The Secret World of Medicaid Regulation

8:30 pm Medicaid

Potential clients sometimes ask William Gatesman whether they can pursue their legal matters themselves.  Often, the advice in response to such an inquiry is that the client would obtain a more favorable outcome using the services of a knowledgeable lawyer.  A key component of that advice is that the lawyer should be knowledgeable.

Unfortunately for the general public, when it comes to applying for Medicaid benefits, there is a limited pool of lawyers in Maryland who can be viewed as being truly knowledgeable about all of the nuances in the Medicaid eligibility rules.

This should not be the case.  Maryland law, and in particular, the Maryland Administrative Procedures Act, mandates that the rules governing such matters as the Maryland Medicaid program be promulgated and implemented through a transparent public process.  Through that process, such rules are to be disclosed and maintained in a manner to make them easily accessible to the public.

Unfortunately, with respect to the Maryland Medicaid program, some of the rules are complex, hidden, and accessible by only a few who know where and when to look for them.  One of the problems arises because Medicaid is a joint Federal and State program.  Notwithstanding that, the rules as they apply in Maryland (Medicaid rules vary state by state) should be put in place in accordance with the Administrative Procedures Act, however, the Maryland Administrative Procedures Act routinely is disregarded.  Indeed, a senior Medicaid official recently advised William Gatesman that there is an administrative freeze by the Maryland Governor that prohibits any action toward implementing new regulations.

So, then, how do Medicaid lawyers in Maryland know what are the rules that apply to their clients?  Sadly, sometimes the answer to that question is that some of those lawyers don’t know.

Consider the following case in point.  Some disabled individuals who have too many assets can still qualify for Medicaid if they use a certain type of trust to hold those assets.  This type of trust is referred to as a “d4a” trust.  Previously, such trust could only be created by the Medicaid recipient’s parent, grandparent, court appointed guardian, or by a court (in which case, creation of the trust could be costly).  This requirement imposed an unreasonable burden on competent adult disabled persons – why did the law not allow them to create their own d4a trusts?

After many years since d4a trusts became a possibility, Congress finally, in December, 2016, passed a law that allows competent adult disabled persons to create their own d4a trusts.  Notwithstanding that change in law at the Federal level , William Gatesman was concerned that competent adult disabled persons in Maryland might be snared in a trap if they sought to create such a trust themselves and then apply for Maryland Medicaid.  The reason for this concern is that the Federal rule change allowing self-created d4a trusts  has not, since the passage of  the law more than six months ago, been implemented in Maryland in any manner whatsoever – not by the passage of a regulation, not by the amendment of the Medicaid caseworker’s procedure manual, and not in any other manner.

That being the case, Mr. Gatesman  asked a group of Maryland elder law lawyers if they, too, were concerned about their clients getting “snared in a trap” by creating their own d4a trusts.  That inquiry sparked a discussion that revealed just how obscure are the Medicaid rules, even for lawyers who practice Medicaid law.  Some of the lawyers involved in the discussion were not aware of the rule change.  One sought out the Federal statute and discovered that, although the December, 2016, rule change is reflected in a published Public Law that is not easy to find, it is not yet reflected in the compiled statutes of the United States (at least those that are available online).

The discussion revealed further that, within the past week, more than six months following the passage of the law, the Federal agency charged with administering the Medicaid program sent a letter to State Medicaid regulators advising them of the new law and instructing them as to how to comply with that law.   That being the case, not only was it Maryland elder law lawyers (with the exception of a small number of them) who were not aware of this important change in the Medicaid rules, but it was the regulators of the Maryland Medicaid program themselves who only recently had become aware of the change.  Consequently, it was prudent for William Gatesman to be cautious lest his clients get snared in the trap of relying on a Federal law change before the State regulators were in a position to allow actions based upon such change.

It was during that discussion that a senior Maryland Medicaid official revealed, in an informal correspondence to a select few lawyers, that, due to the Governor’s administrative freeze, no Maryland regulation would be implemented with respect to this rule change, suggesting also that such administrative freeze would prevent the Medicaid regulator from revising its procedural manual utilized by Departments of Social Services who evaluate Medicaid applications and private Medicaid lawyers alike.  Instead, the only change that will be made is to list “the disabled individual himself” as one of the possible creators of a d4a trust on a checklist that is used when such trusts are evaluated.  This is hardly clear, bright line guidance to lawyers who advise clients concerning Medicaid eligibility issues, much less to the public.

There are other, equally obscure, or even more obscure, important Medicaid rules that have significant bearing on whether individuals will qualify for Medicaid in Maryland.

William Gatesman maintains relationships with other professionals and monitors significant changes in the law to stay abreast of the current operative rules and regulations, no matter how obscure they might be.