April 1, 2015 – Gov. Scott Walker’s proposed 2015-17 biennial budget makes sweeping changes to the Wisconsin’s Medicaid-related Family Care Program and other changes to public benefit programs that currently support the elderly and disabled.
For instance, the budget proposal overhauls the Family Care Program through measures that alter administrative oversight and change how program benefits are accessed, who is eligible, and what entities can deliver benefits and services.
In addition, the proposed budget changes how promissory notes are treated when determining eligibility for Medicaid-related benefits. It also modifies the Senior Care Program, which provides prescription drug benefits to elderly with limited means.
What is Family Care?
Family Care is a state/federal program that provides medical and limited long-term care services to disabled and elderly citizens of limited means. Disabled and elderly persons in Wisconsin have received expanded long-term care services under the Family Care Program since 1998. Whereas traditional Medicaid limits long-term care benefits to institutional/nursing home care, Family Care expands programs to provide long-term care services in one’s home or in community-based residential facilities.
Family Care is not available in every Wisconsin county, and the long-term services provided by the program vary between counties. Seven Wisconsin counties currently have no Family Care Program, but do offer other Medicaid Waiver programs.
Waiver programs are options that states can use to deliver and pay for Medicaid health care services. For instance, Family Care is a “managed care” waiver program in which Medicaid agencies and managed care organizations contract to deliver services.
Bruce Tammi (Marquette 1976) is a solo practitioner at the Law Office of Bruce Tammi in West Allis. He practices primarily in the area of elder law. Tammi is an advisor on the State Bar’s Elder Law Section board. Reach by email or by phone at (414) 744-8120.
Wisconsin’s IRIS (Include, Respect, I Self-Direct) Program is currently an alternative to the Family Care program for elderly or disabled individuals who are able to self-direct and manage the long-term services and supports needed for them to live independently. IRIS benefits are limited and therefore cover only a limited level of care services.
Family Care benefits are currently accessed through Aging and Disability Resource Centers (ADRC) operated by counties. The ADRCs provide information and functional screening to determine whether or not an individual qualifies for Family Care or other Medicaid Waiver programs.
In addition to the Family Care and IRIS programs, 14 counties offer the Family Care Partnership Program, which adds managed medical care to the Family Care benefit.
Once an individual is determined functionally and financially eligible for the Family Care Program, the individual must enroll in a Managed Care Organization (MCO). The MCO provides Family Care benefits to the individual. MCOs receive a set payment for each individual enrolled, but benefits to the individual are not limited by the set payment.
Wisconsin counties are given the option to operate both ADRCs and MCOs, but only Milwaukee County operates its own MCO. There are five private MCOs that operate in one or more counties. Currently MCOs operate in limited geographic areas of Wisconsin and there are no MCOs operating statewide.
The Family Care Program currently is managed overall by the Wisconsin Department of Health Services (DHS), but with oversight by the Wisconsin Legislature’s Joint Finance Committee and public input on boards governing ADRCs and MCOs.
The Proposed Budget
The governor’s budget bill would phase out the current ADRCs and MCOs over a two-year period, reduce Family Care Program oversight, and open the program up to entities (most likely large insurers) that would operate as MCOs statewide.
The Family Care related provisions of the governor’s budget request are in 2015 Assembly Bill 21, primarily at sections 1545 through 1621. The following are major changes proposed to the Family Care Program:
DHS would apply for a waiver from the secretary of the federal Department of Health and Human Services to make the changes proposed, but even if the waiver is not approved, the DHS could start implementing them.
The Legislature’s Joint Committee on Finance would no longer review and approve contracts between DHS and MCOs for administering the Family Care Program benefit.
DHS may contract with entities (probably large health insurers) to operate as statewide ADRCs and MCOs for the Family Care Program.
DHS may include primary and health care services as part of the Family Care Program benefit.
The current regional long-term care advisory committees overseeing ADRCs and MCOs would be eliminated.
DHS may contract with an entity to perform part of the functions normally performed by an ADRC.
Wisconsin counties lose the right to operate an ADRC or create a long-term care district.
DHS may contract with an entity to determine the financial eligibility of an individual who applies for Family Care benefits.
Current governing boards of ADRCs would be eliminated.
The DHS would no longer be required to solicit proposals for contracts to be a Family Care program MCO under a competitive sealed process. Total discretion for MCO contracts reverts to DHS.
MCOs no longer need to contract with service providers willing to accept the current rate of reimbursement.
DHS has discretion to contract with an entity for statewide service or note limited geographic coverage as a MCO.
IRIS is phased out. Under the Family Care Program, MCOs must offer a self-directed services option under guidelines to be established by DHS.
Transfers between MCOs may be made only during an open-enrollment period or under exceptions specified by DHS.
Long-term care districts cannot be created by counties or tribes after June 30, 2015, and existing such districts are dissolved June 30, 2017.
Viewpoint on Changes
It appears that the DHS had no input in the governor’s Family Care overhaul and there was no legislative or public input. The Family Care revamp eliminates future oversight of and input in the Family Care program by the legislature and public.
DHS is vested with complete discretion in creating and contracting for ADRCs and MCOs and in determining the benefits offered under the Family Care programs.
Lack of competitive sealed bids and oversight by the legislature will create a streamlined process for the DHS to contract for long-term care and medical services. The upside and possible outcome from the changes may be increased efficiency, reduced Family Care Program costs, and quicker implementation of changes.
The downside to these changes may be MCOs that offer much more limited services and choice to Family Care recipients. Placing such contracting power with DHS and its boss, the governor, could result in contracts being placed because of political favor rather than on the merit of the services provided.
The possibility of a statewide Family Care Program and a statewide competitive MCO has appeal to this writer when compared to the unequal and geographically divergent level of Family Care program services available today.
However, the devil in making the proposed Family Care Program changes work well will be in the details of implementation and operation. Under the governor’s proposal, the legislature and public will be left out of the implementation process.
If the proposed changes to the Family Care Program are enacted, the legislature should keep control of the process until fully implemented and give the public ample opportunity for input in the process of implementation.
The Legislature should also insist on keeping the provisions of current Wis. Stat. section 46.284(2)(bm), which requires DHS to solicit MCO contracts under a competitive sealed proposal process and “evaluate the proposals primarily as to the quality of care that is proposed to be provided.”
One also wonders how for-profit corporations will wring enough savings from the Family Care Program to both provide their shareholders with the profit they expect and lower state costs per enrollee.
One also wonders what competence a large health insurer will have in assessing and managing the long-term care needs of the elderly and disabled since none currently offers such all-inclusive long-term care and medical coverage.
Medicaid Promissory Notes: Asset or Divestment?
AB 21 (sections 1803-1806) makes changes to the treatment of promissory notes held by applicants for long-term care Medicaid-related benefits. Current Wis. Stat. section 49.453(4c) on promissory notes follows underlying federal law, 42 U.S.C. 1396(c).
Currently, a promissory note is considered a transfer of assets for less than fair market value (resulting in ineligibility) unless the note’s repayment term is actuarially sound, the note repayments are equal during its term, and the balance due on the note is not canceled upon death. A promissory note meeting the criteria of the current statute is considered an unavailable asset with the note payments being considered a return of principal and interest income only when received.
One current Medicaid planning technique is for an individual to transfer assets that normally disqualify the individual for receiving Medicaid benefits to another in exchange for a qualifying promissory note. AB 21 (section 1803) classifies qualifying promissory notes as a countable asset if the person applying for Medicaid benefits or his/her spouse provided goods, services or lent money for the promissory note after the effective date of the statute, and the promissory note is negotiable, assignable, and enforceable and does not contain any terms making it unmarketable.
There would be a rebuttable presumption that such a promissory note is negotiable and its value is the outstanding principal balance due at the time of application.
AB 21 (section 1804) then creates Wis. Stat. 49.453(4c)(am), under which the purchase of or entering into a promissory note after its effective date is classified as a transfer of assets for less than fair market value unless it meets the three current criteria:
the note’s repayment term is actuarially sound;
the note repayments are equal during its term, and the balance due on the note is not canceled upon death; and
the promissory note is negotiable, assignable, and enforceable and does not contain any terms making it unmarketable.
The effect of these amendments will be classification of most promissory notes as either an available asset or disqualifying transfer of assets for less than fair market value.
Federal law does not contain this fourth requirement to avoid a promissory note being considered a transfer for less than fair market value. Federal law also provides that Wisconsin Medicaid law cannot be more restrictive than underlying federal law, and therefore, the proposed changes may be subject to challenge if enacted.
Senior Care and Estate Recovery
The governor’s budget bill modifies the Senior Care Program, which provides prescription drug benefits to elderly with limited means, by requiring eligible individuals to enroll in Medicare Part D, making the program of little or no benefit to most seniors.
Estate recovery is expanded under an amended Wis. Stat. section 49.682, requiring DHS to make claims against the estates of a Medicaid recipient and spouse for funeral expenses paid by DHS. DHS also will reduce payment of the funeral/burial benefit for a qualifying Medicaid recipient a dollar for every dollar that the individual has life insurance exceeding $3,000 in face value (whether or not owned by the individual).
The bill adds a drug testing requirement to certain Medicaid, employment, and food assistance programs, but elderly and disabled do not usually use these programs.
Editor’s note: According to Wispolitics.com, Wisconsin Rep. John Nygren (R-Marinette), co-chair of the Legislature’s Joint Finance Committee, has indicated Assembly Republicans on the committee will not consider the governor’s proposed changes to Senior Care.