Medicaid as "Payment in Full"
Posted Friday, March 30, 2012 by John S. Palmer
I recently met with a family that was in the process of finding an Adult Family Home for an aging family member. They had found a home they liked and showed me the proposed Admission Agreement given them by the home’s owner. It contained a provision stating that if the resident began receiving Medicaid benefits, the family would be obligated to pay the difference between the facility’s private-pay rate and the Medicaid reimbursement rate.
For example, if the facility’s private-pay rate was $4,000 per month for room, board, and care, but the Medicaid reimbursement rate was only $2,400 for those services, they wanted the family to pay the difference of $1,600 each month. I advised the family that this was not permitted and they should not agree to such a provision.
States are not required to participate in Medicaid, but all of them do. The program is a cooperative one; each State must submit a plan for medical assistance that conforms to federal law; in return, the federal government pays between 50% and 83% of the medical and long term care costs the state incurs for Medicaid recipients.
There are several provisions in the federal Medicaid statutes and regulations that prohibit so-called “balance billing” (billing a Medicaid recipient or their family for the “balance due” over and above the amount paid under the Medicaid program). For example, 42 CFR 447.15 states: “A State plan must provide that the Medicaid agency must limit participation in the Medicaid program to providers who accept, as payment in full, the amounts paid by the agency plus any deductible, coinsurance or copayment required by the plan to be paid by the individual.”
Once an individual is on Medicaid, the provider must accept the Medicaid reimbursement rate; however Medicaid is set up to be the payment of last resort for health care. Therefore, a Medicaid recipient receiving long-term care benefits is obligated to contribute most of their monthly income toward their cost of care; in Washington State this is called their “participation amount” and the State pays the rest, up to the Medicaid reimbursement rate. (For doctors and hospitals, the state will reimburse them for the balance due after any payments from the patient’s private health insurance, if any.)
The federal requirement that Medicaid be accepted as “payment in full” has been incorporated into Washington State’s Medicaid regulations. For example:
WAC 388-96-803(3) provides that a nursing home participating in the Medicaid program shall accept payment from the State (at the State’s rate of reimbursement, and after applying the patient’s “participation amount”) “as full compensation for all services provided” under the Medicaid program, and the nursing home “shall not seek or accept additional compensation from or on behalf of a recipient for any or all such services.”
WAC 388-105-0050 contains a similar provision for Adult Family Homes and Assisted Living Facilities who accept Medicaid; it provides that before a facility may request supplemental payments, it must have a written policy advising prospective and current residents that the amounts paid pursuant to the Medicaid program “is payment in full for the services, items, activities, room and board” required by the resident’s negotiated service plan or negotiated care plan and that additional payments requested by the facility “are for services, items, activities, room and board not covered by the Medicaid per diem rate.”
Items or services not covered by Medicaid, for which the patient or their family may voluntarily pay additional amounts, include such things as the cost of providing a private telephone in the patient’s room, or the additional cost for providing the patient with a private room.
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