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A federal district has ruled that an administrative law judge (ALJ) with the U. S. Centers for Medicare & Medicaid Services (CMS) improperly denied Medicare benefits to a patient in a skilled nursing facility. The ALJ had concluded that "[i]t became apparent that no matter how much more therapy the Beneficiary received, she was not going to achieve a higher level of function."

After undergoing hip replacement surgery on April 28, 2008, Mary Beth Papciak, 81, developed a urinary tract infection and was readmitted to the hospital. On June 3, 2008, Ms. Papciak was discharged by Dr. Tuchinda to ManorCare to receive skilled nursing care, physical therapy and occupational therapy. Upon Ms. Papciak's admission to ManorCare, Ms. Papciak was unable to ambulate and could not use her walker due to numbness of her hands due to what was later diagnosed as carpal tunnel syndrome. Ms. Papciak also had a history of cellulitis, anemia, cholecystectomy, chronic atrial fibrillation, hypertension, anxiety and depression.

Ms. Papciak received therapy five days a week; however, she made slow progress during her stay. Her therapy included physical and occupational therapy, treatment, self care, therapeutic exercises and therapeutic activities. Her initial treatment was primarily for ambulation. Medicare paid for the skilled care Ms. Papciak received from June 3 through July 9, 2008. It was determined, however, that effective July 10, 2008, Ms. Papciak no longer needed skilled care because Ms. Papciak had made only minimal progress in some areas, had regressed in other areas, and had been determined to have met her maximum potential for her physical and occupational therapy. As a result, Medicare denied payment from July 10 through July 19 because Ms. Papciak was only receiving "custodial care," not the skilled nursing services required for Medicare coverage.

Ms. Papciak appealed the decision denying coverage, and her appeal worked its way up the chain to an administrative law judge, which upheld the denial, which was then upheld by CMS's Medicare Appeal Counsel (MAC). After exhausting her administrative remedies, Ms. Papciak sought relief in federal district court.

The federal district court sided with Ms. Papciak. The proper legal standard to be applied to determine if a patient is entitled to Medicare benefits in a skilled nursing facility is whether the patient needs skilled services to enable her to maintain her level of functioning.

In the CMS Medicare Skilled Nursing Facility Manual, the reviewing authorities must give consideration to a patient's need for skilled nursing care in order to maintain her level of functioning. The relevant portion reads: "The services must be provided with the expectation, based on the assessment made by the physician of the patient's restoration potential, that the condition of the patient will improve materially in a reasonable and generally predictable period of time, or the services must be necessary for the establishment of a safe and effective maintenance program."

Neither the ALJ nor the MAC addressed Ms. Papciak's need for skilled nursing care in order to maintain her level of functioning. This was error, held federal Magistrate Judge Cathy Bissoon, requiring that the decision to deny her benefits be overturned.

The ALJ had concluded that "[i]t became apparent that no matter how much more therapy the Beneficiary received, she was not going to achieve a higher level of function." Similarly, the MAC stated that "[d]espite the appellant's arguments to the contrary, the enrollee made little or no progress in therapy from the time of her admission to ManorCare through her discharge from skilled care on or around July 10, 2008."

A common misunderstanding about Medicare's skilled nursing facility benefit is that the patient must show "progress" in order for Medicare to pay for her care. Indeed, federal regulations state that "[t]he restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities."

What happened to Ms. Papciak? She was hospitalized again, discharged to a different skilled nursing facility, where she received physical and occupational therapy under the Medicare benefit, and was discharged home on August 21, 2008.

Papciak v. Sebelius, Western District, Pennsylvania, September 28, 2010.

Article courtesy of Elder Law FAX, published by the Elder Law Practice of Timothy L. Takacs.

For a complete review of your particular situation, please contact a qualified Florida Elder Law Attorney.

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Many people like the idea of leaving bequests to favorite charities in their wills. But instead of leaving money to a charity in your will, you can put that money into a charitable remainder trust and collect income while you are still alive. Charitable remainder trusts have many other advantages, including reducing your income and estate taxes and diversifying your assets. (Before making any final decisions, please consult with a qualified Florida Elder Law Attorney.)

A charitable remainder trust is an irrevocable trust that provides you (and possibly your spouse) with income for life. You place assets into the trust and during your lifetime you receive a set percentage from the trust. When you die, the remainder in the trust goes to the charity (or charities) of your choice.

A charitable remainder trust has many benefits:

At the time you create the trust, you will receive an income tax deduction for charitable giving.
Any profit from the sale of investments within the trust are not subject to capital gains tax, which means the trustee may have more freedom in managing the assets.
When you die, the assets in the trust will pass outside your estate and be eligible for the estate tax charitable deduction.

The downside of a charitable remainder trust is that it is irrevocable, meaning once you create the trust, you can not cancel it. While you can not revoke the trust, you may have the ability to change the beneficiary if you decide to give to a different charity. You may also serve as trustee, giving you control over how the trust assets are invested. In addition, note that any income you receive from the trust will be subject to income taxes.

To find out if a charitable remainder trust is right for you, contact our office at (561) 750-380 or send an email to info@elderlawassociates.com.

Labels: Florida Charitable Remainder Trusts, Florida Elder Law Attorney, Florida Wills

A report by the Government Accountability Office (GAO) warns that given the weak economy, Continuing Care Retirement Communities (CCRCs) are facing challenging times. While few CCRCs have gone bankrupt so far, CCRCs are primarily regulated by states rather than by the federal government, and states vary in how much they help ensure that CCRCs stay solvent or don't sharply raise monthly fees on residents.(Before making any final decisions about CCRCs and the legalities they entail, please consult a qualified Florida Elder Law Attorney.)

CCRCs offer the entire residential continuum of care -- from independent housing to assisted living to round-the-clock nursing services -- under one "roof." Residents pay an often sizeable entry fee and an adjustable monthly rent in return for the guarantee of care for the rest of their life. Many older Americans sell their homes, which are often their primary asset, to pay the required fees, and, as a result, their ability to support themselves is inextricably tied to the long-term viability of their CCRC. For example, residents could lose the refundable portion of their entrance fees which may amount to hundreds of thousand of dollars or more if a CCRC encounters financial difficulties.

In its new report, "Continuing Care Retirement Communities Can Provide Benefits, but Not Without Some Risk," the GAO notes that although few CCRCs have failed, "challenging economic and real estate market conditions have negatively affected some CCRCs' occupancy and financial condition." The GAO's report notes that CCRC residents "are at a disadvantage because any claim they have on a CCRC that is forced into bankruptcy is subordinate to the claims of secured creditors, such as tax-exempt bondholders and mortgage lenders." (Last November, Newsweek reported on bankruptcies hitting retirement communities.)

In its review of state regulation of CCRCs, the GAO found that 38 states have some level of regulation specifically addressing CCRCs, while 12 states and the District of Columbia do not. The states that have no specific CCRC regulation are: Alabama, Alaska, Colorado, Hawaii, Mississippi, Montana, Nebraska, Nevada, North Dakota, South Dakota, Utah, and West Virginia. As a group, these states have few CCRCs and two -- Alaska and Colorado -- have none.

States that do regulate CCRCs generally require that the communities periodically submit financial information, but the type of information required and what the state does with it varies, and not all states do their own financial examinations. The GAO looked closely at how eight selected states -- California, Florida, Illinois, Ohio, New York, Pennsylvania, Texas, and Wisconsin -- regulate CCRCs with respect to financial oversight and consumer protection.

CCRCs generally depend on high occupancy rates to remain financially viable. Slow real estate markets like the current one can make it difficult for older Americans to sell their homes to pay CCRC entrance fees. As a result, occupancy levels at many CCRCs have fallen. In addition, some older Americans may be staying in their homes longer and thus moving into CCRCs when they need more care, which can worsen CCRCs' long-term financial picture.

One industry rating firm said the outlook for CCRCs in 2009 and into 2010 is negative because of their declining liquidity and other financial ratios, tightening financial markets, and difficult real estate markets. But the firm also noted that these negative effects could be softened somewhat by factors like the continuing strong demand for entrance into CCRCs and favorable labor costs.

Officials of some CCRC residents associations said state regulators need to provide more overall financial oversight to compensate for the short-term focus that most CCRCs have on their financial solvency. And actuaries told the GAO that, overall, only a few states are appropriately using actuarial studies to assess CCRC providers and that many states are using very little actuarial information for financial oversight.

For a copy of the GAO report, which includes a description of the types of contracts CCRCs typically offer (see page 5), click here.

To read testimony presented at a July 21, 2010, Senate hearing titled "Continuing Care Retirement Communities (CCRCs): Secure Retirement or Risky Investment?," click here.

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Congratulations to Elder Law Associates partner, Howard S. Krooks, for being appointed treasurer of the National Academy of Elder Law Attorneys (NAELA). Mr. Krooks has previously served as secretary of NAELA and is a member of the Council for Advanced Practitioners of NAELA.

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