Ringo v. Hamilton, et al.
Attorneys for Plaintiff:
- Scott R. Severns, Severns Associates, 41 E.. Washington St., #300, Indianapolis, IN 46204
- Robert W. Fechtman, Attorney At Law, 36 S. Pennsylvania St., Suite 600, Indianapolis, IN 46204
Case Introduction
This case involves an effort by the State of Indiana's Medicaid office to make a massive change in the "spend-down" policy under the Medicaid rules. The change would threaten access to medical care for the plaintiffs and others similarly situated. On August 6, 2003, the Hamilton Superior Court issued an injunction blocking the proposed changes. One of the plaintiffs is a kidney transplant patient, two were receiving in-home services as an alternative to nursing home placement and the fourth had a variety of health issues that require regular attention to prevent costly hospitalizations. All had limited incomes and were subject to monthly “spend-down” rules. The judge found that each was subject to “irreparable harm” if the State’s changes were enacted. The judge enjoined the changes pending a full hearing on the issues.
The Indiana Family & Social Services Administration (FSSA) has proposed drastic changes to Indiana's Medicaid "spend down rules." The changes, as proposed, would dramatically impact Hoosiers dependent upon Medicaid for life-sustaining medical care. This follows earlier efforts by the State to implement these changes that was the subject of the injunction in the Ringo v. Hamilton case. On January 27, 2004, Scott Severns testified against the proposed changes at a public hearing. The proposed rules are not yet final.
Court Injunction Blocks Medicaid Spend Down Changes, The State Appeals
Hamilton Superior Court Judge William Hughes ordered a temporary halt to a massive change to Indiana’s Medicaid “Spend-down” policy on August 6, 2003. The judge’s order followed a day-long hearing with testimony from plaintiffs whose access to critical medical care was threatened by the proposed restrictions. Now State Officials have announced their intention to appeal Judge Hughes’ ruling and to publish proposed rules to implement the changes.
The case, known as Ringo v. Hamilton, had been filed by four individuals represented by Attorneys Scott Severns and Robert W. Fechtman. One man is a kidney transplant patient, two were receiving in-home services as an alternative to nursing home placement and the fourth had a variety of health issues that require regular attention to prevent costly hospitalizations. All had limited incomes and were subject to monthly “spend-down” rules. The judge found that each was subject to “irreparable harm” if the State’s changes were enacted. The judge enjoined the changes pending a full hearing on the issues.
Monthly income “Spend-down” applies to aged, blind or disabled individuals living outside of nursing homes whose income exceeds $552 for one person, or $829 for a couple. Each month, these people must show proof that they have received medical services costing at least as much as the difference between their income and the $552 state standard in order to have their Medicaid “turned on” for the remainder of the month. Medicaid does not pay the bills used to meet the "spend-down" amount, only bills incurred later that month are covered by Medicaid.
Medicaid spend-down is a complex system, simply because documentation often has to come from many different providers. The data is transferred from paper to computer by a Medicaid "spend-down clerk," and there is a wait of at least two days for 2 computer systems to synchronize, all before Medicaid is "turned on" for the month. Many people await the completion of this process before they can fill their prescriptions, for instance. Each month, the ordeal starts anew.
If there is a delay in the process, there is no effective way for the client to obtain the prescriptions or other services required. Appeals or retroactive actions are often useless because the harm to health has already occurred, often at great expense to Medicare, Medicaid and the individual.
The State proposed to stop counting bills toward spend-down if the bill may be paid by Medicare or private insurance at some point in the future. For many people, use of these potentially-covered services is the only way that they can obtain timely coverage for their prescriptions or other services.
Two problems are particularly troublesome about the proposal. First, the new system would tend to enforce impoverishment by requiring that the recipient pay all bills personally down to a sub-poverty living standard of $552 per month. Most people must find work-arounds to this sub-poverty standard in order to survive.
Second, the new system would be so inherently complex that fair and timely administration would be impossible.
Currently, spend-down clerks receive bills sent in by a beneficiary or his provider. Large numbers of these bills typically arrive early in the month. Upon receipt, the spend-down clerks are required to transfer data from the bills to the Medicaid computer within 24 hours of receipt. No sophisticated knowledge is required, but careful attention is important to accurately transcribe the data, line by line. These clerks are low-paid and their only job qualification is 1 year experience as a clerk.
Under the proposed system, the clerk would be required to determine, bill-by-bill, line-by-line, whether a provider's charge might be covered by Medicare or insurance. If so, the clerk would be required to investigate the extent of the coverage, requiring sophisticated knowledge of co-payments, deductibles, allowed charges and other arcane rules of Medicare. When other insurance is involved, the inquiry has even more variables and would require a careful analysis of coverage terms, policy-by-policy. This is far more complex and time-consuming than the current system. Two experts in the medical billing field testified that attempts to predict coverage have been so fraught with uncertainty, that even sophisticated medical providers like Clarian Health, have abandoned such programs.
If errors or delays occur in turning on a spend-down beneficiary’s Medicaid for the month, the results are potentially life-threatening.
Paralegal, Kathy Welling, a Medicaid specialist at Severns & Bennett, has received calls from around the State about delays and errors with the current spend-down system. She fears that errors and delays will skyrocket if the State proceeds with its plan.
State officials claimed that this change was not about saving money. In fact, they could not tell whether the change would result in savings. Instead, they claimed that the change was necessary because the old policy violated federal law (and had been doing so for the past 19 years.) The judge ruled otherwise.
Judge Hughes ruled that the State could not proceed because it had not properly promulgated a rule. Judge Hughes also found that plaintiffs will be irreparably harmed if the change proceeded.
Since the judge’s ruling the State has taken the following steps:
- Filed notice of intent to appeal Judge Hughes' ruling;
- Filed notice of intent to promulgate a Rule to implement the policy;
- Written federal officials at the Centers for Medicare & Medicaid Services (CMS) for their opinion of whether the State was required to make the change.
A new proposed Rule has not been published in the December, 2003 Indiana Register. If it is published later, there will be opportunity for public comment, at a date and time listed with the proposed Rule. In the meantime, members of the Medicaid Oversight Committee of the Indiana General Assembly have heard testimony about the impact the change would have on the low income Hoosiers who have the highest need for Medicaid assistance outside of the nursing home setting and groups representing the elderly and disabled are appealing to Gov. Kernan’s administration prevent the changes.
“The judge’s order is well-reasoned and will help keep people out of hospitals and nursing homes when they can get the Medicaid help they need in the community,” said Scott Severns. “It is well-worth defending against the State’s appeal.”