Policy 'truth' proves elusive

Cathleen F. Crowley

Apr. 10, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- ALBANY -- About 7 percent of the elderly who apply for Medicaid reimbursement for nursing home care are denied because they are caught trying to hide their wealth.

The Rockefeller Institute of Government conducted a study to determine how often New Yorkers abuse the Medicaid system by transferring assets and spending down their wealth in order to qualify for nursing home reimbursement.

"You hear anecdotes about somebody's rich grandmother who is having her nursing home paid for by Medicaid," said Courtney Burke, director of the institute's New York State Health Policy Research Center. "We wanted to get at 'What is the truth?' "

In New York, nursing home care accounts for 37 percent of the budget of Medicaid, a public program for the poor and disabled. Individuals with less than $8,700 in annual income and assets under $13,000 qualify for nursing home reimbursement.

Elderly people with higher incomes can transfer assets by setting up trusts, purchasing annuities and promissory notes, or selling assets to relatives for less than fair market value.

While many of those divesting activities are legal, federal law prohibits transferring assets in order to qualify for Medicaid reimbursement for long-term care. The study focused on cases where improper transfers were detected, leading to denial of reimbursements.

But the truth about divesting was elusive.

Researchers hypothesized that wealthier communities would either have higher denial rates because there are more rich people, or lower denial rates because wealthy people can hire estate planners to legally shelter their wealth.

But the study found no association between wealth and rejection rates.

"There was no rhyme or reason to how the counties came out," Burke said. "That's why we couldn't conclude much."

Four of the state's poorer counties topped the list of denials in the 10-year period studied, 1998 to 2008. Franklin County denied 48.9 percent of elderly applicants because of asset transfers, affecting 243 applicants. Schoharie County denied 43.8 percent, Delaware 34.9 percent and Clinton County 29.1 percent.

Ona Rushford, Franklin County's director of financial assistance, was surprised by the numbers and wanted to review the report, but said "apparently, we seem to be doing our job."

At the other end of the spectrum, Westchester and Dutchess counties, two of the state's wealthier counties, rejected a total of 50 applications in a decade. Their denial rates were 1 percent or less.

But there were rich counties with high denial rates and poor counties with low rates.

Rockland County, a wealthier county, denied 535 people, a rate of 24.2 percent, making it one of the higher rejection rates in the state. Chautauqua County, a poorer county, denied only 4 people in a decade, a 0.2 percent denial rate.

What does it mean?

Perhaps rich people in Westchester aren't applying for Medicaid benefits as much as policymakers feared or they have estate planners to help them transfer assets; or perhaps the county has an inadequate system for detecting transfers.

"It's very confusing," Burke said.

The study was commissioned by the state Department of Health. It did not include New York City, because the city uses a different computer system to track Medicaid eligibility.

One possibility for the variation between counties may be how aggressively each approaches the asset test, Burke said. Counties have the right to review five years of an applicant's personal information, including financial, tax and real estate records.

But some counties may rely on information submitted by the applicant.

Officials in Albany and Rensselaer counties say they have an extensive application and interview process. They also use electronic systems to review applicants' banking records.

Albany County's denial rate was 3.7 percent, and Rensselaer's rate was 1.3 percent -- both significantly below the state average.

"I don't know if that's a reflection of economic forces or whether are we doing a good job looking at (assets). I think we are doing a good job," said Randy Hall, commissioner of social services for Rensselaer County.

More research is needed, Burke said, because the truth is still unknown.

Cathleen F. Crowley can be reached at 454-5348 or by e-mail at ccrowley@timesunion.com.

Divesting in the Capital Region

The Rockefeller Institute of Government looked at how many elderly people where denied Medicaid nursing home benefits because the issue of divesting assets and wealth:

Elderly denied Medicaid nursing home benefits because of asset transfers. Percentage of elderly denied benefits because of asset transfers.

Per capita personal income rank*

Saratoga County 194 14.6 percent 10

Albany County 85 3.7 percent 7

Columbia County 10 1.7 percent 16

Rensselaer County 19 1.3 percent 19

Schenectady County 15 1.2 percent 12

State (excluding NYC) 6,064 7 percent -

Source: Rockefeller Institute's "Assessing Asset Transfer for Medicaid Eligibility in New York State." The study looked at Medicaid applications between 1998 and 2008, and did not include New York City. *Higher numbers indicate higher rates of poverty.

Newstex ID: KRTB-0007-34054195