News Report on Medicaid in Portland (Oregon)

[background radio conversation] Walter "Cluss?" and his sister Barbara "Rossos?" grew up in this small home in Portland. Cluss never moved out. Living with and helping take care of his mom for almost 50 years. She enjoyed having ample heroes i-in the house especially from her yard. If the roses smell sweet, the family's memories of their mom's last years and the federal Medicaid system are bitter. 71 year old "Mini?" Cluss suffered two major strokes. Her family placed her in a nursing home and her life savings went quickly. [Rossos] We applied for Medicaid because we did not have the finances to take, you know, to pay for all of her bills," said Rossos. Rossos and Cluss thought Medicaid, the government health care program for the poor, would cover the cost of their mother's care. But they got a surprise, a letter from the state demanding Cluss pay rent, if he wanted to continue living in the house he'd lived in since childhood. The rent would go to the state to reimburse it for paying his mother's nursing

home bill. [Cluss] I didn't like it but you know what are you going to do? It's pretty hard to fight the State," stated Cluss. He paid Oregon $300 a month for the next two years. After his mom died in 1996, came another letter, docking her estate for more than sixty two thousand dollars. The rest of the Medicaid money it had spent on her. The only asset in "Mini?" Cluss's estate was the family house. The State staked claim to it. To pay the claim and keep the house Walter Class had to take out a loan and buy it from the state. "They don't have, I don't think the Government's got a heart at all. A person's home should never, never be in jeopardy in something like this, said Cluss. What Oregon did is perfectly legal since 1949, the state has demanded families reimburse it for aid it's provided for long term care and now other states are demanding the same thing. [clapping] President Clinton's

1993 federal budget mandated every state tried to recoup Medicaid money spent on long term care. The head of Oregon's recovery program emphasizes Medicaid assistance is a loan, not an entitlement. [Kaplan] At the time that the client is incurring the cost of the services, she's not in a position to make the payment because her assets are tied up, generally in a house. However, after death, those assets, which are hers, become available and can be used to defray the costs of her care." Long term care accounts for 57 billion dollars out of the 165 billion dollar federal Medicaid budget. Kaplan says the more money States can recover, the more there will be for other Medicaid recipients. [Kaplan] If we didn't go after those assets, we would have to either, come up with more general fund or income tax money to run the program, or conversely we would have to serve fewer people who needed long term care. [Reporter] The national recovery

effort is generating about one hundred seventy five million dollars a year. Oregon is considered one of the most aggressive states and lawyer Doug "Fellows?", one of the state's most aggressive collectors. He estimates he's personally recovered 25 million dollars in his career. Typically he goes after homes of the deceased. They're the largest asset elder's have been allowed to keep and still qualify for Medicaid. But he also tries to recover trusts and bank accounts. He says, while some people are driven on to Medicaid by nursing home costs, others purposefully spend down their money giving it to family members and then, unfairly turn to Medicaid to pay for their long term care. "There are people who would rather take their parent's assets and go buy a new car or a new pick-up and let the taxpayers pay for the person's care. You know, it's, it becomes a question of relative fair doesn't it," said Fellows.

Yet these studies from the Health Care Financing Administration find the majority of people have not purposely divested or sheltered their assets prior to applying for Medicaid. Most simply go broke paying nursing home bills that can run as high as six thousand dollars per month. [Man speaking in background] Portland elder law attorney Tim "Nay?" says recovering money from their estates is cruel to their heirs. "They're absolutely overwhelmed with what's going on," he says. "Although the Medicaid application in most states has a small statement about a right to recover, it's almost unnoticeable in the application form." On Oregon's application, the warning shows up on page 3 of the 10 page form. [Nay] Most people don't really understand what that means and the impact only hits them after Mom has died." [Reporter] Nay says the system disproportionately impacts middle-class families

who often don't have attorneys to advise them on estate matters. "We do horrible things to very vulnerable people, particularly middle class people. They're the ones that fare the worst. They're the ones that are targeted," Nay says. Portland elder law attorney Cindy Barrett says there are ways to ease the bite. She tells clients to make advance plans to transfer their savings to family members who provide at home care for them. "If they would like to preserve that home for that child or some other asset for that child, look at selling bits and pieces in return for services over the years as you go along." [Reporter] Barrett says elders should consider purchase of long-term care insurance or a life insurance policy which pays beneficiaries on death but is exempt from recovery. But even if there are ways to keep recovery to a minimum, critics say the complicated system underscores a hole in the nation's patchwork health care

system. They ask why a patient with an acute illness can undergo a $75,000 operation and not owe the government a penny, but those whose medical need is long term care have to jump hoops to avoid owing a fortune. "When there is no, no commandment that Moses came down from the mountain with, saying thou shalt lose thy shirt for long-term care. "If we want to have a cradle to grave healthcare and long term healthcare and so on, that's fine. The problem is, right now the way our system has worked for years is that people are supposed to pay for their own long term care." With recovery programs growing more ambitious, those who have been forced to pay large sums say there should at least be a better way to arbitrate disputes. Carmen Perkins' mother-in-law, Hazel Perkins, and her second husband, Lloyd Gooding, died within months of each other in

1993 and '94. Gooding had been on Medicaid. After their deaths, Oregon tried to recoup Gooding's Medicaid costs from Hazel Perkins' estate, but Perkins had kept her property separate from Gooding's, so by law the state had no legal claim on it. [Dishes being cleaned] Nonetheless it began collecting four hundred twenty five dollars a month from the Perkins' estate. Money Carmen Perkins should have inherited. [Perkins] We did everything we could. There was nothing else we can do but pay it. So we did." Carmen Perkins needed the money. Her husband, David, was stricken with Lou Gehrig's disease and the couple was spending thousands on medical supplies. The state took $14,000 over four years and the family sought legal help. "I don't know how people that are just plain law- abiding citizens, that are hardworking, can fight a

government," said Perkins. Only when attorney "Nay?" threatened a class action suit to open files on all of Oregon's recovery cases did the state backed down. This march it mailed the family this unapologetic letter and a $14,000 check. David Perkins died shortly afterwards. The state's Dan Kaplan says the government made no mistake. The Perkins family just hadn't argued their case well. "The heirs didn't help us by providing the information that made it clear," said Kaplan. "The family didn't communicate it to you clearly enough?" "Right." "Did the state err?" "The state didn't have all the information it needed," said Kaplan. "Did the state err?" "I don't know how to answer that," he said. "They say you owe it, you pay it, and if you don't, we'll go after it in court. Plain and simple. It's probably the ultimate debt

collection entity in the world," said Nay. Attorney "Nay?" estimates one in four state claims is actually invalid and says states should establish independent arbiters to mediate disputes. Kaplan calls the allegation outrageous. [Kaplan] We file claims based on the information we have at the time the client dies. Um, lots of times through the estates claim process we get more information and we very often withdraw our claims. Now, I wouldn't say that those claims that we initially filed are invalid when, when we withdraw them when we get more information," said Kaplan. Congress approved a tax deduction in 1996 to help people afford long term care insurance. But there's been no effort to regulate the estate recovery process itself.