State Medicaid offices target dead people’s homes to recoup their health care costs

WASHINGTON — As Salvatore LoGrande battled cancer and all the pain that came with it, his daughters promised to keep him in the white, sloping-roof house he worked so hard to buy decades ago.

So Sandy LoGrande thought it was a mistake when Massachusetts billed her $177,000 for her father’s Medicaid costs a year after her father’s death and threatened to sue for his house if she didn’t pay up quickly.

“The house was everything,” LoGrande, 57, told her father.

But the bill and its accompanying threat were not a mistake.

Rather, it was part of a routine process that the federal government requires of every state: recovering money from the assets of dead people who in their final years relied on Medicaid, the taxpayer-funded health insurance for the poorest Americans.

A person’s home is typically exempt from qualifying for Medicaid. But it is subject to the estate recovery process for those who are over 55 and have used Medicaid to pay for long-term care, such as nursing home stays or home care.

This month, a Democratic lawmaker proposed scrapping the “cruel” program altogether. Critics argue that the program collects too little — roughly 1% — of the more than $150 billion that Medicaid spends annually on long-term care. They also say that many states do not warn people who sign up for Medicaid that their families may face large bills and claims on their property once they die.

LoGrande says that’s how she ended up in a two-year legal battle with Massachusetts after her father died. Several years before he died in 2016, she had turned to a local nonprofit for advice on caring for her elderly father. The group suggested she enroll him in Medicaid. She even remembers asking about the house, but was assured that the state would only search for the house if her father was sent to a nursing home.

“He would never have signed anything that would endanger his home,” she said.

For years, her father received an annual renewal notice from the state’s Medicaid office. She says it wasn’t until after his death, when the state’s demand for $177,000 came in, that she saw the first bill for his care, which included a brief stint in the hospital for cancer pain, medications and hospice.

“That’s what ripped my guts out,” LoGrande said. “It was unfair.”

The state settled with the LoGrandes in 2019 and released its claim to the house.

State policies surrounding this recovery process vary widely, according to a 2021 report from the Medicaid and CHIP Payment and Access Commission, which makes policy recommendations to Congress.

Some states will place a lien – a legal right – on a home, while others will not. Meanwhile, some Medicaid offices try to recoup all of patients’ medical costs, such as doctor visits or prescriptions, while others absorb only long-term care costs. Alaska and Arizona have pursued only dozens of properties in recent years, while other states have pursued thousands of homes, totaling hundreds of millions of dollars.

New York and Ohio topped the nation for such collections, recovering more than $100 million combined in one year, a Dayton Daily News survey found.

An investigation into the Kansas program, released Tuesday by the Health and Human Services Inspector General, found the program was cost-effective — raising $37 million while spending just $5 million to return the money to get. But the state did not always collect the money from estates. who were eligible.

Last month, a foundation for one of the industry’s largest health insurers called on Massachusetts to overhaul its process, including collecting reimbursements for most Medicaid costs, which go beyond the federal government’s minimum requirement to cover long-term care costs to earn back. The Blue Cross Blue Shield Foundation of Massachusetts has recommended that the state legislature pass a law that would ban these additional collections.

Estate recovery “has the potential to perpetuate wealth disparities and intergenerational poverty,” said Katherine Howitt, director of Medicaid policy at the foundation.

In Tennessee, which recovered more than $38.2 million from more than 8,100 estates last year, Imani Mfalme found herself in a similar situation after her mother’s death in 2021.

As her mother’s early-onset Alzheimer’s worsened, Mfalme continued to care for her. But when Mfalme was diagnosed with breast cancer in 2015 and required a double mastectomy, she started looking at other options. She organized a meeting at her mother’s house with the local Medicaid office. The representative told her she needed to empty her mother’s bank accounts — money Mfalme put into assisted living payments for her mother — so her mother would qualify for the program.

She remembers being somewhat offended at the meeting after the representative asked her three times, “Is this your mother’s house?” The representative, Mfalme said, did not mention that she might be forced to sell the house to pay her mother’s Medicaid bill once she died.

Now the Tennessee Medicaid office says she owes $225,000 and the state is seeking a court order that would require Mfalme to sell the house to pay.

Mfalme, now 42, said she wants to pay what she can, but the house is a particular sore point. Her mother, a Black woman, bought her dream home in Knoxville after winning a landmark discrimination case against her former employer, Boeing, for paying her less than her male colleagues.

“She fought hard for equal pay and equal rights. Just to see that ripped away just because she was sick and I was sick, it’s absolutely devastating,” Mfalme said of her mother.

TennCare, the Medicaid office in Tennessee, said in an email to The Associated Press that it would not comment on specific cases.

The Medicaid and CHIP Payment and Access Commission report recommended that Congress roll back the 1993 law that required states to recover money from estates and instead make it optional.

Earlier this month, Democratic Rep. Jan Schakowsky of Illinois reintroduced legislation that would end the federal government’s mandate. Schakowsky believes the rule is a losing proposition for families, who give up their homes, and for taxpayers, who don’t see big returns from recovery efforts.

“It’s one of the most cruel, ineffective programs we see,” Schakowsky told the AP. “This is a program that doesn’t work for anyone.”

In a gridlocked Congress, where some Republicans are pushing to curtail Medicaid eligibility, the bill is unlikely to gain the bipartisan support needed to become law.

There is at least one person who acknowledges that the rule doesn’t work: the man who created it.

Many people are unaware of the decades-old mandate, which was intended to encourage people to save for long-term care — or risk losing the equity in their homes, explains Stephen Moses, who now works for the conservative Paragon Health Institute works.

“The plan here was to make sure that people who need long-term care can get it, but that you plan ahead so that you can pay privately so that you don’t end up in the public health care program,” Moses said.