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The Estate Recovery Notification - Implementation Plan

Executive Summary

Background: Washington State has had an estate recovery program in place since 1987. The program is federally required to recapture public expenditures made on behalf of clients receiving certain Medicaid long-term care services. In 1998, DSHS researched 22,432 deaths to determine if the decedents had received any DSHS services. 11,096 of those people were in fact known to DSHS and met age criteria. Only about 5.2% (579) of those deceased DSHS clients had an estate which allowed for financial recovery. From those 579 estates, $7.3 million was recovered.

The percentage of clients with estates is low because people do not qualify for Medicaid services unless they are low-income. The only asset they can keep is their home, and that is not recoverable until their spouse and dependent children also die. If Medicaid clients die with an estate, it is either their house or some funds acquired after services began (perhaps an inheritance) which have not yet been "spent down."

2SHB 1116 Requires:  In a few cases, heirs have been unaware of the estate recovery requirement and have seen their expected inheritance disappear. Therefore, Chapter 354, Laws of 1999, (2SHB 1116) requires DSHS to:

• Disclose in advance the terms and conditions of estate recovery.
• Provide a written description of community services options.
• Develop a plan to notify clients or their representative quarterly of services used and associated costs which could be charged against the estate.
• Submit the implementation plan by December 12, 1999 to the appropriate standing committees of the House of Representatives and the Senate, and to the joint legislative and executive task force on long-term care.

Implementation Plan: This report is the required implementation plan. It describes DSHS actions to assure that all long-term care clients understand the estate recovery requirement and to provide written material to clients describing community service options. Also, it presents three options and associated costs for quarterly notification to clients showing services used and the associated costs which will be charged against the client's estate.

• Option 1: notify only "new" long-term care clients (those who begin to receive long-term care services after the implementation date). These clients would have no historical services. (Cost: $ 2 million to develop and $ 1.2 million to maintain).

• Option 2: notify all clients currently receiving long-term care services, but do not include information on services that were received before the implementation date. (Cost: $ 2.6 million to develop and $ 1.5 million to maintain).

• Option 3: notify all clients currently receiving long-term care services and include information on services that were received before the implementation date. (Cost: $ 3.7 million to develop and $ 2.2 million to maintain).

Methods: The plan to notify clients of services and costs, which may be subject to estate recovery, depends to a great extent upon information systems development, which is in progress in DSHS. Significant system improvements are already underway at the Social Services Payment System, Aging and Adult Services

Administration, and the Client Services Database at Research and Data Analysis. The implementation plan options described here make full use of this ongoing work and therefore reduce the development costs that would otherwise be necessary. However, sending notices to all clients vastly increases the number of clients for which estate recovery information must be developed so it is not feasible to continue assembling it by manually inspecting microfiche records, (which is how it is done at present). Therefore, all options require the establishment of a new database containing the notification information, and the establishment of an information center in DSHS where clients can discuss the information on their notification statements. 

Costs and Timelines: These options and associated costs and timelines are described in detail in this report. All options involve considerable cost. This will not result in additional recoveries, since recoveries are limited by the small number of clients with estates. The costs and features of the options are highlighted in the table below, and contrasted with the current program, which only assembles recovery information for the 600 clients a year who die with an estate

	Current	Option 1	Option 2	Option 3
New FTEs required for development	0	14.2	25	47.50
New Costs for development.	0	$2,046,500	$2,605,900	$3,728,400
Ongoing additional FTEs required for operation for the next five years.	0	9.4	13.4	24.65
Ongoing additional annual costs for operation.	0	$1,201,000	$1,543,800	$2,221,800
Development timeline.	-NA-	July 1, 2000– Dec 31, 2001	July 1, 2000– Aug 31, 2002	July 1, 2000 – April 30, 2003
Clients notified in first operational year.	-NA-	15,000	47,000	47,000
Show historical charges from 1987 forward?	-NA-	No	No	Yes
Number of inquiries and complaints annually.	About 30	Estimate 7,500	Estimate 12,000	Estimate 23,500
Number of affected estates (no change).	About 600	About 600	About 600	About 600
Recoveries in millions (no change).	About $7.3	About $7.3	About $7.3	About $7.3
Recovered Medicaid amount in millions, that will remain for Washington State, after the federal portion been paid back (no change).	About $3.5	About $3.5	About $3.5	About $3.5

Risks: In developing and costing these options, we wish to register some concern about the expense and complication of sending quarterly mailings to each person receiving long-term care services. That is a lot of mail, to many people who may well know that they will have no estate when they die. The expense involved includes not only the mailing costs, but also the complaints and the staff time dealing with correcting unduplication errors for persons who have no estate to begin with. We respectfully suggest that rather than mailing quarterly statements to all clients, that if any of these options are implemented, the clients be notified in writing that the information exists, and asked whether they wish to receive a quarterly report of their recoverable long-term care expenses. The information systems changes would still be made, but the ongoing FTE load to handle inquiries and complaints would decrease because people who did not want statements would not receive them.

Modified: Thursday August 16 2007

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