CMS Looks to Limit Estate Recovery Actions for New Medicaid Recipients

Commentators on both sides of the Affordable Care Act (ACA) debate have pointed out that lower-income Americans may be deterred from enrolling in the expanded Medicaid program because of the currently estate recovery actions are allowed. An estate recovery action is a legal collection method that allow states to recover the amount of payments for long-term Medicaid services from patients after their death to repay the state for the cost of their medical care. 

This practice stems from a 1993 federal law that requires states to recoup the costs spent on long-term Medicaid services from the estates of deceased recipients. The 1993 law also gives states the option of recovering all Medicaid costs incurred from the age of 55 until death, even if they are not related to long-term care. In practice this often results in states placing a lien on the deceased's home after being notified of the death. However, states generally try not to collect the debt immediately in instances where a surviving spouse or dependent is living in the home. 

Last week the Centers for Medicare and Medicaid Services (CMS) issued a letter to state medicaid directors providing guidance that seek to limit estate recovery actions for Medicaid recipients that qualify under the ACA's Medicaid expansion program. While the letter does not compel states to follow the conditions set forth in the letter, experts say it will likely serve as a deterrent for states considering estate recovery actions against expanded Medicaid recipients. 


More discussion on Medicaid Estate Recovery and the CMS letter can be found at the following sources:

•  Asbury Park Press, Feds: Don't try to bill new Medicaid recipients after their death.
• National Senior Citizens Law Center, MAGI Medicaid and Estate Recovery: CMS Issues State Medicaid Director Letter.
• Modern Healthcare, Reform Update: Medicaid estate-recovery law may hamper enrollment efforts.