Doing Long Term Care RIght: Part Five

Today we bring you the fifth and final installment of our study on Medicaid and long-term care.


Rhode Island Medicaid has embarked upon a financially risky, but potentially very beneficial reorganization of its long-term care delivery system.

State policy makers agree on the “Basic Principles” guiding their long-term care reform initiative:

  1. “‘Take care of the people with no other options first’
  2. ‘Right service, right setting, right time, right result’
  3. ‘For everyone a medical home with all the necessary information’
  4. ‘Leverage all available money’
  5. ‘Remember the taxpayer'”

So far, Rhode Island’s LTC reform measures have addressed two of those objectives (numbers 2 and 3) but largely disregarded three others (numbers 1, 4, and 5).

The state’s unique global waiver enables Rhode Island Medicaid to provide more LTC services in settings people prefer (home and community) and fewer in settings most people would rather avoid (nursing homes).

Thus, the principles of providing the right services in the right settings are being met.

In the absence of equally radical changes to Medicaid’s generous financial eligibility for long-term care, however, the clinical changes implemented by Rhode Island could cause LTC expenses to skyrocket, waiting lists to explode, or both.

Easy access to Medicaid LTC eligibility after the insurable event has occurred increases public expenditures and crowds out potential private LTC financing sources.

Clearly, the objectives of caring first for the neediest, leveraging all available money, and remembering the taxpayers are not yet achieved nor even being strongly pursued.

To be sure, Rhode Island is constrained by generous and elastic, federally imposed LTC eligibility rules that prevent the state from targeting scarce Medicaid resources to people most in need.

It was precisely the domineering, over-restrictive federal laws and regulations governing waivers, home and community-based services, and institutional bias that Rhode Island sought to escape by means of its global Medicaid waiver.

So, the next logical step for Rhode Island is to seek authority under the global waiver to pursue Medicaid LTC financial eligibility rules that comport more fully with the state’s principles of long-term care reform.


The following recommendations if implemented would position Rhode Island Medicaid to achieve all of its remaining LTC reform goals by (1) targeting scarce public resources to people most in need and (2) attracting nontax revenue to LTC financing from private assets, home equity and insurance, thus (3) relieving the financial burden of Medicaid LTC on taxpayers.

If some of these recommendations seem harsh, consider them in the context of what will happen when Medicaid and other state and federal safety net programs are unable to continue supporting current programs. Consider the potential benefits to all concerned–care receivers, caregivers, and care funders–of attracting new sources of private financing to the long-term care system.

I. Establish a baseline. Study a valid random sample of LTC cases to determine how much money Rhode Island Medicaid loses because of . . .

  1. Assets transferred before the five-year transfer of assets look-back period.
  2. The $500,000 home equity exemption.
  3. The business exemption.
  4. The automobile exemption.
  5. The prepaid burials exemption.
  6. The term life insurance exemption.
  7. The household goods exemption.
  8. Purchase of exempt assets.
  9. The “reverse half-a-loaf” technique.
  10. Irrevocable income-only trusts.
  11. Medicaid friendly annuities.
  12. Life estates with special powers.
  13. Purchase of an interest in another’s home.
  14. Fraud or unintentional misrepresentation of personal finances.
  15. Other Medicaid planning techniques.
  16. Failure to pursue TEFRA liens.
  17. Lack of a robust Medicaid estate recovery program.

The results of this study should provide ample evidence of the need for and the benefits of implementing the remaining recommendations.

II. Seek authority from the federal Centers for Medicare and Medicaid Services under the state’s global Medicaid waiver to change Rhode Island’s financial eligibility rules for long-term care services in the following ways.

  1. Extend the look-back period during which assets transferred for less than fair market value to qualify for Medicaid incur an eligibility penalty from five years (currently) to ten years (as currently in Germany, a socialized health care system.)
  2. Eliminate or radically reduce the home equity exemption for Medicaid LTC eligibility from $500,000 (currently) to no more than $40,000 (as in the United Kingdom, another socialized health care system.)
  3. Preclude the use of trusts, annuities, promissory notes, the “reverse half-a-loaf” strategy and other Medicaid planning techniques to divest or shelter assets from Medicaid LTC financial eligibility limits.

III. Enhance Rhode Island’s lien and estate recovery program.

  1. Establish a TEFRA lien program and make it stronger than otherwise allowed under federal law by using the global Medicaid waiver authority.
  2. Hire more estate recovery personnel until the marginal rate of return is reached, i.e. add staff as long as each new hire increases lien and estate recoveries.
  3. Establish a system, currently nonexistent, to ensure that every death of a Medicaid LTC recipient is reported immediately and that the estate recovery procedure begins without delay in every case with potentially recoverable assets.
  4. Seek passage of the “uniform probate code” by the state legislature.
  5. Expand estate recovery to include home care, not just nursing home services as currently.
  6. Seek state legislative approval of the expanded definition of probate to include assets passed in joint tenancy with right of survivorship as authorized by OBRA ’93.
  7. Track and seek recoveries from the estates of deceased spouses for Medicaid’s cost of care paid for their predeceased spouses on Medicaid, AKA “spousal recoveries.”
  8. Track and seek recoveries from former Medicaid recipients who die after leaving Medicaid.
  9. Seek state legislative authority to capture accounts held by nursing homes in the Medicaid recipients’ names until estate liability is determined.
  10. Establish a system to recover hard assets, including investment-grade property, from recipients’ estates before the property is taken by heirs.
  11. Set up repayment plans whereby families can repay their estate recovery liability over time and retain ownership of homes or other property if they wish.
  12. Conduct a study of successful estate recovery programs, especially Oregon’s, and implement best practices. Seek state legislative authority for changes that require it.
  13. To eliminate all cost to the state and maximize recoveries, consider hiring an outside contractor on contingency to do estate recoveries in exchange for a percentage of the amount recovered.

III. Educate Rhode Islanders about the importance of planning for long-term care.

  1. Explain the risk and cost of long-term care in the media and in public meetings.
  2. Publicize what the state will and will not pay for and for whom under new, stricter eligibility rules.
  3. Describe measures taken to restrict access to Medicaid LTC and why they are necessary to ensure access to quality care for the needy, as public funds diminish.
  4. Emphasize the fact that stronger lien and estate recovery rules will ensure everyone who can pay will pay for long-term care, either up front as a private payer or after the fact, through Medicaid estate recovery.

IV. Implement measures to encourage the use of reverse mortgages and private long-term care insurance to fund long-term care privately.

  1. Consider both tax and Medicaid eligibility incentives to promote the use of reverse mortgages to fund long-term care privately.
  2. Consult the National Council on the Aging’s (NCOA) report titled “Use the Home to Stay at Home” for additional ways to encourage the use of home equity conversion to fund LTC.
  3. Publicize and expand Rhode Island’s Long-Term Care Partnership program.
  4. Consider and implement tax incentives to encourage the purchase of private long-term care insurance.

Why not try these measures in a small state that has already embarked on Medicaid experimentation with its global waiver? If they work, Rhode Island Medicaid could become a model for LTC reform throughout the country.

It happened for welfare reform when an experiment in Wisconsin went national in the Welfare Reform Act of 1996. It must happen for long-term care somewhere soon, because the Age Wave will make fixing long-term care harder and harder as time goes on.

Carpe diem.


______, “Editorial: R.I.’s Pension Pickle,”, December 13, 2009, LINK, cited January 8, 2010

Jeffrey R. Brown and Amy Finkelstein, “The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market,” National Bureau of Economic Research, December 2004,

Donald L. Carcieri, “State of Rhode Island and Providence Plantations Executive Summary Fiscal Year 2010,” March 9, 2009, LINK.

ELJAY, LLC, “A Report on Shortfalls in Medicaid Funding for Nursing Home Care,” for the American Health Care Association, November 2009, LINK.

Micah Hartman, et al., “National Health Spending In 2007: Slower Drug Spending Contributes To Lowest Rate Of Overall Growth Since 1998,” Health Affairs, Vol. 28, Issue 1, pps. 246-261,

Ari Houser, Wendy Fox-Grage, Mary Jo Gibson, “Across the States: Profiles of Long-Term Care and Independent Living,” eighth edition, 2009, AARP, Washington, DC, LINK.

Richard W. Johnson and Joshua M. Wiener, “A Profile of Frail Older Americans and Their Caregivers,” Occasional Paper Number 8, Washington, DC, February 2006,

Kaiser Family Foundation,, “Rhode Island: State Budget Shortfalls, SFY2010,”

Peter Kemper, Harriet L. Komisar, and Lisa Alecxih, “Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?,” Inquiry, Vol. 42, Winter 2005/2006, pps. 335-350.

MetLife Mature Market Institute, “The 2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs,” October 2009, LINK.

Stephen A. Moses, “Aging America’s Achilles’ Heel: Medicaid Long-Term Care,” Cato Institute, Policy Analysis No. 549, September 1, 2005, Washington, DC,

Stephen A. Moses, “The Fallacy of Impoverishment, The Gerontologist, Vol 30, No. 1, February 1990, pps. 21-25.

Stephen A. Moses, “LTC Bullet: So What if the Government Pays for Most Long-Term Care?, 2007 Data Update,” Center for Long-Term Care Reform, Seattle, Washington, January 13, 2009,

Stephen A. Moses, “LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle,” Center for Long-Term Care Financing, Seattle, Washington, September 1, 1998, .

Stephen A. Moses, “The Myth of Unaffordability: How Most Americans Should, Could, and Would Buy Private Long-Term Care Insurance,” Center for Long-Term Care Financing, Seattle, Washington, September 1, 1999, .

Stephen A. Moses, “The Realist’s Guide to Medicaid and Long-Term Care,” Center for Long-Term Care Financing, Seattle, Washington, September 7, 2004, .

Stephen A. Moses, “R.I. Medicaid has sprung a leak,” Providence Journal, September 17, 2009, LINK .

National Governors Association and National Association of State Budget Officers, “The Fiscal Survey of States,” Washington, DC, December 2009,

Nicholas Johnson, Phil Oliff, and Jeremy Koulish, “An Update on State Budget Cuts,” Center on Budget and Policy Priorities, Washington, DC., revised May 13, 2009,, cited December 10, 2009.

Terence Ng, Charlene Harrington, and Molly O’Malley, “Medicaid Home and Community-Based Service Programs: Data Update,” Kaiser Family Foundation, December 2008,

The Pew Center for the States, “Beyond California: States in Fiscal Peril,” November 2009, p. 4, LINK.

Rhode Island Public Expenditure Council (RIPEC) and United Way of Rhode Island, “Social Safety Net Study for Rhode Island – Data Analysis Summary and Conceptual Framework,” June 2009, p. ii, LINK.

State of Rhode Island, Executive Office of Health and Human Services, “The Future of Medicaid,” October 2007, p. 1, LINK.

State of Rhode Island, Executive Office of Health and Human Services, “Rhode Island Annual Medicaid Expenditure Report – State Fiscal Year 2008,” undated.

State of Rhode Island Senate Budget Office, Senate Fiscal Staff, and House Fiscal Staff, “The American Recovery and Reinvestment Act of 2009: Rhode Island Impacts and Opportunities,” revised March 5, 2009, LINK.

Barbara R. Stucki, “Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages for Long-Term Care: A Blueprint for Action,” The National Council on the Aging, January 2005,

U.S. Census Bureau, “American Housing Survey for the United States: 2007,” H150/07, Current Housing Reports, issued September 2008, Table 3-14. Value, Purchase Price, and Source of Down Payment–Owner-Occupied Units,

U.S. Census Bureau, Census of Housing, “Historical Census of Housing Tables Home Values,” Housing and Household Economic Statistics Division, Last Revised: December 02, 2004,

U.S. Census Bureau, Alfred O. Gottschalck, Current Population Reports, “Net Worth and the Assets of Households: 2002 Household Economic Studies,” P70-115, Issued April 2008, Table 4. Median Net Worth and Median Net Worth Excluding Home Equity of Households by Age of Householder and Monthly Household Income Quintile: 2000 and 2002, p. 10,

U.S. Census, “State and County QuickFacts,” Rhode Island,

U.S. Department of Health and Human Services Centers for Medicare and Medicaid Services, Rhode Island “Global Consumer Choice Section 1115 demonstration” approval letter, signed by Acting Administrator Kerry Weems on January 16, 2009,

Respondents and Interviewees

Gary Alexander, Secretary of the Rhode Island Executive Office of Health and Human Services

Brenda J. Archambault, V.P. Mortgage Lending, The Washington Trust Company (reverse mortgage expert)

Deb Barclay, Administrator of Legal Services and Administration, Executive Office of Health and Human Services, Department of Human Services

Senator David E. Bates, Senate Minority Whip, State of Rhode Island Senate

Deborah Beards, Mount St. Rita Health Centre, Cumberland, RI

Deborah B. Buffi, Esq., Associate Director, Management Services, Executive Office of Health and Human Services, Department of Human Services

Virginia Burke, Executive Director, Rhode Island Health Care Association and several of her members

Dave Burnett, Associate Director of Government and Public Affairs, Executive Office of Health and Human Services

Frank T. Caprio, State Treasurer, Democratic candidate for Governor, 2010

Deborah Castellano, Chief Case Work Supervisor, Department of Human Services

Cynthia Conant-Arp, Executive Director, Hope Alzheimer’s Center, Cranston, RI

Tom Conlon, Administrator of Long-Term Care and Adult Services, Department of Human Services

Karen Chludenski, Long Term Care Advisor, EmPower Services, Inc. (LTC insurance expert)

Dana Denman, Social Case Worker 1, Department of Human Services

Ted Dobek, Casework Supervisor, Department of Human Services

Marilee Driscoll, Speaker, Marketing Consultant, Author and Founder of

Robert “Bob” Fain, Professional Speaker, The Owl Nose (LTC insurance expert)

Bill Felkner, President, Ocean State Policy Research Institute

W. Christopher Fisher, Insurance Planning, (LTC insurance expert)

Carol Grilli, Eligibility Technician, Department of Human Services

Hugh J. Hall, Administrator, West View Health Care Center, president of the Rhode Island Health Care Association

Kathleen Heren, Associate Director and Clinical Director, Alliance for Better Long Term Care, LTC Ombudsman

Steven H. Jennings, Certified College Planner, National Collegiate Advisors

Kathleen Kelly, Executive Director, Rhode Island Assisted Living Association

Kelly Lee, Executive Director, Westerly Adult Day Services, Westerly, RI

Michael G. Leonardo, CFS, Financial Advisor, Ameriprise Financial

Susan A. Leone-Pomfret, Northeast Wholesale Account Executive,

MetLife Home Loans (reverse mortgage expert)

Greg Luttge, Eligibility Technician, Department of Human Services

Karl Lyon, long-term care (nursing home, assisted living and home care) provider

Mario Macera, CFO, Saint Antoine Residence, North Smithfield, RI

Senator Francis T. “Frank” Maher, Jr., Deputy Minority Leader, Rhode Island Senate

Ann Martino, Ph.D., Director of Policy, Executive Office of Health and Human Services

Ellen Mauro, Administrator, Office of Institutional and Community-Based Services and Supports, Department of Human Services

Lisa McAree, CLU, LTCP, President, The McAree Company (LTC insurance expert)

Ariel Mota, Eligibility Technician, Department of Human Services

Diane Nawrocki, Supervising Eligibility Technician, Department of Human Services

Elena Nicolella, Medicaid Director, Department of Human Services

James P. Nyberg, Director, Rhode Island Association of Facilities & Services for the Aging and 10 or 15 of his members

Ray Paola, Director of Long Term Care Insurance, Brokers Service Marketing Group

Joyce Paterson, Social Case Worker, Department of Human Services

Lynn Pohl, LTC Planning Specialist, Genworth Financial

Elizabeth H. Roberts, Lieutenant Governor, State of Rhode Island and Providence Plantations

Jane Rogers-King, Social Case Worker, Department of Human Services

Doug Ross, President, EmPower Services, Inc. (LTC insurance expert)

Angelo S. Rotella, Esq., Past Chair of the American Health Care Association

Philip A. Sheridan CLU, CIE, Senor Insurance Rate Analyst, State of Rhode Island Department of Business Regulation, Division of insurance

Rory Smith, former Republican candidate for Governor, 2010

Janice Stenson, Social Caseworker, Department of Human Services

Jill E. Sugarman, Esq., McLaughlin & Quinn, LLC, Attorneys at Law, elder law attorney and Medicaid planner

Susan Sweet, Sweet and Associates, Consultants, LLC

Alan Tavares, Executive Director, R.I. Partnership for Home Care

Mary Beth Vitullo, Social Case Worker, Department of Human Services

William K. “Bill” White, President, Ocean State Reverse Financing, Inc. (reverse mortgage expert)

Jennifer L. Wood, Chief of Staff and General Counsel, State of Rhode Island and Providence Plantations

J. Chris Woulfe, Executive Director, Scandinavian Home, Cranston, RI

Appendix: Recognition of Donors

The project concluded with this report began last Spring when Ocean State Policy Research Institute (OSPRI) president William Felkner contacted Center for Long-Term Care Reform (CLTCR) president Stephen Moses about conducting an analysis of Rhode Island’s global Medicaid waiver.

The two agreed to seek funding for a study. In the end, OSPRI raised financing to support the work. But to get the process started, CLTCR reached out to its members for special contributions to “prime the pump.” The purpose of the following list is to acknowledge the people and/or companies that provided that critical start-up funding which enabled the project to start.

The following individuals and/or their companies contributed financially to support our work on this project in Rhode Island.

Keystone ($5,000): Thomas Campbell Jackson

Foundation ($1,000 to $500): Rick Leonard and Joe Lautiero (Long Term Care Resources); Sue Howarth; Tom McAuliffe; Mark Randall (GoldenCareUSA); Phillip Sullivan; Stephen Forman (Long Term Care Associates, Inc.); Tony Stratidis

Building ($300 to $50): Bob Callanan; Claude Thau; Bill Dorfii; Eve Anderson; Alan Jonas; B.J. Randolph; Teresa Eagan; Sally Leimbach; Honey Leveen; Kyle Hitt; Annemiek Storm; Heady Nezhadpour.



One response to “Doing Long Term Care RIght: Part Five

  1. Ah! This is perfect! Thank you for countering severalsome
    misunderstandings I had read about this as of late.

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