by Ron Landsman, Esq. – Guest Contributor
Note from Gustavo Matheus: When dealing with high-cost medical cases, oftentimes hospitals lose significant revenue simply because they fail to create special needs trusts. Since such an omission results in many missed opportunities to recover revenue, I have asked elder-law attorney Ron Landsman to address this important issue for hospitals as a guest contributor on the blog. His article follows.
Hospitals and other medical providers may be missing out on substantial Medicaid payments because of their failure to qualify disabled individuals promptly. The classic situation is the under- or uninsured emergency room patient admitted to the facility for in-patient services who has too many resources to qualify for Medicaid.
By quick, focused action, staff can make the person eligible for Medicaid benefits – to the advantage of the medical facility and the patient.
By reducing the number of uninsured, the Affordable Care Act (ACA) may limit the need for this strategy. And applying for insurance promptly under the ACA may also be an option since there is no preexisting-condition exclusion. But the conventional approach to Medicaid can advance eligibility well ahead of ACA coverage – no small advantage in high-cost cases.
Such patients dealing with complex medical conditions often fall through the cracks in hospitals: Risk management looks at liability to the patient and the need for guardianship. Patient finance looks at sources of payment and finds little or none exist at the time. Social work looks at discharge to minimize exposure for uncompensated costs.
But no one looks at the possibility that prompt action can qualify the individual for Medicaid within a few days, ensuring payment from that point forward.
The truth is, a permanently disabled individual, no matter how wealthy or what age, can qualify for Medicaid benefits if all but a modest amount of his or her assets are placed in the appropriate Special Needs Trust (SNT). Assets held in an SNT are not “counted” in determining Medicaid eligibility, and the act of funding such a trust is not a disqualifying transfer. Furthermore, the SNT is for the benefit of the disabled individual and can be used to meet any of his or her needs – for food, clothing, shelter, recreation, or any other need – while Medicaid pays for any medical care not covered by other insurance.
For most such patients, the appropriate solution is an existing Pooled Special Needs Trust (PSNT). (An individual SNT may be appropriate in some cases; that is something the process described below will reveal.) With the PSNT, one non-profit trust with one expert trustee serves many beneficiaries, each with his or her own account. There is no age limit for when it is created or funded. And importantly, its funding and ownership are exempt for all relevant Medicaid purposes.
To be sure, there is a payback requirement: When the patient dies, Medicaid stands first in line to be reimbursed; but in most cases, the Medicaid benefits vastly exceed the value of the trust account. Thus, qualifying for Medicaid is plainly in the patient’s best interest. Medicaid pays for expensive medical care while the patient preserves what may be limited resources to pay for his or her many other needs in the future.
What has to be done? Someone with authority to do so needs to establish a PSNT account, move the patient’s assets into trust ownership and then seek Medicaid benefits. Those benefits should be effective as of the date the trust is funded. If the patient is competent, he or she can appoint an agent to do all of that. If not, a parent can create the trust account, and an agent or guardianship court can appoint someone to take control of the patient’s assets and put them into trust ownership. Once that is done, anyone can apply for Medicaid benefits.
To fully benefit from the SNT system, here is what hospital staff should do:
– Patient finance identifies the under-/uninsured patient not already eligible for Medicaid.
– Medical staff recognizes the patient who is likely disabled and requires extensive care.
– Social work determines whether there are interested family members (spouse, children, siblings, others), and, if so, who they are.
– Risk management pinpoints who can act (perhaps an agent) or retain counsel to seek appointment of a temporary guardian, if necessary. Then staff follows up to make sure the agent or guardian collects information, identifies resources, takes control of them, and establishes and funds a PSNT account. The attorneys handling the case and the guardian of course have to be experienced and familiar with public benefits.
The cost of such a proceeding is modest – on the order of $15,000 to $20,000 per case, plus the Medicaid application, assuming no family opposition – compared with the hospital’s significant potential recovery.
For more information regarding SNTs and other eldercare legal issues,please contact Gustavo Matheus at gmatheus@andersonquinn.com or Ron Landsman at rml@ronmlandsman.com. In addition, Mr. Landsman blogs on these issues on his law firm’s website at www.ronmlandsman.com.
Anderson & Quinn, LLC is a renowned law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need.
