Wednesday, November 17, 2010

Medicare and the "Improvement Myth"

It is a familiar story:  an elderly woman falls down in her home and suffers a broken hip or other serious injury.  After a too-brief hospital stay, she is sent to a nursing home for rehabilitation.  Since the woman was in the hospital for at least three days prior to entering the nursing home, Medicare assumes the initial responsibility for covering the costs of her care in the nursing home.  Assuming that she is qualified, Medicare will pay 100% of the cost of  the first 20 days of skilled care, and will pay a percentage of the cost for days 21 through 100; in New York, the patient – or their supplemental insurer, if any – will pay a co-payment of $137.50 for days 21 through 100.

In practice, there is no guarantee that a Medicare will pay for the full 100 days.  Medicare directs nursing homes and home healthcare providers to terminate Medicare coverage upon a determination that the patient has failed to “improve” as a result of their treatment and is no longer in need of “skilled” care, but requires only “custodial” care.  The “failure to improve” standard has become so ingrained in Medicare lore that these determinations are rarely questioned. 

Contrary to common belief, the “failure to improve standard” is not found in any Medicare statute or its implementing regulations.  Rather, this rule is derived from references in various Medicare practice manuals, and has become “gospel” within the health care field.

Two recent Federal court decisions have affirmed that it is not required that a patient show improvement in order to receive Medicare coverage for their rehabilitation treatment.  In Papciak v. Sebelius, the U.S. District Court in Pittsburgh ruled that Medicare was improperly denied for an 81-year-old woman being treated for a broken hip whom, the nursing home claimed, was unlikely to improve.  In determining that continued Medicare coverage was warranted, the court stated,

[t]he restoration potential of a patient is not the deciding factor in determining whether skilled nursing services are needed.  Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.

Likewise, in Anderson v. Sebelius, the U.S. District Court in Vermont held that a 60-year-old woman was improperly denied home care Medicare coverage after suffering a second stroke.  The court noted that, “[a] patient’s chronic or stable condition does not provide a basis for automatically denying coverage for skilled services.”

Both of these court decisions confirm that the “failure to improve” standard that is almost reflexively employed in Medicare denials has no basis in law.  Patients denied Medicare on that basis may challenge these determinations and retain the coverage to which they are entitled.  Even better, perhaps the Federal Government will advise nursing homes and other health care providers to follow the appropriate guidelines in determining their patients’ ongoing eligibility for skilled nursing coverage under Medicare.

Friday, November 12, 2010

The New York Times Discusses Long-Term Care Insurance

The New York Times  recently reported that sales of long-term care ("LTC") insurance policies have stalled.  In fact 2009 was the first year the sale of LTC insurance policies did not increase since tracking of LTC insurance policies began in the late 90's.  The article cites a number of reasons why the sale of LTC insurance policies has lagged, including: 
  • The widespread misconception that Medicare covers long-term care needs (in fact, Medicare provides very little in the way of long-term care coverage)
  • The belief that they will likely not need long-term care (in fact, 45% of people 65 or older will file a claim on an LTC policy)
  • The presumption that they will qualify for Medicaid (which, while available with planning, does typically result in the loss of at least some assets, and Medicaid home care coverage is spotty)
Another impediment to the sales of LTC insurance is that the costs for the policies is beginning to skyrocket, as more people begin to go on claim than the insurance companies anticipated.  In fact, just today I heard that MetLife is going to stop writing LTC insurance policies in New York State (and maybe throughout the United States).

For those who can afford it, LTC insurance can be a great safety net.  For those who elect not to purchase LTC insurance, however, meeting with an elder law attorney to review proactive planning strategies -- often including the use of Irrevocable Asset Protection Trusts -- is a wise move.

Here's a link to the NYT article.

Saturday, November 6, 2010

New York TImes Columnist Paul Sullivan Weighs-in OnThe Importance of Legacy

This past week the New York Times' personal finance columnist, Paul Sullivan,  wrote an excellent column describing the process he and his wife went through in creating a true "legacy plan" for their family that went way beyond a discussion of financial issues.  For over a decade I have been counseling clients on the importance of passing to their heirs their values as well as their assets.  Sullivan's column, which can be read here, confirms the wisdom of that approach

New York Revises Its Power of Attorney Form -- Again

Just over a year ago – September 1, 2009, to be exact – the New York legislature enacted legislation that substantially revised the statutory “short form” Power of Attorney (“POA”).   Perhaps the most significant change was the requirement that the “principal” executing the POA execute a separate Statutory Major Gifts Rider (“SMGR”) if the principal wished to allow the agent to make “major gifts” of the principal’s assets.  This statutory revision was predicated on the widespread belief that, under the prior POA form, it was too easy for senior citizens to unwittingly authorize unscrupulous agents to make gifts of the principal’s assets – often to the agents themselves. 

Immediately following enactment of the 2009 revisions, attorneys began inundating the New York State Bar Association with complaints about the new POA form.  Many attorneys complained that the new form was too lengthy and difficult for many elderly clients to sign.  Business attorneys complained that many routine transactions that did not involve any gifting still required the Principal to execute the SMGR.  In response to those complaints, the Law Revision Commission went back to work in an attempt to further amend to law to make the POA form more “user friendly.”

In response to these concerns, New York enacted its latest revision to the statutory “short form” POA, which became effective September 13, 2010.   The following are a few of the most significant changes to the 2009 POA form: 
  • A new section 5-1501C of the statute specifically excludes from coverage under the new short form POA a number of commercial and governmental transactions, such as the exercise of shareholder voting rights with respect to a corporation, or a power authorizing acceptance of service of process on behalf of the principal.
  • Gifting authority within the main form POA is limited to an amount not to exceed $500 per year; any gifts by an agent in excess of that sum can only be made under the Statutory Gifts Rider. 
  •  Under the 2009 statute, execution of a new POA would specifically revoke all prior POA’s executed by the principal unless the principal specified that one or more prior powers was not to be revoked.  The 2010 statute specifically states that signing a new POA does not revoke prior powers of attorney; rather, the principal can provide for such revocation by including such a provision under the “Modification” section of the document. 
  •  The new statute makes it easier for a principal to revoke an agent’s authority; now, delivering the revocation is effective by delivering notice to the agent in person, or by sending a signed and dated revocation by mail, courier, electronic transmission or fax to the agent’s last known address. 
  • The Statutory Major Gifts Rider has been renamed the Statutory Gifts Rider (“SGR”).  The statute provides that the SGR is required to make “gifts or changes to interests in your property” (emphasis supplied). The SGR is not required to complete other non-gift transactions, which can be authorized in the Modifications section of the main form. However, there remains some ambiguity whether transactions affecting “interests in property” can actually be addressed within the main form; it is likely that an additional amendment to the POA statute will be required to eliminate this ambiguity.
Be aware that any New York short form POA that was executed prior to enactment of the new statute remains a valid legal document.  However, it is probably a wise idea to execute the most current form anytime you are revising your estate plan