When it comes to issues related to money, perspective often hinges upon whose ox is getting gored. Take the issue of Medicaid reimbursement to the states and how the current system’s inequities impact different state jurisdictions, for example. A recent article in Forbes focuses attention on that issue, and suggests that New Jersey is negatively impacted by the way that New York runs its own Medicaid program. That accusation raises a couple of important questions, of course. First, is it true? And if so, what can be done about it?
The Claim: The Empire State’s Bloated Medicaid Program
At the core of the argument is the claim that New York’s Medicaid program is unnecessarily large, inefficient, and wasteful. While there is certainly truth to that claim, the same can be said for many other states with large populations and big cities. California and other large states often hear similar complaints. It is also true, though, that many of the inefficiencies in the Medicaid program are largely the result of inefficiencies at the federal level. If New York’s program is perceived to be too large and wasteful, critics should look to the federal program’s rules before lamenting how those rules impact programs at the state level.
More than that, though, the article essentially accuses the state of using creative accounting to attract more federal dollars for its program. It suggests that New York officials are eager to grab as many of these federal dollars as they can, since they understand that those tax dollars are largely coming from other state jurisdictions. The basic argument couldn’t be clearer, and it implies that New York is basically a deadbeat state that unnecessarily saps wealth away from its neighbors and other states, while providing “little value” to New York Medicaid recipients.
Unfortunately, some of those claims do seem to have merit, and are backed up by other expert analysis. Indeed, a 2013 congressional report suggested that New York has been misspending federal tax dollars for decades – to the tune of billions of dollars. In fact, the report identified numerous instances of improper Medicaid reimbursements paid out to the state of New York due to its creative attempts to draw in more federal funds. There were also identifiable instances in which thousands of residents in New York City accessed Medicaid when they should have been ineligible, with costs estimated at roughly $150,000 for each person – with a total cost that could be as much as $2.6 billion.
Is Fraud a Problem?
The writer focuses on that type of fraud, and rightly so. There have been estimates in the past that suggest that fraud is involved in at least ten percent of New York City’s Medicaid expenses. In addition, perhaps another third of all spending could be considered unnecessary. The New York Times has estimated that fraud and waste could amount to billions of wasted dollars every year. In an era of massive debt and unsustainable deficits, these numbers do matter.
When you consider reports that the state received billions in overpayments due to the $5,118 per day payments Medicaid provided for developmentally disabled patients at state-run care facilities, it’s easy to see why some are concerned. After all, nursing homes – which often provide care for dementia patients and others with serious conditions – charge less than a tenth of that price for their care services. A daily charge of more than $5,000 a patient is hard to justify in any reality.
The article’s author also focuses on Medicaid planning, however – lumping it in along with charges of fraud and waste. He suggests that there is something untoward about residents who use estate planning tools to ensure that they can qualify for Medicaid eligibility to help cover the costs of nursing home care, and even suggests that many families use these strategies to escape responsibility for paying for their elders’ care. And, of course, he also accuses the legal industry of helping them shirk that responsibility by “creatively arranging” the applicants’ assets to help them gain eligibility.
Of course, nothing could be further from the truth. Medicaid planning is made possible in large measure by federal and state laws. Families don’t use this planning to escape responsibility for their elders; they use this planning because they are being responsible. Without it, many of them would become impoverished paying for care that Medicare does not cover – care that is prohibitively expensive in large measure due to the burdensome costs imposed by state and federal regulations.
Does New York’s Medicaid Program Harm New Jersey?
Even with all those points noted – and many acknowledged as true, is the central point of the argument true? Is New York unfairly harming New Jersey and other states simply because it has a large – and admittedly inefficient – Medicaid program? Perhaps. The program was always designed to be a wealth redistribution scheme, with wealthier Americans subsidizing the healthcare of low-income citizens, and wealthier states presumably paying more than poorer states.
It is certainly true that New York received four times more from federal Medicaid than New Jersey did, as of 2015 – a disparity that seems unwarranted when compared to the difference in the two state’s populations. That’s not necessarily an argument that suggests that New York’s Medicaid program is responsible for New Jersey’s shortfall, however, since that state could opt for a similar aggressive approach. It is an argument that demonstrates the inherent problems in the ACA and current Medicaid laws, however. The author admits as much when he notes that “fixed federal payments” could help to resolve much of this fraud, waste, and bloat. He’s probably also aware that those types of “block grants” are being considered for any ACA replacement, so he may get his wish.
Your Medicaid Planning is Necessary
The fact is that your Medicaid planning is necessary, and the legal team at the Law Offices of Mary A. Miller, P.C. will continue to stand with you to help you ensure your eligibility for the nursing home assistance you may someday need. To learn more about how we can help with your elder care and estate planning needs, contact us online or give us a call at (914) 939-6565 today.