Health Law Daily Interpretation of federal, local law at center of Medicaid eligibility fight
Friday, April 9, 2021

Interpretation of federal, local law at center of Medicaid eligibility fight

By Jessica Y. Washington, J.D.

When it comes to the calculation of Medicaid eligibility, there is no such thing as an improper benefit cliff.

In a matter brought by three former Medicaid beneficiaries—all Washington D.C. residents—challenging an Office of Administrative Hearings (OAH) order affirming the termination of their Medicaid benefits, the District of Columbia Court of Appeals upheld the OAH’s final order. Upon de novo review, the appeals court concluded that the former beneficiaries were not entitled to relief, because their countable incomes made them ineligible for Elderly and Individuals with Physical Disabilities (EPD) waiver benefits under both federal and local guidelines. Further, the former beneficiaries failed to establish eligibility under any alternative benefit category (Eldridge v. District of Columbia Department of Human Services, April 8, 2021, Glickman, S.).

The issue before the appeals court concerned the interpretation of federal and District of Columbia laws and regulations governing the calculation of Medicaid eligibility. The former beneficiaries challenged the OAH’s order based on three arguments: (1) that the OAH applied undue deference to the District of Columbia’s interpretation of ambiguous provisions of federal law; (2) that the District of Columbia wrongly applied federal law by considering different income eligibility levels for categorically and medically needy Medicaid applicants, which created an improper benefit cliff; and (3) that because they were existing beneficiaries, the District of Columbia should not have reassessed their benefit eligibility, but, instead, should have simply recalculated their expected contributions.

Undue deference. Finding that the OAH administrative law judge did not defer to the District of Columbia’s reading of federal law in its decision and also finding no ambiguities in the applicable federal law, the appeals court ruled the former beneficiaries’ undue deference claim, innocuous and immaterial.

Misapplication of income eligibility calculations. The appeals court was not persuaded by the former beneficiaries’ argument that the District of Columbia used two different income qualification standards when calculating Medicaid benefits for medically needy recipients: (1) a special income standard (SIS), which provides $2,205 per month for qualifying beneficiaries without spend down, and (2) a medically-needy income standard, which provides $643 per month for beneficiaries initially above SIS who can spend down through medical expenses. The appeals court found that there was no evidence indicating that the District of Columbia relied on two different standards in its benefit calculations in violation of the federal requirement of a single income standard. Further, the appeals court found the argument that the use of two standards creates an unfair and improper benefit cliff, harming beneficiaries whose incomes exceed SIS, to be meritless. The appeals court ruled that requiring beneficiaries with countable incomes rising above SIS to spend down to a medically-needy income level instead of to an SIS level in order to qualify as medically needy, does not produce an improper benefit cliff. In its reasoning, the appeals court concluded that benefit cliffs are an accepted, foreseen, and intended outcome under Medicaid, acknowledged and sanctioned by the Supreme Court.

Eligibility reassessment. Finally, the appeals court disagreed with the former beneficiaries’ contention that as existing beneficiaries, they should have been exempt from reassessment of their Medicaid eligibility. They argued that their expected contributions should have been recalculated, instead. The appeals court noted that the applicable regulations are neither a means to evade eligibility redeterminations, nor a medium for retaining indefinite Medicaid eligibility, regardless of income.

The case is No. 18-AA-664.

Attorneys: Bradley E. Oppenheimer (Kellogg, Hansen, Todd, Figel & Frederick PLLC) for Richard Eldridge, Rosa Lee and Eva Freeman. Graham E. Phillips, Office of the Attorney General, for District of Columbia Department of Human Services and District of Columbia Department of Health Care Finance.

Companies: District of Columbia Department of Human Services; District of Columbia Department of Health Care Finance

MainStory: TopStory CaseDecisions CMSNews MedicaidNews EligibilityNews DistrictofColumbiaNews

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