District Medicaid documents for processing an applicant who is just over the income threshold
District Medicaid documents for processing an applicant who is just over the income threshold Credit: Joshua Kaplan

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Mrs. Jones died fighting for the healthcare she thought she deserved.

She was 89 years old. She spent her whole adult life working for the federal government, and when her health began to decline a decade ago, she was living off of social security checks and a modest pension, which combined to $1,099 a month. (City Paper is using Jones’ last name to respect her family’s wish for privacy.) Soon, her healthcare costs were several times that amount. But D.C. was there to help. She got on District Medicaid, and for years, she lived quietly at home with her husband, counting on the city to take care of her.

And then her husband passed away.

That was when everything changed. Now single, she started to receive a bit more money from social security, and rather than helping pay the bills, that extra money turned out to be devastating.

In the spring of 2017, the District sent her a letter: “Because you have too much income, your current eligibility for [home-care based services] will end on 05/31/2017.” While she still did not have nearly enough money to pay for her care on her own, her income was now just over Medicaid’s threshold of $2,205 a month. She was being kicked out of care completely.

Distraught, she took the decision to court. And court is where she spent the last two years of her life, stuck in an obscure legal battle over a tangle of Medicaid regulations with grave consequences for hundreds of District residents. The District says that federal law gives it no choice but to kick out people like Jones.

Advocates claim federal law says the exact opposite: that actually, the law forbids them from kicking people out, and that the District is hiding in a maze of legalese to get out of its obligation to provide these people with care.

In November, Jones passed away, just a month before the conclusion of her lawsuit. She lost the case.

More Money, More Problems

In 2019, the Medicaid income threshold for elderly people receiving long-term care is $2,313 a month. In D.C., that threshold is like a cliff. If you make $2,300 a month, Medicaid will pay for all of your healthcare needs. If you make $2,400 a month, Medicaid will pay for none of it.

There is a way around this—kind of. People over the income threshold can still apply for a medically needy waiver, a complicated process in which people prove that their medical expenses are far more than they could pay on their own. But the waiver has a few drawbacks for people who are receiving home care, rather than care in a nursing home.

First, as of 2019, people with the medically needy waiver are expected to live on less than $670 a month, putting the rest of their income toward their care. In other words, someone who makes $2,300 a month would keep all $2,300 to pay for their food, rent, and other expenses, while someone who makes $2,400 a month would have less than $670 to live on.

Second, the waiver is only temporary, and people who are receiving care in their own homes can only qualify for it after they’ve incurred a massive amount of medical expenses. Once they get the waiver, it covers them for six months, but then they have to wait until they incur more medical expenses to reapply. And once the six months run out, when they’re waiting to get reapproved, Medicaid won’t help with their care.

The District has been attentive to the problems with the medically needy waiver—problems that are the results of bad federal policies. In 2017, the Department of Health Care Finance (which administers Medicaid in the District) wrote a detailed white paper and shared it with the federal government, arguing that people receiving home-care should be allowed to keep more than $670 a month, and that they should not have to go through this cycle of being kicked out and reapplying. Because of these restrictions, DHCF wrote, “In order to get the care they need, [people] have little choice but to seek nursing home placement.”

Jones did not want to go into a nursing home. She had spent much of her life in that house. She raised her children there. Her son and her extended family would stay with her when they visited—she did not have to be alone. But without coverage, she would have no other choice.

She often talked with Suzanne Jackson, a professor of healthcare law at The George Washington University who took Jones’ case pro bono, about her dread of going into a home. And for good reason, Jackson says: “The predictable consequence of forcing someone to sell his or her home and head off to a nursing home is an early demise.”

Suzanne Jackson vs. The District of Columbia

For the past couple of years, Jackson has been a tireless, pro bono crusader for the rights of seniors getting cut off from Medicaid. It was not a role she ever intended to take on. She used to run GW’s Health Insurance Counseling Project, and a few years ago, one of her law students took on a case much like Jones’. It soon spiraled into something far more than a student could handle, so she took it over. Pretty soon, she was fighting cases for ten different seniors who had come to rely on Medicaid and now were being booted off for making too much money. Some of them were over the threshold by as little as $57 a month.

Indeed, thanks to an old mistake by DHCF, a lot more people in D.C. are in this situation than otherwise would be. For years, the Department did not actually enforce an income threshold, so people were getting coverage when they were technically ineligible. When the federal government told them they needed to start enforcing the cutoff, over a hundred people who had been receiving care lost coverage.

But according to Jackson, they should not have. She says that once a senior starts receiving Medicaid coverage for long-term care, the federal law requires the District to apply “post-eligibility treatment of income,” or PETI, to any additional income they receive. PETI is a complicated procedure that determines how much a person on Medicaid has to contribute to their care, but in this case, it would just mean that if someone on Medicaid suddenly went $100 over the monthly income threshold, rather than kicking them out, the city would just have them pay the extra $100 towards their care.

Jackson says that PETI is meant to “recognize the importance of stability and security” for people in vulnerable situations. When the government starts providing for seniors’ home care, they and their families plan their lives around that coverage. Children move. Alternatives melt away. “You can’t just pull the rug out from under these people,” says Jackson.

When she discovered that PETI was not being applied, GW’s Health Insurance Counseling Project sent a fact sheet to healthcare providers around the District explaining the options for saving people’s coverage. Soon, she was getting scores of calls from people asking for advice on how to navigate PETI. DHCF then sent a letter to providers responding to Jackson’s, explicitly saying that she was misinterpreting the law. DHCF tells City Paper that it does not comment on lawsuits, and declined to comment on its interpretation of PETI.

In its court briefs, DHCF says that while the federal law does require them to have people pay into care through PETI, it only applies to people who are already under the income threshold. According to the department, federal law actually prohibits them from using it for someone in Jones’ situation. If they were to give care to these people and the federal government later told them they shouldn’t have, they could get in a lot of trouble.

The federal regulations around Medicaid are notoriously inscrutable—the fight for people’s coverage in D.C. has all hinged on how one interprets a few highly ambiguous sentences. Different states read the law very differently. New York, for instance, interprets the law like D.C. does.

Massachusetts, on the other hand, says the exact opposite—that federal law requires them to carry out PETI in just the way that Jackson claims. A spokesperson for MassHealth tells City Paper that federal law mandates they let seniors on Medicaid whose income later rises above the income threshold to simply pay the excess income to the state through PETI.

Jackson has taken to the courts, arguing in 10 different cases that D.C. has “run afoul of the federal regulations” and rendered its own laws incoherent. The District has set up its laws so that it never actually has to perform PETI, which is a complex procedure to administer. D.C. regulations say that anyone eligible for PETI has to pay all of their income toward their care except for $2,313 a month—which is exactly the same as the Medicaid income threshold. So in D.C., people who make less than $2,313 don’t have PETI applied to them. But according to the District’s interpretation of the law, the rest of the population—who make more than $2,313 a month—are never eligible for PETI.

And yet, D.C. has pages and pages of regulations explaining in excruciating detail how PETI should be conducted. If no one is actually eligible for PETI, “to what end the extensive and detailed regulations?” asks Jackson in one court brief. “DHCF may have used lawyerly language to narrow the scope of its statements, but its [rules] leave an unsuspicious (and reasonable) reader believing that post-eligibility procedures are conducted.”

DHCF’s apparent motivation, she argued in another court case, is that while PETI is required by federal law, D.C. has not set up a system that would let it actually carry out PETI. Thus, it has interpreted the law to exclude people like Jones in order to avoid having to pay someone to set up the system.

DHCF lawyers have responded that while they indeed save administrative costs by paying for people’s care rather than make them pay through PETI (a win-win situation), this is not the reason they exclude people whose income makes them ineligible. They say that they’re just following the federal law.

So far, again and again, the courts have sided with DHCF. While three of Jackson’s cases are still under appeal, she has yet to win a case on this issue. It’s an uphill battle because whenever the law is ambiguous, the District receives a great deal of deference to do as it pleases. Judges have repeatedly said that so long as DHCF’s interpretation is “reasonable,” they must go along with that interpretation.

And unless that interpretation (or the federal regulations) change, there will be little to protect seniors from being suddenly thrown out of care.

“Ending home care because of a shift in income that the individual is powerless to change,” says Jackson, “can push vulnerable people into an impossible position.”