Senate Hearing Addresses Bush Administration Proposals for Restrictions on Medicaid Asset Transfers
Bush administration proposals to tighten restrictions for elderly patients who shift assets to family members to gain eligibility for Medicaid-funded nursing home care could reduce state and federal spending but also could have unintended negative effects, according to testimony at a Wednesday hearing of the Senate Special Committee on Aging, CQ HealthBeat reports (CQ HealthBeat, 7/22).
One proposal to address the issue would extend the period in which states review whether Medicaid applicants have transferred assets from three to five years. A second proposal would increase the amount of time that the federal government can withhold Medicaid eligibility when asset transfers occur (California Healthline, 4/28).
Such changes "are likely to impose stricter penalties on people who made transfers without any intention of ever needing Medicaid's assistance," according to Julie Stone-Axelrad, an analyst with the Congressional Research Service.
Vincent Russo, past president of the National Academy of Elder Law Attorneys, said the restrictions could inadvertently penalize -- for example -- grandparents who contribute to their grandchildren's education costs.
Some critics also contend that nursing homes would have to absorb the cost of providing uncompensated care during the period of beneficiaries' ineligibility, while some seniors might forgo long-term care altogether.
A Republican aide to the Senate Finance Committee said that the rule changes need not penalize "accidental" transfers, adding, "We recognize there is a real concern and are working on solutions." The aide said that tighter rules could generate even bigger savings than expected, adding that they could reduce state and federal spending by $8.7 billion over five years.
The Congressional Budget Office has estimated five-year federal savings of $1.44 billion if the rule changes take effect (CQ HealthBeat, 7/22).