MGE 215665 (03/20/2025)
Over-verification was agency error, Family Care backdated

The attached proposed decision of the Administrative Law Judge dated February 10, 2025 is hereby adopted as the final order of the Department.

Preliminary Recitals

Pursuant to a petition filed on October 29, 2024, under Wis. Stat. § 49.45(5), and Wis. Admin. Code HA § 3.03(1), to review a decision by the Racine County Department of Human Services regarding Medical Assistance, a hearing was held on January 9, 2025, by telephone. The hearing was originally scheduled for 9:15am at which point the Division of Hearings and Appeals had not yet received Respondent’s exhibits. The parties consented to a rescheduling of the hearing for the same day at 2:30pm to allow for receipt of the exhibits. The hearing was held at that later time. The record was left open for a period of ten days for both parties to supplement the record.

The issue for determination is whether the agency correctly denied Petitioner’s application for Medicaid and the Community-Based Waivers Long Term Care program.

There appeared at that time the following persons:

PARTIES IN INTEREST:

Petitioner:
—

Petitioner’s Representative:
—

Respondent:
Department of Health Services
1 West Wilson Street, Room 651
Madison, WI 53703
By: Fatima Marquez
Racine County Department of Human Services
1717 Taylor Ave
Racine, WI 53403-2497

ADMINISTRATIVE LAW JUDGE:
Wendy I. Smith
Division of Hearings and Appeals

Findings of Fact

1. Petitioner (CARES —) is an elderly resident of Racine County and resides in —, an assisted living facility located in Racine.
2. In a letter dated May 3, 2024, the Aging & Disability Resource Center of Racine County (ADRC) found Petitioner to be functionally eligible for long-term care benefits.
3. On July 16, 2024, the agency received Petitioner’s application for Elderly, Blind, or Disabled Medicaid (EBD Medicaid). Petitioner indicated that she was applying for Medicaid in order to receive services in an assisted living facility.
   1. Petitioner’s application identified a checking account at — and an irrevocable burial trust.
   2. Petitioner reported receiving income from Social Security and pension/retirement benefits.
   3. Petitioner reported the sale of her home in October 2020, and no other sale or transfer of assets within the last five years.
   4. Petitioner reported a monthly Medicare Supplement policy premium.
   5. Petitioner’s application did not request backdated coverage.
   6. The application was signed by Petitioner’s Power of Attorney on July 1, 2024.
4. At the time of her application, Petitioner received $2,552.52 per month from Social Security benefits and retirement/pension benefits.
5. Supporting documents were enclosed with her application, including a transaction history for charges from —, a three-month transaction history statement for the — account including a current balance as of July 1, 2024, and a written confirmation that Petitioner’s burial asset was irrevocably assigned to —.
6. On July 19, 2024, the agency requested that Petitioner submit proof documents to verify the information in her application with a deadline of August 15, 2024. The agency requested additional proof of her burial asset, financial account, pension/retirement income, and her home sale contract and proof of where funds were deposited.
7. The July 19 notice required Petitioner to submit proof of a financial account at — which had not been reported by Petitioner. Petitioner submitted a statement from the bank confirming that Petitioner has never had an account there.
8. On August 5, 2024, the ADRC faxed a Referral to Income Maintenance for Managed Long Term Care Services to the agency confirming that she was functionally eligible as of May 3, 2024. The anticipated program start date was listed as September 1, 2024.
9. In a notice dated August 15, 2024, the agency extended the deadline for providing the requested proof documents until September 3, 2024. It added a request for proof of Petitioner’s health insurance premium by the same deadline. By this time, Petitioner had already submitted responsive documents, such as proof of the burial asset and financial statements. There was no evidence that the agency was unable to ask for the additional premium information in its earlier notice of July 19, 2024.
10. Prior to the deadline, Petitioner submitted responsive proof documents.
11. In a notice dated September 4, 2024, the agency again requested additional proof documents. The notice requested verification of the “spend-down” of Petitioner’s money market account in which she deposited the proceeds from the sale of her home in 2020, the home sale agreement, and a copy of the burial insurance policy with statement of goods and services. The stated deadline was September 13, 2024. There was no evidence that the agency was unable to ask for the specific “spend-down” information in greater detail in its earlier notice of July 19, 2024.
12. Petitioner supplied responsive documentation to the agency, which was received September 16, 2024.
13. In a notice dated September 24, 2024, the agency denied Petitioner’s application for the Community Waivers subprogram, effective September 1, 2024, claiming that she had not supplied requested verification items by the stated deadline. Petitioner was also denied Medicaid because the agency claimed that her household income was over the program limit and she had not supplied requested verification.
14. Petitioner filed an appeal with the Division of Hearings and Appeals.
15. Prior to the hearing on this matter, the agency reopened Petitioner’s application and allowed her to submit additional documentation to verify her financial eligibility. Specifically, in a letter dated December 9, 2024, the agency identified seventeen transactions (withdrawals or checks) from Petitioner’s submitted bank statements for additional verification. The majority of these transactions were subsequently reconciled by the agency with the transaction history for — that had already been provided by Petitioner with her application in July. It required no additional documentation to do so. There was no evidence that the agency was unable to ask for the specific “spend-down” information in greater detail in its earlier notice of July 19, 2024.
16. In a notice dated December 23, 2024, the agency requested verification of only three remaining withdrawals dated 01/27/2023, 11/21/2023, and 12/22/2023 (totaling $2,700.00), with a stated due date of January 6, 2024.
17. Petitioner’s authorized representative submitted responsive documents before the stated deadline. There was no evidence that the agency was unable to ask for this specific “spend-down” information in greater detail in its earlier notice of July 19, 2024.
18. In a notice dated January 10, 2025 (the day after the hearing was held in this matter), Petitioner was advised that she was now enrolled in the Community Waivers program, effective as of January 7, 2025. Petitioner is enrolled in the Family Care program.

Discussion

In this case, Petitioner received a denial of eligibility for Medicaid and the Community Waivers Long-Term Care programs in a notice dated September 24, 2024. Each are addressed in turn below.

Medicaid Eligibility

The state’s Medicaid program offers Medical Assistance (MA) to individuals who are elderly, blind, or disabled (EBD) and who meet certain financial and non-financial eligibility criteria. See Wis. Stat. § 49.47; Wis. Admin. Code DHS § 103.03; Wisconsin Medicaid Eligibility Handbook (Medicaid Handbook) § 24.1.

For the “medically needy” fiscal test group, a single-person assistance group must have countable income of $1,255.00 per month or less, and countable assets of $2,000.00 or less, to be financially eligible for EBD Medicaid. Wis. Stat. § 49.47(4); Wis. Admin. Code DHS § 103.04; Medicaid Handbook at §§ 15.1, 24.1, 39.4.1. When calculating an applicant’s countable income, the agency must count pensions and Social Security benefits. Medicaid Handbook at § 15.4.

Here, Petitioner’s application for EBD Medicaid was denied on two bases: (1) her income was counted as over the program limit and (2) she did not supply the requested proof information during the verification process. While I further address the issue with requested verification below as to her Community Waivers eligibility, the record shows that Petitioner’s monthly income at the time of her application and thereafter exceeds the program limit for medically needy Medicaid. She reported receiving Petitioner’s representative did not contest the income amounts listed in the application or cited in the agency’s denial notice.

Based on the record before me, the agency’s denial of Petitioner’s Medicaid application on September 24, 2024, was correct as her income exceeded program limits.

Community Waivers Eligibility

In the same September 24, 2024, notice, Petitioner was also denied long-term care under the MA waiver programs (referred to in the denial notice as “Community Waivers”) on the basis that she did not provide requested verification information.

Family Care is an MA waiver program that provides long-term care services to frail elderly individuals, individuals who have physical disabilities, and individuals who have intellectual disabilities. Wis. Stat. § 46.286; see also Wis. Admin. Code Ch. DHS 10. Family Care is designed to deliver benefits through a managed care system.

To be eligible, a person must apply for MA benefits and meet the financial, non-financial, and functional criteria. Wis. Stat. § 46.286(1); Wis. Admin. Code DHS §§ 10.32(1)(d) and (e). However, a person who meets all of the program’s eligibility criteria is not entitled to receive benefits until they are enrolled in a managed care organization (MCO). Wis. Stat. § 46.286 (“A person is eligible for, but not necessarily entitled to, the family care benefit if [the person satisfies all eligibility criteria]”); Wis. Admin. Code DHS § 10.36(1); Wis. Admin. Code § DHS 10.41(1). In other words, an individual cannot begin to actually receive Family Care benefits until they are enrolled in an MCO and they cannot be enrolled in an MCO until they are found eligible for MA through the application process. Thus, the longer the application process takes, the later an individual’s benefit start date will be.

Income maintenance (IM) agencies determine financial and non-financial eligibility. Wis. Admin. Code DHS § 10.31(4)(a). IM agencies are generally required to determine this eligibility “as soon as practicable, but no later than 30 days from the date the agency receives an [application].” Wis. Admin. Code DHS § 10.31(6)(a). Aging and Disability Resource Centers (ADRCs) make functional eligibility determinations. Id. ADRCs are generally required to determine an individual’s functional eligibility “as soon as practicable, but no more than 30 days from the date the resource center receives verbal acceptance from the applicant to proceed with the functional screen.” Wis. Admin. Code DHS § 10.31(6)(am). The 30-day time periods for determining financial and non-financial eligibility and for determining functional eligibility may be extended if there is a delay in obtaining necessary information. Wis. Admin. Code DHS § 10.31(6)(b).

In this case, Petitioner’s application was not processed in 30 days. It took the agency 71 days from its receipt of the application to issue a denial notice, largely due to multiple and sometimes duplicative requests for verification of information. After filing an appeal, the agency attempted to correct the processing errors and eventually enrolled Petitioner in Family Care as of January 7, 2025—176 days from receipt of her application.

The agency is required to accurately identify an applicant’s income and assets through the process of verification. Wis. Admin. Code DHS §§ 102.03, 103.04; see also Medicaid Handbook at §§ 15.1, 16.l. The agency must also assess transfers of assets for possible divestment. Wis. Stat. § 49.453; Wis. Admin. Code DHS § 103.065. And applicants seeking long-term care through an adult waiver program are subject to divestment rules. Medicaid Handbook at § 17.1.1.

The agency must request verification within the 30-day application processing time and give the applicant a minimum of 20 days to provide any necessary verification. Id. at § 20.7.1.1. The agency may not request excessive or unnecessary verification, nor may it deny an applicant if they did not receive adequate notice of the verification required. Id. at §§ 20.1.4, 20.8.3.

At the hearing, the agency’s representative testified that Petitioner’s application was denied because she did not submit verification documents by the September 13, 2024, deadline stated in the request notice dated September 4, 2024. Petitioner’s case was then closed. The representative stated that it was not until after Petitioner filed an appeal in December that the agency discovered that verification documents had been submitted and received September 16, 2024, which it claims was after the deadline. Petitioner’s case was reopened to allow submission of more verification.

As stated above, the agency is required to provide Petitioner with at least 20 days to respond to a verification request. The September 4 request was not simply an extension of a previous deadline. This notice required Petitioner to submit new information, including an explanation of all spend-down of the proceeds of Petitioner’s home sale over the course of four years. Petitioner was not given enough time to respond to the request. The agency’s curtailment of the 20-day response time was inconsistent with its own handbook. Petitioner’s representative testified credibly that she attempted to comply with this shortened deadline by supplying the requested information by overnight mail on September 11. Petitioner’s documents were marked as being received on September 16, 2024, which is still well within the allowable 20-day period of response.

On these facts, the preponderance of the evidence demonstrates that the agency improperly denied Petitioner’s eligibility for failure to verify at that time. As a result, Petitioner’s enrollment in the Family Care program has been improperly delayed by the agency, not by the Petitioner.

Further, Petitioner’s representative credibly testified about her attempts to comply with the agency’s requests and complained that she was required to submit documents that she had already provided to the agency; her efforts are demonstrated in the record through her production of verification documents. This credibly establishes that the agency either already had the information that it needed but failed to examine that information, or failed to specifically notify Petitioner as to what exactly was needed to avoid unnecessary delay. Based on the record, Petitioner’s representative has been cooperative, proactive, and responsive to the agency’s verification requests. She has produced literally hundreds of pages of documentation, including proof of spend-down of Petitioner’s accounts, her burial assets, monthly income, and more. Petitioner’s submission of documents was consistently timely and thorough, even when the agency asked for duplicate information that it had already been provided by Petitioner (such as explanations of check payments that were able to be reconciled with previously supplied transaction history for — or multiple documents submitted on Petitioner’s burial asset).

On review of the record, there was no evidence that the agency was somehow prevented from asking for the additional pieces of information in its earliest notice of July 19, 2024, or issuing its requests with more specificity so that Petitioner could expedite the verification process. Therefore, the evidence establishes that the verification process in this case improperly delayed Petitioner’s application and enrollment in Family Care.

Based on the record, at the time of her denial, the only additional information needed by the agency to verify her eligibility was a handwritten statement explaining only three 2023 withdrawals. Petitioner’s representative promptly provided that verification within only days of the December 23 request. Again, this could have been requested through a more detailed request earlier in the processing period and failure to do so resulted in delay.

The record shows that Petitioner is financially and functionally eligible for Family Care and has been able to produce sufficient verification, but the agency’s improper delay in processing and improper denial has resulted in a late enrollment. Petitioner requests that her Family Care enrollment be backdated to her original July application date. Unfortunately, that is not permissible. No applicant to the Family Care program is entitled to benefits at the time of an application. Benefits can only go into effect after the applicant is deemed completely eligible and has been enrolled in the program. Based on Petitioner’s demonstrated ability to satisfy the remaining verifications and her preexisting determination of functional eligibility, it is reasonable to expect that had Petitioner’s application not been improperly delayed and improperly denied, she would have satisfied verification of her eligibility by September 1, 2024. This also coincides with the anticipated program enrollment date offered by the ADRC in its referral on August 5, 2024.

The Division of Hearings and Appeals does not have the authority to directly order a backdating of her enrollment. It may, however, issue a proposed decision for consideration by the Secretary of the Department of Health Services (the Department) in cases, such as this one, where agency action or inaction delays an individual’s enrollment into the Family Care program and may recommend an enrollment date to ameliorate the agency’s errors. See e.g., In re Betty L. Whittaker, DHA Case No. 16-7655 (Wis. Div. Hearings & Appeals March 21, 2016) (DHS) and In re Michael Grassel, DHA Case No. 17-3457 (Wis. Div. Hearings & Appeals Sept. 15, 2016) (DHS).

Based on the above, I find that Petitioner is eligible for Community Waivers as of September 1, 2024, and that she should be enrolled in Family Care as of September 1, 2024. This may be ordered only upon adoption of this proposed decision by the Department, as stated below in the ORDER.

Conclusions of Law

1. The agency was within its authority to deny Petitioner’s application for Medicaid as her income exceeds program limits for the medically needy.
2. Petitioner’s application for Community Waivers Medical Assistance improperly denied.
3. Due to the improper denial of Petitioner’s application, Petitioner has been improperly denied enrollment into Family Care.
4. Had the agency properly processed Petitioner’s Community Waivers Medical Assistance application, she would have been eligible to enroll in Family Care no later than September 1, 2024.

THEREFORE, it is

Ordered

That, if and only if, this proposed decision is adopted in a final decision by the Secretary of the Department of Health Services, then the Department and its Family Care agents are directed to take all necessary administrative steps to certify the Petitioner as eligible for Medical Assistance under Family Care Community Waivers with a beginning enrollment date of September 1, 2024, with written notice. These actions shall be completed within 10 days of the date of the Secretary’s final decision adopting the proposed decision.

[Request for a rehearing and appeal to court instructions omitted.]