Original Notice.

     Preproposal statement of inquiry was filed as WSR 02-02-052.

     Title of Rule: Chapter 388-527 WAC, Services subject to recovery, amending WAC 388-527-2700, 388-527-2730, 388-527-2733, 388-527-2740, 388-527-2742, 388-527-2754 and 388-527-2790; and new section WAC 388-527-2792.

     Purpose: To increase the scope of the state's recovery of costs of medical care from a client's estate.

     Statutory Authority for Adoption: RCW 43.20B.080 and 74.08.090.

     Statute Being Implemented: RCW 43.20B.080, 74.34.090, Section 1917(b) of the Social Security Act (42 U.S.C. 1396p).

     Summary: These amendments are being proposed in order to:

•     Update program-related definitions;

•     Identify assets and resources of Native Americans/Alaska Natives that are exempt from estate recovery;

•     Exclude government reparation payments to special population from estate recovery;

•     Include Division of Developmental Disabilities' clients in estate recovery for state-funded long-term care services;

•     Identify additional Medicaid expenditures to be included in estate recovery. The proposed language includes all Medicaid services, premium payments to managed care organizations, and Medicare cost-sharing services and Medicare premiums for individuals also receiving Medicaid; and

•     Allow interest to be charged on debts that are past due.

     Reasons Supporting Proposal: ESSB 6153-Washington State Omnibus Operating Budget 2001-2003 (chapter 7, Part II, Laws of 2001) requires additional medical assistance costs to be subject to estate recovery by the department.

     Name of Agency Personnel Responsible for Drafting: Wendy Boedigheimer, MAA, P.O. Box 45533, Olympia, WA 98504-5533, (360) 725-1306; Implementation and Enforcement: Mary Beth Ingram, MAA, P.O. Box 45534, Olympia, WA 98504-5534, (360) 725-1327.

     Name of Proponent: Department of Social and Health Services, governmental.

     Rule is not necessitated by federal law, federal or state court decision.

     Proposal Changes the Following Existing Rules: This proposed rule increases the state's recovery of medical expenses as allowed by U.S.C. Sec. 1396p (b)(B)(ii) and brings the department in line with RCW 43.20B.080.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The Medical Assistance Administration (MAA) has analyzed the proposed rule and concludes that the rule change does not impose costs, regulatory burdens, or affect income of small businesses.

     RCW 34.05.328 applies to this rule adoption. The proposed rule change meets the definition of a significant legislative rule. A determination of the probable costs and benefits is available from the person listed above.

     Hearing Location: Lacey Government Center (parking behind Sakura Japanese Restaurant), Room 104-B, 1009 College Street, Lacey, WA 98503, on March 23, 2004, at 10:00 a.m.

     Assistance for Persons with Disabilities: Contact Andy Fernando, DSHS Rules Coordinator, by March 19, 2004, phone (360) 664-6094, TTY (360) 664-6178, e-mail fernaax@dshs.wa.gov.

     Submit Written Comments to: Identify WAC Numbers, DSHS Rules Coordinator, Rules and Policies Assistance Unit, mail to P.O. Box 45850, Olympia, WA 98504-5850, deliver to 4500 10th Avenue S.E., Lacey, WA, fax (360) 664-6185, e-mail fernaax@dshs.wa.gov, by 5:00 p.m., March 23, 2004.

     Date of Intended Adoption: Not sooner than March 24, 2004.

February 11, 2004

Brian H. Lindgren, Manager

Rules and Policies Assistance Unit

[Statutory Authority: RCW 43.20B.080, 74.08.090 and 74.34.010. 99-11-076, § 388-527-2700, filed 5/18/99, effective 6/18/99.]

     "Contract health service delivery area (CHSDA)" means the geographic area within which contract health services will be made available by the Indian Health Service to members of an identified Indian community who reside in the area as identified in 42 C.F.R. Sec. 136.21(d) and 136.22.

     "Estate" means all real and personal property and any other assets that pass upon the client's death under the client's will or by intestate succession pursuant to chapter 11.04 RCW or under chapter 11.62 RCW. The value of the estate will be reduced by any valid liability against the deceased client's property at the time of death. An estate also includes:

     (1) For a client who died after June 30, 1995 and before July 27, 1997, nonprobate assets as defined by RCW 11.02.005, except property passing through a community property agreement; or

     (2) For a client who died after July 26, 1997, nonprobate assets as defined by RCW 11.02.005.

     ((The value of the estate shall be reduced by any valid liability against the deceased client's property at the time of death.))

     "Lis pendens" means a notice filed in public records warning that title to certain real property is in litigation and this outcome may affect the title.

     "Long-term care services" means, for the purposes of this chapter only, the services administered directly or through contract by the ((aging and adult services administration of the)) department((,)) of social and health services for clients of the home and community services division and division of developmental disabilities including, but not limited to, nursing facility care and home and community services.

     "Medicaid" means the state and federally funded program that provides medical services under Title XIX of the Federal Social Security Act.

     "Medical assistance" means both Medicaid and medical care services.

     "Medicare Savings programs" means the programs described in WAC 388-517-0300 that help a client pay some of the costs that Medicare does not cover.

     "Property":

     (1) "Personal property" means any property that is not classified as real, title, or trust property in the definitions provided here;

     (2) "Real property" means land and anything growing on, attached to, or erected thereon;

     (3) "Title property" means, for the purposes of this chapter only, property with a title such as motor homes, mobile homes, boats, motorcycles, and vehicles.

     (4) "Trust property" means any type of property interest titled in, or held by, a trustee for the benefit of another person or entity.

     "State-only funded long-term care" means the long-term care services that are ((paid only)) financed with state funds only.

     (("Medical assistance" means the federal aid medical care program provided under Title XIX of the Federal Social Security Act.))

[Statutory Authority: RCW 43.20B.080, 74.08.090 and 74.34.010. 99-11-076, § 388-527-2730, filed 5/18/99, effective 6/18/99. Statutory Authority: 1995 1st sp.s. c 18 and RCW 74.08.090. 95-19-001 and 95-24-037 (Orders 3893 and 3893A), § 388-527-2730, filed 9/6/95 and 11/29/95, effective 10/7/95 and 12/30/95.]

     (2) The client's estate is not liable when the client died before July 1, 1994 and on the date of death there was:

     (a) A surviving spouse; or

     (b) A surviving child who was either:

     (i) Under twenty-one years of age; or

     (ii) Blind or disabled as defined under chapter 388-511 WAC.

     (3) The estate of a frail elder or vulnerable adult under RCW ((74.34.010)) 74.34.005 is not liable for the cost of adult protective services (APS) ((paid for only by)) financed with state funds only.

     (4) The client's estate is not liable for amounts paid for Medicare premiums and other cost-sharing expenses incurred on behalf of a client who is eligible only for the Medicare Savings programs, and not otherwise Medicaid eligible.

[Statutory Authority: RCW 43.20B.080, 74.08.090 and 74.34.010. 99-11-076, § 388-527-2733, filed 5/18/99, effective 6/18/99.]

     (1) For a client who on July 1, 1994 was:

     (a) Age sixty-five or older, the client's estate is liable for ((medical assistance that was)) Medicaid services that were subject to recovery and ((which was)) provided on and after the date the client became age sixty-five or after July 26, 1987, whichever is later;

     (b) Age fifty-five through sixty-four years of age, the client's estate is liable for ((medical assistance that was)) Medicaid services that were subject to recovery and ((which was)) provided on and after July 1, 1994; or

     (c) Under age fifty-five, the client's estate is liable for ((medical assistance)) Medicaid services that were subject to recovery and provided on and after the date the client became age fifty-five.

     (2) Regardless of the client's age when the services were provided, the client's estate is liable for state-only funded long-term care services provided to:

     (a) Home and community services' clients on and after July 1, 1995 ((regardless of the client's age when the services were provided)); and

     (b) Division of developmental disabilities' clients on and after June 1, 2004.

[Statutory Authority: RCW 43.20B.080, 74.08.090 and 74.34.010. 99-11-076, § 388-527-2740, filed 5/18/99, effective 6/18/99. Statutory Authority: 1995 1st sp.s. c 18 and RCW 74.08.090. 95-19-001 and 95-24-037 (Orders 3893 and 3893A), § 388-527-2740, filed 9/6/95 and 11/29/95, effective 10/7/95 and 12/30/95.]

     (1) The client's estate is liable for:

     (a) All ((medical assistance)) Medicaid services provided from July 26, 1987 through June 30, 1994;

     (b) The following ((medical assistance)) Medicaid services provided after June 30, 1994 and before July 1, 1995:

     (i) Nursing facility services;

     (ii) Home and community-based services; and

     (iii) Hospital and prescription drug services provided to a client while receiving nursing facility services or home and community-based services.

     (c) The following ((medical assistance)) Medicaid services provided after June 30, 1995 and before June 1, 2004:

     (i) Nursing facility services;

     (ii) Home and community-based services;

     (iii) Adult day health;

     (iv) Medicaid personal care;

     (v) Private duty nursing administered by the aging and ((adult)) disability services administration of the department; and

     (vi) Hospital and prescription drug services provided to a client while receiving services described under (c)(i), (ii), (iii), (iv), or (v) of this subsection.

     (d) The following services provided after May 1, 2004:

     (i) All Medicaid services;

     (ii) Medicare savings programs services for individuals also receiving Medicaid;

     (iii) Medicare premiums only for individuals also receiving Medicaid; and

     (iv) Premium payments to managed care organizations.

     (2) The client's estate is liable for all state-only funded long-term care services and related hospital and prescription drug services provided ((after June 30, 1995)) to:

     (a) Home and community services' clients on and after July 1, 1995; and

     (b) Division of developmental disabilities' clients on and after June 1, 2004.

[Statutory Authority: RCW 43.20B.080, 74.08.090 and 74.34.010. 99-11-076, § 388-527-2742, filed 5/18/99, effective 6/18/99. Statutory Authority: RCW 74.08.090 and 1995 1st sp.s. c 18. 95-19-001 (Order 3893), § 388-527-2742, filed 9/6/95, effective 10/7/95.]

     (1) Undue hardship exists when:

     (a) The estate subject to adjustment or recovery is the sole income-producing asset of one or more of the heirs and income is limited; or

     (b) ((Recovery would result in the impoverishment of one or more of the heirs; or

     (c))) Recovery would deprive an heir of shelter and the heir lacks the financial means to obtain and maintain alternative shelter.

     (2) Undue hardship does not exist when:

     (a) The adjustment or recovery of the client's cost of assistance would merely cause the client's family members inconvenience or restrict the family's lifestyle.

     (b) The heir divests assets to qualify under the undue hardship provision.

     (3) When a deceased client's assets were disregarded in connection with a long-term care insurance policy or contract under chapter 48.85 RCW, recovery is not waived.

     (4) When a waiver is not granted, the department will provide notice to the person who requested the waiver. The denial of a waiver must state:

     (a) The requirements of an application for an adjudicative proceeding to contest the department's decision to deny the waiver; and

     (b) Where assistance may be obtained to make such application.

     (5) A person may contest the department's decision in an adjudicative proceeding when that person requested the department waive recovery, and suffered a loss because that request was not granted.

     (6) An application for an adjudicative proceeding under this section must:

     (a) Be in writing;

     (b) State the basis for contesting the department's denial of the request to waive recovery;

     (c) Include a copy of the department's denial of the request to waive recovery;

     (d) Be signed by the applicant and include the applicant's address and telephone number;

     (e) Be served on the office of financial recovery (OFR) within twenty-eight days of the date the applicant received the department's decision denying the request for a waiver. If the applicant shows good cause, the application may be filed up to thirty days late; and

     (f) Be served on ((the office of financial recovery ())OFR(())) as described in WAC 388-527-2795.

     (7) An adjudicative proceeding held under this section ((shall be)) are governed by chapters 34.05 RCW and 388-02 WAC and this section. If a provision in this section conflicts with a provision in chapter 388-02 WAC, the provision in this section governs.

[Statutory Authority: RCW 74.08.090. 01-02-076, § 388-527-2750, filed 12/29/00, effective 1/29/01. Statutory Authority: RCW 43.20B.080, 74.08.090 and 74.34.010. 99-11-076, § 388-527-2750, filed 5/18/99, effective 6/18/99. Statutory Authority: 1995 1st sp.s. c 18 and RCW 74.08.090. 95-19-001 and 95-24-037 (Orders 3893 and 3893A), § 388-527-2750, filed 9/6/95 and 11/29/95, effective 10/7/95 and 12/30/95.]

     (a) Received before July 25, 1993; and

     (b) When the client died with:

     (i) No surviving spouse;

     (ii) No surviving child who is:

     (A) Under twenty-one years of age;

     (B) Blind; or

     (C) Disabled.

     (iii) A surviving child who is twenty-one years of age or older.

     (2) For services received after July 24, 1993, all services recoverable under WAC 388-527-2742 will be recovered, even from the first fifty thousand dollars of estate value that is exempt above, except as set forth in ((subsection)) subsections (3) through (8) of this section.

     (3) For a client who received services after July 24, 1993 and before July 1, 1994, the following property, up to a combined fair market value of two thousand dollars, is not recovered from the estate of the client:

     (a) Family heirlooms((,));

     (b) Collectibles((,));

     (c) Antiques((,));

     (d) Papers((,));

     (e) Jewelry((,));

     (f) Photos((,)); and

     (g) Other personal effects of the deceased client and to which a surviving child is entitled.

     (4) Certain properties belonging to American Indians/Alaska Natives are exempt from Medicaid estate recovery if at the time of death:

     (a) The deceased client was enrolled in a federally recognized tribe; and

     (b) The estate or heir documents the deceased client's ownership interest in trust or nontrust real property and improvements located on a reservation, near a reservation as designated and approved by the Bureau of Indian Affairs of the U.S. Department of the Interior, or located:

     (i) Within the most recent boundaries of a prior federal reservation; or

     (ii) Within the Contract Health Service Delivery Area boundary for social services provided by the deceased client's tribe to its enrolled members.

     (5) Protection of trust and nontrust property under subsection (4) is limited to circumstances when the real property and improvements pass from an Indian (as defined in 25 U.S.C. Chapter 17, Sec. 1452(b)) to one or more relatives (by blood, adoption, or marriage), including Indians not enrolled as members of a tribe and non-Indians, such as spouses and step-children, that their culture would nonetheless protect as family members, to a tribe or tribal organization and/or to one or more Indians.

     (6) Certain AI/AN income and resources (such as interests in and income derived from tribal land and other resources currently held in trust status and judgment funds from the Indian Claims Commission and the U.S. Claims Court) are exempt from Medicaid estate recovery by other laws and regulations.

     (7) Tribal artifacts held by individual Native Americans or Alaska Natives including, but not limited to, traditional regalia, basketry and pottery, and treaty-related fishing equipment are exempt from Medicaid estate recovery.

     (8) Government reparation payments specifically excluded by federal law in determining eligibility are exempt from Medicaid estate recovery as long as such funds have been kept segregated and not commingled with other countable resources and remain identifiable.

[Statutory Authority: RCW 43.20B.080, 74.08.090 and 74.34.010. 99-11-076, § 388-527-2754, filed 5/18/99, effective 6/18/99. Statutory Authority: 1995 1st sp.s. c 18 and RCW 74.08.090. 95-19-001 and 95-24-037 (Orders 3893 and 3893A), § 388-527-2754, filed 9/6/95 and 11/29/95, effective 10/7/95 and 12/30/95.]

     (2) When the department seeks to recover from a client's estate the cost of medical assistance or state-only funded long-term care services, or both, provided to the client, prior to filing a lien against the deceased client's real property, notice shall be given to:

     (a) The probate estate's personal representative, if any; or

     (b) Any other person known to have title to the affected property.

     (3) Prior to filing a lien against any of the deceased client's real or titled property, a person known to have title to the property ((shall)) will be notified and have an opportunity for an adjudicative proceeding as follows:

     (a) Any person known to have title to the property ((shall)) will be served with a notice of intent to file lien, which ((shall)) will state:

     (i) The deceased client's name, social security number, if known, date of birth, and date of death;

     (ii) The amount of medical assistance((,)) or state-only funded long-term care services, or both, correctly paid on behalf of the deceased client that the department seeks to recover;

     (iii) The department's intent to file a lien against the deceased client's ((real)) property to recover the amount of medical assistance or state-only funded long-term care services, or both, correctly paid on behalf of the deceased client;

     (iv) The county in which the ((real)) property is located; and

     (v) The right of the person known to have title to the property to contest the department's decision to file a lien by applying for an adjudicative proceeding with the office of financial recovery (OFR).

     (b) An adjudicative proceeding can determine whether:

     (i) The amount of medical assistance or state-only funded long-term care services, or both, correctly paid on behalf of the deceased client alleged by the department's notice of intent to file a lien is correct; and

     (ii) The deceased client had legal title to the ((real )) property at the time of the client's death.

     (4) An application for an adjudicative proceeding must:

     (a) Be in writing;

     (b) State the basis for contesting the department's notice of intent to file the lien;

     (c) Be signed by the applicant and state the applicant's address and telephone number;

     (d) Be served on ((())OFR(())) within twenty-eight days of the date the applicant received the department's notice of intent to file the lien. An application filed up to thirty days late may be treated as timely filed if the applicant shows good cause for filing late; and

     (e) Be served on OFR as described in WAC 388-527-2795.

     (5) Persons known to have title to the property ((shall)) will be notified of the time and place of the adjudicative proceeding by the department when it receives an application for the same.

     (6) An adjudicative proceeding under this section ((shall be)) is governed by chapters 34.05 RCW and 388-02 WAC and this section. If a provision in this section conflicts with a provision in chapter 388-02 WAC, the provision in this section governs.

     (7) If no known title holder requests an adjudicative proceeding, a lien ((shall)) will be filed by the department twenty-eight days after the date that the notice of intent to file the lien letter was mailed. The lien will be filed against the deceased client's real property in the amount of the correctly paid medical assistance or state-only funded long-term care services, or both.

     (8) If an adjudicative proceeding is conducted in accordance with this regulation, when the final agency decision is issued, the department will file a lien against the deceased client's real property for the amount of the correctly paid medical assistance or state-only funded long-term care services, or both, as established by that final agency decision.

[Statutory Authority: RCW 74.08.090. 01-02-076, § 388-527-2790, filed 12/29/00, effective 1/29/01. Statutory Authority: RCW 43.20B.080, 74.08.090 and 74.34.010. 99-11-076, § 388-527-2790, filed 5/18/99, effective 6/18/99. Statutory Authority: 1995 1st sp.s. c 18 and RCW 74.08.090. 95-19-001 and 95-24-037 (Orders 3893 and 3893A), § 388-527-2790, filed 9/6/95 and 11/29/95, effective 10/7/95 and 12/30/95.]

     (a) The filing of the department's creditor's claim in the probate of the deceased client's estate; or

     (b) The recording of the department's lien against the property of the deceased client in the county where the property is located.

     (2) The department may waive interest only if:

     (a) Insufficient cash, accounts, or stock exist to satisfy the department's claim and no sales of estate property has occurred despite its continuous listing or marketing for sale in a commercially reasonable manner for a reasonable fair market value; or

     (b) Suit filed in the probate of the deceased client's estate resulted in the filing of a lis pendens or order prohibiting the personal representative from selling the estate property; provided however, this section will not apply to such suit contesting the department's assessment of interest or claim for reimbursement of medical assistance or state-only funded long-term care services debt.

[]

     (1) ((Legal service must be by personal service or certified mail, return receipt requested, to OFR at the address described in this section.

     (2) The mailing address of the office of financial recovery is:

     Office of Financial Recovery

     P.O. Box 9501

     Olympia, WA 98507-9501.

     (3) The physical location of the office of financial recovery is:)) Personally at Blake Office Park, 4450 10th Avenue SE, Lacey, Washington; or

     (2) By certified mail, return receipt requested, to Office of Financial Recovery, PO Box 9501, Olympia, WA 98507-9501.

[Statutory Authority: RCW 43.20B.080, 74.08.090 and 74.34.010. 99-11-076, § 388-527-2795, filed 5/18/99, effective 6/18/99.]

     Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.

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