Everyone is wondering: When will the new Medicaid rules begin in North Carolina? The answer is: I don't know.

The Deficit Reduction Act, signed by President Bush on February 6, 2006, imposes harsh and poorly thought-out transfer restrictions and penalties on seniors who transfer assets within five years of entering a nursing home. Passing a law and implementing a law, however, are different matters.

Only half the states have implemented the new measures in the 16 months since the Medicaid amendments became federal law. Rewriting Medicaid manuals and addressing the myriad practical issues created by the new restrictions has not been easy.

North Carolina's Division of Medical Assistance ("DMA") has been writing Medicaid manual drafts for a year now. The problem encountered by DMA is its inability to adopt permanent rules regarding hardship waivers. The hardship waiver rules are mandated by federal law and are required to implement the Medicaid manual with the new transfer restrictions.

The process of adopting a permanent and formal rule is detailed and complex. A department wishing to adopt a formal rule must meet public notice requirements and gain approval by the North Carolina Rules Review Commission ("RRC"). The RRC rejected a preliminary rule and urged DMA to work with advocates to fashion an acceptable rule. DMA failed to do so.

In March RRC adopted a final rule, but advocates from the Elder Law section of the NC Bar, AARP and Legal Services gathered enough letters of objections to the rule to suspend the adopted rule until the General Assembly had an opportunity to review the rule.

The following month (April) DMA attempted to persuade the RRC to adopt the hardship rule as a temporary rule (which would have effectively thwarted legislative review). To do so, RRC would have needed to be convinced that the rule was required due to emergency circumstances. After rather vigorous argument before the RRC (Curtis Venable of Asheville, Frank Johns of Greensboro, and Bob Mason of Asheboro speaking against adoption), the Commission refused to adopt the temporary rule.

In the meantime, under the NC Administrative Procedures Act (which governs the rule making process) the Governor could issue the rule by executive order if he finds public health and welfare to be in danger. The Governor has made no such finding.

The General Assembly has as long as next Spring to review the rule. The idea is to allow citizens to give their representatives input. Nevertheless, Representative Dale Folwell of Winston-Salem dropped a bill into the House hopper which calls for an immediate adoption of the rule. The bill was promptly assigned to a committee where it was expected to wither.

The bill's language, however, made it into the Senate version of the Budget Bill, passed by the Senate on May 31. The language is not in the House version. If House and Senate conferees include it in the final budget bill, DRA transfer sanctions, along with an unusually harsh and vindictive hardship rule, will be enforced sometime in July or August.

If the language is not included in the final Budget Bill, advocates will have until next Spring to educate our elected representatives and produce a sane hardship waiver process.

I have posted a summary of North Carolina's Medicaid rules on the Mason Law website. Read it by clicking HERE. To read more details about the Hardship Rules dispute before the Rules Review Commission, click HERE.

Stay tuned. I may send an ALERT out as news develops.

Certain types of Medicare Advantage plans are coming under close scrutiny by authorities after discovery of abusive hard-sell tactics by private insurers.

North Carolina's Insurance Commissioner Jim Long has been raising concerns about these plans for at least two years as the level of complaints to his department have dramatically risen.  Reports of aggressive sales people switching seniors from traditional Medicare Part A and Part B to Medicare Advantage plans have surfaced throughout North Carolina. The Department of Insurance's Senior Health Insurance Information Program ("SHIIP") has fielded hundreds of complaints in the past few months alone.

The abusive activity seems to center on a particular type of Medicare Advantage Plan known as a "private fee for service plan". Nevertheless, the developments in North Carolina (and elsewhere in the country) are triggering careful evaluations of all Medicare Advantage Plans.  The US Senate has gotten into the act and has held a series of hearings around the country in a lead-up to what many believe will be new legislation.

Medicare Part A has been the traditional route for medical coverage needed by the elderly and disabled in medical facilities. Part B applies to services provided by physicians and other medical practitioners, home health services, durable medical equipment and other services not covered by Part A. (For a more complete discussion of Medicare read Medicare 101 on the Mason Law website.)

When combined with good Medicare supplemental insurance policies (popularly called Medigap policies) and the new Part D Drug plans, Part A and Part B provide fairly complete coverage. There are gaps, however.

Traditional Medicare, for example will not pay for most dental care, vision care, hearing care and preventive care. On the other hand, many Medicare Advantage plans offer to fill some of those gaps. But at a cost (and often hidden).  For example there may be higher coinsurance amounts or deductibles, or other restrictions on who may provide services.

The newer Medicare Advantage Plans may be patterned after health maintenance organizations, which offer a wide variety of services as long as the member uses participating providers.  Other Advantage plans may be patterned after preferred provider organizations and managed care organizations that offer broader service but hold down costs by preapproving services or placing other restrictions on the medical providers. Most of the abuses do not involve these plans. But do think very carefully before switching to an Advantage Plan; the deal may not be as sweet as it first seemed.

Remember: There are different kinds of Medicare Advantage Plans. The abuses have centered on Medicare Advantage plans known as "private fee for service plans". Under a private fee for service plan, the member is free to use any physician or provider willing to accept a payment from the plan and render service according to conditions set by the Plan. Many people switch to private fee for service plans later to discover that their doctor will not participate in the Plan.

One great resource for seniors and their families is the SHIIP program run by the North Carolina Department of Insurance. Counsellors are available at 800-443-9345. Or you can visit the program website - I've put a link under this month's favorite Links in this issue of Elder Law Update.  Use this free service. If your instincts tell you something may be too good to be true, it probably is.