As an attorney who has concentrated in elder law and long-term care rights for more than two decades, I was only too happy to help my aunt, who suffers from numerous illnesses and requires significant assistance with all of her activities of daily living, to apply to Medicaid for the home care services she greatly needs. Little did I know that her request would lead us to file a class action lawsuit in a New York federal court seeking to obtain fair treatment for hundreds of thousands of New York Medicaid recipients, and to an appeal before the U.S. Court of Appeals for the Second Circuit.
Her Kafkaesque journey is still underway.
To get the services she needed, my aunt, Rosalind Bellin, had to apply for them to a private managed care organization (MCO) that contracts with the state of New York, where she lives. The procedure is similar in many other states.
What she learned from the application process was that even being represented by a highly experienced attorney does not guarantee that private managed care organizations and the states that contract with them will treat people fairly or provide them with the assistance they need to be safely cared for in their homes. In fact, the MCO and the state would not even allow my aunt to appeal the initial decision about how many hours of care she was entitled to.
Her experience illustrates why Medicaid recipients must be given a way to independently appeal all managed care organizations’ determinations and hold them accountable for improper denials of care.
To better understand this issue, a bit of background is necessary.
The federal government and many states believe that contracting with private managed care organizations to deliver health care under states’ Medicaid programs is a way to control costs. Those savings arise because most state-MCO contracts are capitated, meaning the state pays an MCO a set amount per month per patient enrolled regardless of the amount of care each patient needs.
States like this arrangement because it allows them to set a relatively accurate ceiling on the costs of their Medicaid programs while shifting the risk of needing more care than anticipated to the managed care organizations. This funding system contains perverse incentives. It can lead MCOs to provide inadequate care, or deny care outright, to the sickest and most vulnerable Medicaid recipients, whose costs of care often exceed the monthly capitated payment.
Upon receiving my aunt’s application for home care, the managed care organization sent a nurse to assess her needs. Although the nurses’ assessment clearly showed that my aunt needed the services of a home care attendant throughout the day and night, the MCO granted her only eight hours a day of care. Providing her with round-the-clock care would have cost the organization significantly more than the capitated payment it would receive from Medicaid for that care.
When my aunt and I tried to appeal the initial determination, the MCO told us that she had no right to appeal unless she first signed up with the organization and received a level of care she rightfully believed was not only inadequate but that would put her in danger. Only then could she apply for additional care, which would mean awaiting another evaluation and decision by the MCO, which could take weeks.
If, after receiving weeks of inadequate care that would endanger her, she was not satisfied with the second decision, she was then authorized to appeal the second decision — but not the first — and would have to once again wait weeks or months for that appeal to be decided.
The New York State Department of Health agreed with the managed care organization that my aunt had no right to appeal its initial determination.
Though frail and elderly, my aunt decided that this system was not only unfair and dangerous for her, but also for the more than 200,000 New York Medicaid recipients who receive home care services through managed care organizations. So she authorized me to file a class action lawsuit in federal court in New York, naming her as the class plaintiff. It claimed that the New York State Department of Health and the managed care organization violated federal Medicaid law and her right to due process of law by denying her the opportunity to appeal the MCO’s initial determination.
Luckily for my aunt, family members were able to pay for the additional cost of the care she needed while the lawsuit proceeded. That isn’t true for the vast majority of the Medicaid recipients in New York or elsewhere who receive home care attendant services through MCOs and do not have anyone who can pay for their care or sue on their behalf. They are left to suffer — and possibly be endangered — because of this extremely unfair system.
Although the trial court dismissed my aunt’s case, the U.S. Court of Appeals for the Second Circuit reversed that decision on July 29, 2021. It held that nothing in federal Medicaid law authorized my aunt to appeal the MCO’s initial decision about personal care services, but ruled that my aunt had adequately alleged under the due process clause of the United States Constitution that she had the right to appeal the decision. Significantly, the court ruled that private managed care organizations that contract with the New York State Department of Health to provide Medicaid personal care services are state actors that can be sued by individuals for violating the U.S. Constitution.
The appeals court sent my aunt’s case back to be reheard by the trial court, where I will be able to question representatives of the managed care organization and the New York State Department of Health to obtain evidence that supports my aunt’s due process claim.
While my aunt and I hope for a positive outcome on her constitutional claim in the trial court, such a result is by no means assured. The fact that the appeals court interpreted federal Medicaid statutes as not providing the right to appeal the initial personal care service determinations made by managed care organizations may leave some of the most vulnerable New Yorkers at the mercy of private companies that have a strong economic incentive not to provide them with adequate care.
This problem is by no means limited to New York. States can adopt similar procedures to try to prevent Medicaid beneficiaries from appealing managed care organizations’ initial benefit determinations.
Under President Biden’s infrastructure plan, the federal government will be spending an additional $400 billion for home care for seniors and people with disabilities. To accompany that, federal lawmakers should pass legislation or issue regulations ensuring that vulnerable individuals like my aunt, for whom this money is intended to provide a real opportunity to get the care they need, can ask a neutral decision-maker to review initial home care determinations made by managed care organizations. We owe them at least that much.
Aytan Y. Bellin, the managing attorney of Bellin & Associates LLC, concentrates in nursing home and long-term care abuse and neglect litigation, long-term care rights litigation, elder law, and consumer law.
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