September 24, 2002
QUALIFIED MEDICARE BENEFICIARIES (QMB) AND MEDICAID RECOVERIES
By: Robin Cohen, Principal Analyst
You asked for a brief history of the QMB program. You also wanted to know if the state can recover payments made on behalf of QMBs.
Congress established the QMB program in 1988 to ensure mandatory Medicaid coverage for people eligible for both Medicare (Parts A and B) and Medicaid (i.e., dually-eligible). The QMB program pays the premiums, co-payments, and deductibles for this population; in some instances, the program provides full Medicaid coverage as well. The law requires states running a Medicaid program to offer QMB participation to eligible individuals. The original law established the program's income and asset limits (which are the same today) at 100% of the federal poverty level and twice the asset limit for people eligible for Supplemental Security Income, respectively (currently $4,000 for a single person).
The program has undergone virtually no change since 1988. But a 1997 revision clarified when states have to make co-payments for Medicare services. Under the revision, states do not have to make the 20% co-payment for Medicare services when the Medicare payment for services (the other 80%) equals or exceeds the Medicaid payment for the same service.
A review of the federal legislation since 1988 reveals only one additional change and it is not specific to the QMB program. In 1990, Congress increased the Medicare Part B deductible from $75 to $100, effective January 1, 1991. (The deductible remains $100 today.)
Federal law requires states to recover benefits from the estates of QMBs who received full Medicaid coverage. And it allows states to recover from QMBs for whom the state provides only the cost sharing assistance and not full Medicaid coverage. Connecticut has exercised this option and attempts to recover from the estates of QMBs once they die. Beneficiaries are informed of this policy when they apply for assistance.
Congress passed the QMB provisions as part of the Medicare Catastrophic Coverage Act (MCCA) of 1988 (PL 110-360). The program was phased in beginning January 1, 1989. As a new mandatory Medicaid coverage group, the QMB program was meant to “improve benefits for the indigent elderly and disabled” by requiring states that ran Medicaid programs to “buy-in” to the Medicare program through the payment of that program's premiums, deductibles, and co-payments using Medicaid funds.
Congress believed that without this Medicare assistance many people would apply for Medicaid sooner at a much higher cost to states, which pay up to 50% of their Medicaid costs, but pay nothing for Medicare. Although there would now be some limited cost to the states in requiring them to help with the cost-sharing, these would be partially offset with federal matching funds using the same formula under which states were reimbursed for the other Medicaid coverage groups.
The Congressional Budget Office estimated at the time that only about one-third of the people with incomes under the poverty level were getting Medicaid coverage and most were likely to lack private Medigap (Medicare supplements) coverage and the ability to meet the Medicare cost sharing requirements.
History of State Implementation of the QMB Program
Although the 1988 federal law was clear that states had to offer QMB coverage, it was less clear on the amount of cost sharing states were expected to provide.
After the federal law passed, the federal Medicaid agency published guidance in the State Medicaid Manual to give states further direction on how to implement the change. The manual instructed states that they had the option of paying Medicare cost sharing in amounts based either on the full Medicare-approved amount for a service or on the amount that the state paid for the same service on behalf of Medicaid recipients who were not entitled to Medicare.
Connecticut and a number of other states opted to limit the payments it made to providers serving QMBs so that the combined Medicare and Medicaid payment did not exceed the amount Medicaid alone would pay for this service. This effectively eliminated co-payments (but not deductibles or premiums) and hence saved the state money since Medicaid almost always paid less than Medicare for most services.
But Connecticut never implemented its law (PA 91-8, June Special Session) because courts in a number of jurisdictions ruled that this option was not allowable. To address the apparent ambiguity in the law, Congress passed clarifying language in the Balanced Budget Act of 1997. § 4714 of that act explicitly gives states flexibility in choosing the payment option for making co-payments. After this development, the state began operating pursuant to the 1991 state law (codified at CGS § 17b-265), the effect of which has been that DSS now pays virtually no co-payments to providers serving QMBs. (DSS still pays the $100 deductible and program premiums.)
There have been several proposals to restore the co-payments since 1999 but none have passed. The legislature has allowed DSS to increase the Medicaid rates it pays to physicians treating all Medicaid recipients, including QMBs (most recently pursuant to PA 02-7, May 9 Special Session), but inadequate funding has prevented this from occurring in the past.
With some exceptions, federal law requires states to recover from certain Medicaid beneficiaries' estates any assistance correctly provided. States have the option to recover Medicare Part B cost sharing under the QMB program, even when the state has paid only for cost sharing and not full Medicaid benefits. The state must return one-half of what it recovers to the federal government because the federal government normally reimburses the state for one-half of the program's costs (42 USC § 1396p(b), 42 CFR § 433.36, and Medicaid Manual, § 3210).
Connecticut exercises this option by giving DSS a claim against the estates of deceased QMBs. DSS's claim has priority over all other claims except (1) up to $375 in expenses related to last sickness; (2) up to $1,200 in funeral and burial expense; and (3) administrative expenses, including probate fees, taxes, and a percentage of fiduciary fees. The $1,200 funeral and burial allowance is reduced by any prepaid funeral arrangement that the QMB may have had. (State law allows Medicaid recipients to maintain revocable funeral contracts worth up to $1,200 and irrevocable ones up to $5,400 (CGS §§ 17b-95, 17b-84, and 42-407)).
If the QMB owns a home and is living in it, he can remain there as long as he is able. But once he leaves the home and is not expected to return (because, for example, he goes into a nursing home), and certain relatives are not living in it (e.g., a spouse) the state places a lien on it and expects a good faith effort to sell it. (The proceeds of the home sale are considered an asset and are factored into Medicaid eligibility at that time. In general, the amount for which the lien is placed at this point is for the cost of the long-term care and generally not the cost sharing paid before that time, according to DSS's Marcus Tilton.) If the client remains in the home and dies, the home goes into probate and the state has the priority to recover the cost sharing payments.
To ensure that beneficiaries know about these recoveries, DSS eligibility workers are supposed to tell Medicaid applicants that they or their legally liable relative can be required to repay the state for assistance provided. In addition, the application, which the beneficiary signs, contains a statement that indicates the applicant's understanding that the state will recover from his estate.