BY BEN L. KAUFMAN
The Cincinnati Enquirer
The U.S. Court of Appeals for the 6th Circuit in Cincinnati said Wednesday that Ohio's initial eligibility rules for Medicaid nursing home payments were legal.
The ruling overturned a 1995 class-action victory for thousands of families who were forced to spend down family assets before Medicaid kicked in. They had hoped for a possible $1 billion Medicaid repayment. Judges Harry W. Wellford, Karen Nelson Moore and R. Guy Cole Jr. said Ohio policy was reasonable and no federal rule mandated which eligibility formula a state had to adopt.
Attorneys for the class action could not be reached for comment. However, Jeffery S. Sutton, who argued Ohio's successful appeal, said from 7,000 to 18,000 families might have been involved in the class action.
The problem began in 1990 when the federal Medicare Catastrophic Coverage Act took effect and suggested two approaches to determining Medicaid eligibility for nursing home payments:
"Resource first." This allows a spouse in a nursing home to transfer assets to the spouse living in the community to ensure a decent standard of living. When resources are insufficient, the spouse in the nursing home can transfer his income until that standard is reached. Remaining resources for the spouse in the nursing home must be spent down to $1,500 before Medicaid kicks in.
This formula protects more family assets and is favored by families who sued Ohio.
"Income first." A spouse in a nursing home turns over any income to the spouse in the community until the living standard is met. If both spouses' incomes are insufficient, other assets can be shifted to the spouse in the community.
This requires families to spend down their assets on nursing home bills before Medicaid pays.
From 1990 to 1996, Ohio used the Income First formula and provoked the class action.
In 1996, Mr. Sutton said Ohio adopted an eligibility policy somewhere between those approaches in response to the class action verdict and the "astounding dollars it potentially involved." The new policy has not been challenged in court, Mr. Sutton added. The department of human services has not decided whether it will continue its hybrid policy or return to income first, spokesman Jon Allen said.
Federal law excludes some assets - resources from either calculation: the couple's home, household goods, personal belongings, value of a burial space, and a limited amount for a car and funeral.
Moreover, Mr. Sutton noted, resources are divided in half before either formula is applied and only those assets belonging to the spouse living in the nursing home are involved in computations. The monthly minimum allowance for the spouse living in the community is 150 percent of the federal poverty level for the couple plus at least another 30 percent for housing.
