Saturday, December 28, 2019

Medicare Part A and observation status

Andrew Taylor writes in the Los Angeles Times “I’m on Medicare and I still got a $25,000 hospital bill.” 

Taylor was diagnosed with prostate cancer and went to the hospital at his doctor’s direction for surgical treatment, a radical prostatectomy (complete removal of the organ). He spent two nights on a surgical ward before going home. 

He received a surprise bill for $25,000 from the hospital and another $4,700 from his surgeon.

Why? He was on Medicare Part A but not on Medicare Part B. Without telling him, the hospital had placed him on “observation status” despite the fact that he was there for a full surgical procedure. A patient on observation status is not regarded as “admitted,” and Part A covers only patients who have been admitted to a hospital. 

Taylor had no idea that this designation by the hospital would make such a major difference, even though he himself is a physician. Like many people, he knew that he had Medicare coverage for in-hospital treatment and he was being treated in a hospital. He assumed that something as major as a radical prostatectomy would be paid under that coverage. 

He recommends: 
“What can be done? If you are scheduled to be hospitalized for elective surgery, get a written statement from your surgeon and from the hospital that you will be admitted and not placed under observation status.” 
This is also a recurring problem for patients who require a rehabilitative stay in a nursing home after in-hospital treatment. Medicare will typically pay for such nursing home care, but only if the patient has been admitted for three days, under the "two midnight" rule. If the hospital has classified the procedure as outpatient or the patient as an observation patient, Medicare coverage for that needed postoperative care will not be provided. 

In general, before undergoing any planned medical treatment, consult with your physician to ensure that problems like this will not arise. The regulations adopted by CMS in November 2015, and the CMS publications on the two-midnight rule, reflect that CMS consistently emphasizes the physician's medical judgment (not that of his or her billing people) on the question of whether the care that is needed for the planned treatment is expected to require a hospital stay that will span three days / two midnights and thus be eligible for Medicare coverage. In addition, CMS has developed a list of inpatient only procedures (over 150 pages) which identifies the surgeries that will automatically be paid under Part A. 

For ER visits, emergency services by themselves are, in general, covered only under Medicare Part B, but sometimes the condition that gives rise to the emergency requires inpatient care, and the same situation can arise. 

Tuesday, September 10, 2019

Your Digital Legacy e-book

The redoubtable Take Control series of e-books includes Take Control of Your Digital Legacy, released in January 2017. Many of the recommendations echo those that we have made here for years.
A will takes care of your physical possessions, but what about your digital life—photos, email, files, and the like? If you want to pass your electronic ephemera on as part of your digital legacy, turn to tech expert Joe Kissell for advice on dealing with large quantities of data, file formats, media types, the need for a “digital executor,” and more.
Available at this link for $15.


Monday, August 26, 2019

Tips for returning college students


We are undergoing our annual incursion of new and returning students to our three universities, Northern Michigan University, Michigan Technological University, and Lake Superior State University. Among all of the other things that students and parents will be thinking about, these two should be included: 

A medical authorization form. A student who is 18 years old is an adult. If he or she encounters any illness or injury and as a result is unable to provide consent directly, a treating hospital or physician is not permitted to give medical information to a parent. Having a signed medical authorization form in hand will remove this obstacle - treating doctors will be able and willing to talk with the parent and provide the needed information. We have developed a HIPAA-compliant medical authorization form that can be used for that purpose. It is carefully written so that providers are authorized to speak to the parent about illness or injury, but not about routine matters such as sexual health, contraception, and the like. 

Auto-related injuries. If an out-of-state student is involved in a Michigan accident involving a motor vehicle but is not the owner of the vehicle, he or she may be entitled to Michigan no-fault benefits, either from the insurer of one of the motor vehicles involved in the accident or, in certain circumstances, from the Michigan Assigned Claims Facility. Those no-fault benefits may well be more advantageous than the benefits offered under other auto insurance available to the student. 

Saturday, May 11, 2019

DHHS policy on sole benefit trusts is overturned

On May 9, 2019, the Michigan Supreme Court issued its decision in the case of Hegadorn v Dept. of Human Services Director, overruling the policy adopted by the Department of Health and Human Services in August 2014, and holding that a sole benefit trust (SBO trust) intended for the benefit of a community spouse can shelter a couple’s assets and make them non-countable for the purpose of qualifying the institutionalized spouse for Medicaid benefits for long-term care.

James Steward and Angela Hentkowski of Steward & Sheridan, Ishpeming, were the lead attorneys for the plaintiffs challenging the policy and should be congratulated for an excellent win.

Prior to August 2014, an SBO trust was a common tool that was available to use to avoid spousal impoverishment under the statutes and regulations requiring that a person seeking Medicaid coverage for long-term care must spend down all countable assets to a maximum of $2,000.

The requirements were:
  • The transfer to the SBO trust must be irrevocable.
  • The distributions or payments from the trust must be made solely for the benefit of the community spouse; 
  • The distributions to the community spouse must be made on an actuarially sound basis over his or her the projected lifetime; 
  • There may not be any conditions or circumstances under which either principal or income could be distributed to or used for the benefit of the institutionalized spouse. 
The Hegadorn ruling involved three consolidated cases, each following the same fact pattern. The essential ruling by the Court was that the DHHS had improperly interpreted the provisions of the Federal Medicaid law with respect to a trust whose assets may be made available under any circumstances. The Federal law provides that such a trust would be countable if its assets may be used “for the individual” under any circumstances. The DHHS interpretation was that the word “individual” would apply to both the institutionalized spouse and the community spouse. The Supreme Court disagreed. The statutory language, it ruled, applies only to the institutionalized spouse, the person for whom Medicaid benefits are sought.

Under the Medicaid statute, the definitions that apply are found at 42 USC 1396d. There is no definition of the word “individual” in that section, but it is important to note that that word appears in section 1396d a total of 72 times, and each time it is used it is clear that it refers to the institutionalized person, the person receiving Medicaid benefits, and not to his or her spouse.

Chief Justice Bridget McCormack, concurring in the decision, wrote separately to say that, in her opinion, the transfer of assets by the community spouse into the trust would be regarded as a “divestment” which would trigger a period of disqualification for Medicaid benefits under the divestment rules. She observed that that was not an issue involved in the case before the Court and thus did not require consideration.

We believe that the Chief Justice is probably wrong on this point. At page 9 of the Bridges Eligibility Manual, section 405 (divestment), the DHHS says that:
It is not divestment to transfer resources from the client to:
The client’s spouse.
Another [person] SOLELY FOR THE BENEFIT OF the client’s spouse. Transfers from the client’s spouse to another SOLELY FOR THE BENEFIT OF the client’s spouse are not divestment.
And this DHHS policy statement is based on the Federal Medicaid statute, 42 USC 1396p-c-2-B-i:
(2) An individual shall not be ineligible for medical assistance by reason of paragraph (1) to the extent that—
* * *
(B) the assets—
(i) were transferred to the individual’s spouse or to another for the sole benefit of the individual’s spouse,
(ii) were transferred from the individual’s spouse to another for the sole benefit of the individual’s spouse,
(iii) were transferred to, or to a trust (including a trust described in subsection (d)(4)) established solely for the benefit of, the individual’s child described in subparagraph (A)(ii)(II), or
(iv) were transferred to a trust (including a trust described in subsection (d)(4)) established solely for the benefit of an individual under 65 years of age who is disabled (as defined in section 1382c(a)(3) of this title)

Friday, February 1, 2019

Updated probate limits

The Michigan Treasurer has certified the following as the amounts for spousal share, statutory allowances, etc. for persons dying in 2019:


Nothing wrong with thinking ahead

 Kiplinger: Federal Estate Tax Exemption Is Set to Expire – Are You Prepared? The current exemption equivalent of $11.58 million per person ...