would make Michigan the last state in the nation to pass estate recovery initiatives required by federal law.

Lawmakers took up the bill in the midst of a possible government shutdown after Community Health Department Director Janet Olszewski wrote senators a letter earlier this month, explaining that federal officials threatened to cut off $5 billion in annual Medicaid payments if the state was not in compliance by Sept. 30. The Medicaid budget is $8.6 billion, meaning more than half of the program was at stake.

"Time is now of the essence and action by the Legislature is critical in maintaining supports and services provided by the state Medicaid program," Olszewski wrote.

Advocates were relieved, saying that 70 percent of the 42,000 seniors living in Michigan's 400 nursing homes rely on Medicaid to pay for their care. The loss of $5 billion in federal funding would cripple services to the state's most vulnerable citizens, said Melissa Samuel, vice president of Legislative Services for the Health Care Association of Michigan, which represents nursing homes and other long-term care providers.

"We couldn't continue," Samuel said. "When you are talking cuts of that size, you are going to have a direct impact on the care to residents."

But opponents, who have fought estate recovery in Michigan for four years, say the state will not recoup much funding from families. In 2004, estate recovery collections nationwide netted $361 million of the $45.8 billion in Medicaid funds spent on nursing home care, or about 7 percent, according to the Kaiser Family Foundation.

"It's not even worth it," said Don L. Rosenberg, a Troy-based elder law attorney and chair-elect of the of Alzheimer's Association Greater Michigan Chapter. "Estate recovery is bad public policy."

Opponents also say it unfairly impacts families of modest means. Because nursing home care is so expensive -- costing between $40,000 and $75,000 annually -- moderate-income families can quickly deplete their assets paying for care.

Ferndale resident Donald Robison, an unemployed autoworker, thinks the bill is unfair to families.

"You work your whole life for a house, get it paid for and you shouldn't be punished just because one of the members of your family gets sick. It's not like you plan it," said Robinson, who had to put his 58-year-old wife, Virginia, in a nursing home two years ago after he was no longer able to take care of her multiple sclerosis at home. Robinson wouldn't have been able to afford the $5,000 monthly costs if she hadn't qualified for Medicaid.

Though Michigan seniors relying on Medicaid to pay their long-term care costs make up a small portion of the 1.6 million Medicaid population, their care consumes 25 percent of the budget, according to Paul Reinhart, Michigan's Medicaid director.

And those figures are expected to swell as baby boomers age.

Michigan's population subject to estate recovery will grow to about 40,500 in 2010, 49,000 in 2020, and 61,000 in 2030, Reinhart said.

Under the estate recovery bill, nursing home residents currently relying on Medicaid would be exempt, according to Sanford J. Mall, chair of the Elder Law & Disability Rights Section State Bar of Michigan.

Exemptions from the bill include homes occupied by spouses, minor children or disabled relatives of the Medicaid patients.

Individuals may also apply for a hardship exemption.

The legislation also requires review options for developing a voluntary estate preservation program, which could function as an insurance policy for those who want to pay into it and avoid estate recovery.

You can reach Kim Kozlowski at (313) 222-2024 or kkozlowski@detnews.com.