When my clients learn that their spouse or parent has been approved for Medicaid benefits, it is often a time to celebrate and breathe deeply for the first time in a long time. Every once in a while, however, my clients bring to my attention a practice that they know better than to fall victim to (but many others may not): Medicaid supplementation.
The basic premise is this: once Medicaid starts paying for care, the care provider cannot charge the client or their family extra for the same care, only for add-on services that are not covered. For example, in an adult family home (AFH) that has both private and shared rooms, Medicaid pays for a shared room. If the family wants their loved one to stay in a private room, then the AFH can charge a reasonable fee for the upgrade to a private room. They can charge that up-fee even if they do not currently have any shared rooms available, but if the AFH only has private rooms, then they cannot charge more. Similarly, an assisted living facility (ALF) might have a written policy that they bathe Medicaid clients twice per week, but families can pay for a bath aid to bathe them more often.
Any supplementation that a facility or care provider wants to charge extra for should be outlined in the resident contract and must be submitted to the DSHS case worker for approval. Violation of the Medicaid supplementation rules, if found to be intentional, can result in prosecution under the Consumer Protection Act as a Class C felony and can also cause them to lose their contract to work with Medicaid.
In my experience, supplementation comes in many forms and varying degrees of intent. I will describe two scenarios that are more common than others so that you know what to watch out for.
The Beloved In-Home Provider
I frequently have clients who have been receiving care in their own homes and they need to start Medicaid because it is not feasible to continue privately paying for the care, often at $30-50 per hour. They love the care provider that they have been using and get them to become Medicaid certified. Then Medicaid agrees to pay that provider $16-20 per hour and the family wants to give them more so they will stay. If Medicaid approves them for 100 hours and the provider works 100 hours, then the family cannot compensate them more than Medicaid says, so they receive $1,600-2,000 for the work that month. However, families that can afford to pay a bit more will often get around this by having the provider work 120 hours and pay $40-60 per hour or more for the extra hours. They end up still saving a lot of money and the care provider is more likely to stay with them. This is allowed because the extra payment is for hours that are not paid for by Medicaid, so this is not supplementation; it is an up-grade or add-on service.
Make Us Whole
The second most common practice, sometimes completely through non-understanding of the rules and sometimes to take advantage of unknowing families, has to do with “making the care community whole.” This happens more often in AFHs than ALFs because they are not as closely monitored; they have fewer residents that might talk to each other, and they are often run by individuals who do not fully understand the laws rather than by large companies with legal teams. In this situation, a husband may be paying $6,500 per month for his wife’s care and, after two years of paying privately, per the contract, he applies to start his wife on Medicaid. Medicaid approves $150 per day with the wife’s participation set at $1,500 per month. The AFH owner comes to the husband and says, “You agreed to pay us $6,500 per month. Medicaid says that your wife will pay $1,500 and they will pay another $3,000. That is only $4,500 so you need to pay the additional $2,000.” For many of these owners, that just makes sense and clients think it makes sense too. After all they are still saving $3,000 per month. However, unless the AFH is providing $2,000 per month worth of services that are not covered by Medicaid, they risk losing their ability to take Medicaid payments, which could mean all of their residents could lose their benefits and have to move, and they can face up to 5 years in jail and/or $10,000 in fines.
In most cases, once the laws are explained, care providers comply, sometimes with loud objections, but they comply nonetheless. Sometimes, they comply for the families that call them on it, but the ones that don’t know any better continue to suffer, even if it started as an honest mistake that is now an intentional violation of the law. On rare occasions, the facility may decide that they don’t like that law and they voluntarily give up their Medicaid certification or simply stop accepting Medicaid payments and tell all residents to pay privately or find a new community.
This is a very brief look at Medicaid supplementation. The rules related to the subject are mostly contained in WACs 388-105-0050 and 388-105-0055, though, as with all Medicaid rules, you can go down a long list of side trips as you read these two. There are also several articles on the subject if you decide to turn to Google or a legal search engine. One that I found particularly helpful in explaining this to clients is in Columbia Legal Services Senior Bulletin: Medicaid Volume 09-2 (March 9, 2009). The article is written by Joy Ann von Wahide, an attorney with the Northwest Justice Project at the time, and is titled “Medicaid supplementation – supplemental payments in long-term care settings.”
If you, a loved one, or a client are facing a situation like one that I described, then you should contact the State Long-term Care Ombudsman or an elder law attorney. You may put your loved one or your client in a situation where they have to move, but you will likely save them tens or even hundreds of thousands of dollars over their lifetime. You may also cause some short-term grief for the owner of the community but spare them a lot bigger set of legal issues, fines, and imprisonment by getting them to understand what they are doing wrong and correcting it.
Aaron D. Paker has worked on Medicaid cases for Life Point Law for eight years as a paralegal, as an intern, and now as an attorney and partner in the firm. He earned his J.D., Cum Laude, at Seattle University School of Law in 2019, with Cali Awards in Elder Law and Advanced Elder Law. Contact Aaron at APaker@lifepointlaw.com, 253.237.7036, or 31919 6th Avenue South, Federal Way, WA 98003.