Investigators at the U.S. Government Accountability Office (GAO)have found that state Medicaid programs are having troublinggetting the consumer financial information they need to determinewhether residents seeking Medicaid nursing home benefits really arepoor enough to qualify for the benefits.

Carolyn Yocum discusses the GAO's findings in a report onstate Medicaid long-term care (LTC) asset screeningprepared for Sen. Orrin Hatch, R-Utah, and Sen. Tom Coburn,R-Okla., who is a medical doctor.

State Medicaid plans pay for acute health care for the poor. Theplans also pay for nursing home care for patients who get throughan eligibility screening process. State Medicaid programs accountedfor about half of the $263 billion spent on nursing home care inthe United States in 2010, Yocum says.

The drafters of the Deficit Reduction Act of 2005 (DRA) tried to hold down growthin Medicaid long-term care (LTC) spending – and respond toallegations that some consumers make themselves artificiallypoor to qualify for Medicaid nursing home benefits – byrequiring each Medicaid plan to look back at how LTC applicants had managed their assets over theprevious 60 months.

A DRA provision calls for each state and the District ofColumbia to set up electronic asset verification systems to helpwith efforts to detect “Medicaid planning” efforts.

All states told the GAO that they do try to verify Medicaid LTCbenefits applicants' asset information, but no state actually hadan electronic verification system in place when the GAOinvestigators did their research, Yocum says.

Officials in 32 states cited money, staff and time constraintsas barriers to setting up the systems.

In addition, “18 states reported that it had been or would bechallenging to get financial institutions to participate andprovide information,” Yocum says.

“One state reported that it had initially planned to have its[asset verification system (AVS)] implemented by December 2011, butwas unable to do so because financial institutions in the statewere unwilling to participate in the AVS until state legislation ispassed that releases the financial institutions from any liability,ensures they are fairly reimbursed for their services, and makesthe process voluntary,” Yocum says. “The state Medicaid program isseeking such legislation during the state's 2012 legislativesession.”

Medicaid plan managers are supposed to look at LTC benefitsapplicants' annuities, life insurance policies, vehicles and homeas well as the applicants' bank accounts and securities. All butone jurisdiction ask applicants to provide documentation ofpromissory notes or loans, and all reported requiring enoughdocumentation of annuities for the states to determine whether anannuity should be classified as a violation of the DRAanti-Medicaid planning rules, Yocum says.

Similarly, all jurisdictions but Louisiana require Medicaid LTCbenefits applicants to provide documentation of any life insurancepolicies that they own, Yocum says.

The GAO investigators found that 45 states require applicants todisclose any interest the applicant or spouse has in an annuity,and 27 warn applicants that the state will become a remainderbeneficiary of any annuities, Yocum says.

This article was originally posted at LifeHealthPro.com, a sistersite of Credit Union Times.