CMS Rejects Georgia Estate Recovery Exemption (10-5-06)

The Center for Medicare & Medicaid Services has rejected a Georgia Medicaid state plan amendment that would have increased the state’s estate recovery exemption from $25,000 to $100,000.

The Center for Medicare & Medicaid Services has rejected a Georgia Medicaid state plan amendment that would have increased the state’s estate recovery exemption from $25,000 to $100,000.

Generally speaking, 42 U.S.C. §1396p(b) requires states to seek recovery from the estates of individuals to whom the state has provided Medicaid coverage for long-term care services. The recovery mandate has, however, been a source of controversy in many states. West Virginia officials, for example, found the estate recovery practice so unpopular that it sued the federal government to avoid having to implement it. See West Virginia v. U.S. Department of Health and Human Services, 289 F.3d 281 (4^th Cir. 2002) (the state was unsuccessful in the litigation).

Though the estate recovery mandate went into effect in 1993, Georgia only recently initiated estate recovery. However, the state law authorizing it exempted $25,000 from the estates subject to recovery. Reportedly, even with this exemption, the implementation of estate recovery prompted families all over the state to take their relatives out of the nursing homes in order to avoid it. In response, the state legislature raised the exemption to $100,000 (a bill Governor Sonny Perdue (R) signed), and submitted an amended state Medicaid plan to incorporate the change. CMS rejected the amendment, however, finding it "a bit excessive" (according to one agency representative). The $25,000 will remain in place.

The federal law does not specifically provide states the authority to exempt a certain amount from recovery, although the law only requires recovery from the state probate law’s definition of "estate," and the CMS State Medicaid Manual permits states to forego recovery from an estate where it would not be "cost effective." It is not actually clear whether the state advanced either in support of the $25,000 exemption (or even the $100,000) exemption). Theoretically, if CMS can excuse recovery where it is not "cost effective," the agency probably has the discretion to allow an exemption. It can probably be gleaned from the CMS official’s comment regarding the excessiveness of the $100,000 exemption that the agency’s policy is to allow exemptions but to limit their scope.

For more information, please call Gene Coffey in NSCLC’s D.C. office.