States Fail to Set Up Medicaid Verification for Long-Term Care

States are behind in implementing a federal law that requires electronic verification for Medicaid long-term care patients.
by | August 28, 2012 AT 1:00 PM

No state has fully implemented an electronic system—required under a 2008 federal law—to verify that individuals applying for Medicaid long-term care are eligible, according to a new report from the federal Government Accountability Office (GAO).

Individuals applying for Medicaid long-term care must provide documentation of their finances so states can verify that they're eligible for the coverage. That could include paychecks, trusts and annuities, real property and life insurance. A 2008 law passed by Congress required states to set up an electronic system that would allow states to double-check the information provided by applicants and to contact multiple financial institutions, such as banks, to determine if applicants had failed to report any assets.

Implementation was supposed to occur on a rolling basis starting in 2009, with the last states adopting the new systems in 2013. But, according to the GAO review of state progress, no state had fully constructed an electronic verification system for Medicaid long-term care by the end of 2011. On the rolling timeline, 25 states were supposed to have electronic verification in place by the end of last year, but only 18 states had even begun to implement their system at that point.

State officials told the office that their primary challenges were funding the development of their systems and securing the cooperation of financial institutions. According to GAO, 32 states said they didn't have enough resources (money, staff or time) to implement the system, and 18 states said the financial institutions in their state would not be or had not been willing participants.

One state (unnamed in the GAO report) said financial institutions in its state said they wouldn't participate in an electronic verification system until the state legislature passed a law that would exempt them from any liability for releasing personal records. The state Medicaid office told GAO it was in the process of drafting such legislation.

Medicaid is the largest single payer for long-term care in the country, according to the Kaiser Family Foundation, accounting for 43 percent of national spending on such services. Medicaid long-term care patients make up about 6 percent of the program's enrollment, but account for nearly half of its spending ($144.7 billion).

"In light of the increased demand and associated burden that this places on already strained federal and state resources, it is important to ensure that only eligible individuals receive Medicaid coverage for long-term care," the report's authors wrote. "States must balance the costs of eligibility determination efforts with the need to ensure that those efforts provide sufficient information to implement federal requirements."

The GAO also raised questions about compliance with a 2005 law that required states to review 60 months of information for a Medicaid long-term care applicant. A total of 31 states reported that they did not go back the full 60 months when verifying some of their applicants' assets. The office said, however, that its findings were "not conclusive" and further study was necessary.

The full GAO report is below.