State’s asset verification process key issue in Medicaid backlog lawsuit

by Andy Marso, KHI News Service

A nursing home chain’s lawsuit over the Kansas Medicaid application backlog hinges on whether state officials are doing enough to electronically verify applicants’ assets.

The Evangelical Lutheran Good Samaritan Society, a South Dakota-based nonprofit that operates 32 long-term care facilities in Kansas, filed the suit last week in federal court. The suit was filed on behalf of 21 nursing home residents waiting on eligibility determinations for Medicaid, which in Kansas is a managed care program known as KanCare.

The complaint alleges that the Kansas Department of Health and Environment violated federal law by failing to use an electronic asset verification program, or AVP, to quickly determine whether the residents were eligible for Medicaid.

“The defendant did not seek to obtain any of the Plaintiffs’ information electronically via AVP,” the complaints say. “Nor did the defendant try to obtain the Plaintiffs’ information from secondary sources. Instead the Defendant placed the burden of providing information entirely on the Plaintiffs.”

The suit cites a law Congress passed in 2008 requiring states to implement electronic asset verification for Medicaid applications, as well as a federal law that requires states to process applications within 45 days.

For about a year Kansas officials have been grappling with thousands of Medicaid applications that have passed the 45-day mark. The backlog started last summer with the rocky rollout of a new computer program for processing applications known as the Kansas Eligibility Enforcement System, or KEES.

The backlog burgeoned at the end of 2015 when the state funneled all applications — including some that were previously processed by the Department for Children and Families — through a single facility known as the KanCare Clearinghouse.

That change came just as the open enrollment period for the federal Affordable Care Act directed far more online applicants to Medicaid than expected.

By May the state had almost 11,000 applications waiting 45 days or more. The portion of those applications that pertain to Medicaid for long-term care provided by assisted living facilities like the Good Samaritan Society homes require extensive process to verify that the person doesn’t have too many assets to qualify.

Angela de Rocha, a spokeswoman for state agencies, said Kansas is seeking a contractor to set up an electronic asset verification program.

“We are still in the process of awarding the contract for the AVP,” De Rocha said, adding that the program will ultimately interface with KEES.

Uncompensated care

In Kansas, Medicaid primarily covers children, pregnant women, Kansans with disabilities or seniors who otherwise couldn’t afford nursing home care.

Complaints from groups that serve those populations spurred a state audit and led the federal Centers for Medicare and Medicaid Services to request twice-monthly updates on the backlog and the state’s efforts to resolve it.

Leaders of nursing homes and groups that represent them have said that the backlog was hurting them financially because most Kansans rely on Medicaid to pay for long-term care after their personal assets run out.

In the lawsuit, the Evangelical Lutheran Good Samaritan Society said the 21 named plaintiffs have a variety of serious medical conditions and that Good Samaritan Society officials have provided a total of $838,555.18 in uncompensated care while they wait for the residents’ Medicaid applications to clear. According to its most recent available tax forms, the Evangelical Lutheran Good Samaritan Society, which operates nationwide, had about $750 million in net assets in 2014.

The suit requests that a federal judge order Kansas to “automatically approve the Plaintiffs’ Medicaid benefits.”

Rachel Monger, director of government affairs for LeadingAge Kansas, said the Good Samaritan Society homes are part of her organization, but LeadingAge Kansas had no knowledge of the lawsuit before it was filed.

Mark Dickerson, senior director of communications for the Evangelical Lutheran Good Samaritan Society, said the group filed suit because “Kansas’ failure to follow federal regulation and timelines in regard to the processing of Medicaid applications has jeopardized the reimbursement that some of our residents are entitled to receive.”

“In this action we are fighting for the rights of our residents while also attempting to receive payment for services already rendered,” Dickerson said.

Dickerson said he couldn’t recall his organization, which operates in 24 states, filing a similar lawsuit anywhere else.

Some find the fast track

Other nursing homes across Kansas reporting similar financial losses have succeeded in getting their residents Medicaid coverage after filing administrative appeals or taking their grievances to legislators or the media.

Amy Turgon, director of accounting for a Shawnee assisted living facility named Sharon Lane, said via email that the facility’s situation improved dramatically after her struggles to get Medicaid coverage for residents were publicized.

“We were able to get 17 Medicaid applications processed and approved in two weeks,” Turgon said. “That is unprecedented. We were given a supervisor at KDHE to manage our cases and ensure they were resolved.”

Molly Wood, a Lawrence attorney who specializes in elder care law, said she envisioned a similar resolution to the Good Samaritan Society’s lawsuit.

Wood said the suit’s plaintiff list was impressive, but it would be hard to prove harm to the plaintiffs because federal law prohibits assisted living facilities from involuntarily discharging residents for lack of Medicaid payments. And the state can make the whole case moot by pushing those 21 applications to the top of the stack and getting them processed.

State officials promised assisted living facilities a process to apply for half-payments for residents with pending Medicaid applications but never implemented it. Instead, they have used the requests to fast-track those residents’ applications.

The state also deployed extra staff at Maximus and KDHE to process applications and shifted about 30 DCF workers to process them.

Those efforts pushed the number of applications waiting 45 days or more down to 1,512 by the end of August.

State officials say they can eliminate the backlog before the next ACA open enrollment begins Nov. 1.

The nonprofit KHI News Service is an editorially independent initiative of the Kansas Health Institute and a partner in the Heartland Health Monitor reporting collaboration. All stories and photos may be republished at no cost with proper attribution and a link back to KHI.org when a story is reposted online.

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