West Virginia Officials Trying To Eliminate Medicaid Recovery Act

West Virginia officials are attempting to "kill an obscure federal law" that requires states to recover Medicaid expenditures for nursing home care from the estates of deceased beneficiaries, USA Today reports in a May 1 cover story. Under the Estate Recovery Act, which has been part of Medicaid law since the program was created in 1965, states are required to file a "proof of claim" against the estate of Medicaid beneficiaries who received care in a nursing home prior to their death. In some states, liens are placed on homes, and proceeds from the sale of property are used to reimburse Medicaid. For many, the law effectively "wipe[s] away the family homestead," as surviving family members must liquidate property to reimburse Medicaid, USA Today reports. Only about half of states collected such reimbursements until 1993, when Medicaid costs began to escalate. To offset those costs, Congress made the estate recovery program mandatory. Three states -- Michigan, Georgia and Texas -- have refused to participate in the program. West Virginia attempted to opt out, but after Medicaid officials "threaten[ed]" to cut funding to the state -- 75% of the state's Medicaid costs are paid by the federal government -- officials began recovering costs under the law. Federal officials did not threaten to cut funding to the other states, USA Today reports. West Virginia officials noted that each of the three other states is overseen by different federal regions, which may take different approaches to estate recovery.

West Virginia's Opposition
Calling the law "inhuman," West Virginia officials are "pursuing a multi-front attack" against the Estate Recovery Act. Since 1998, state Attorney General Darrell McGraw (D) filed a lawsuit in federal court seeking to have the law declared unconstitutional. Last year a judge rejected the claim, but McGraw has appealed and vows to take the case to the Supreme Court. Gov. Bob Wise (D) has pressed for a modification of the law to allow exemptions for estates valued at less than $50,000, and Rep. Nick Rahall (D-W.Va.) is pushing Congress to rewrite the law to allow states to opt out of the program. "Part of our ethic is hard work, do well, save and pass to your progeny the results of your labor. This [law] defeats that proposition," McGraw said. Officials in other states, however, say that West Virginia's claim is "out of sync with what the federal government can afford." Oregon, for example, has had a recovery program in place since the 1940s that has served as a model for other states, USA Today reports. Oregon's program allows families to apply for a hardship waiver that exempts them from repaying Medicaid nursing home costs. Roy Fredericks, who runs Oregon's program, said, "What we can't do is just pretend that there isn't a claim. We have a public trust, and we have to pursue these assets" (Parker, USA Today, 5/1).