Debunking “Good Cause” and Successful Appeals of Medicaid Denials for Failure to Provide Documentation

September 2016

The most common basis for the denial of institutional Medicaid benefits is the failure to provide sufficient documentation required to render an eligibility determination.  As is clearly stated in the state regulations a Medicaid applicant and his/her designated representative have the primary responsibility of providing all documentation and verification necessary to render an eligibility determination.  This obligation, though simply stated and reasonable, is no small feat. 

The New York State Department of Health’s “Access NY” application2 specifically requires the production of documentation verifying the applicant’s citizenship, identity, residency within the county for which the application is filed, the net and gross amounts of all sources of monthly income, verification of health insurance, copies of tax returns with all schedules and supporting Wage and Income Transcripts (i.e., IRS-1099s) for the last four (4) years, and copies of financial statements for all accounts owned by the applicant (and his/her spouse) within sixty (60) months from the month preceding the filing date of the Medicaid Application (i.e., the five year look-back).

It is notable the sixty (60) month financial history has recently been lengthened by the issuance of the General Information System 15 MA/07 (Apr. 9, 2015).  The Director of Eligibility and Marketplace Integration for the Office of Health Insurance Programs notified all local districts of the N.Y. State Medicaid program of an expansion of the required look-back to commence sixty (60) months prior to the date of the applicant’s admission to a skilled nursing facility.  This rule only applies when the application is classified as a “conversion” or applicant is already in receipt of Medicaid benefits.  This procedural change greatly affects the timing of an applicant’s Medicaid planning, as before the issuance of the GIS 15 MA/07, an applicant, or his/her attorney, could delay the filing of a Medicaid Application to allow asset transfers at the beginning of an appli-cant’s sixty (60) month financial history to “fall off” during the applicant’s rehabilitative treatment customarily paid by Medicare and/or secondary health insurance coverage.  Assuming, arguendo, the applicant had transferred assets or real property at the beginning of the sixty (60) month financial history, this type of analysis could serve to protect the Medicaid applicant (or his/her family) from facing a lengthy penalty period (wherein private payment would be required) in exchange for the remittance of private payment during co-insurance days (which are typically a fraction of the prevailing daily rate charged once the rehabilitative services have been exhausted). 

The production of the sixty (60) month financial history also requires the submission of verification for each transaction in excess of $2,000 during the look back period.  Acceptable verification includes the production of withdrawal slips and cancelled checks or an explanation of the disposition of any cash withdrawal or a copy of the deposit slip and a copy of the check(s) deposited or verification of the source of any cash deposit. This detail oriented and tedious process is further complicated in the common scenario where the applicant, the primary source of this information, suffers from memory deficits, chronic health problems that limit their ability to assist with the Medicaid Application or are administered a medication regime that has affected their attentiveness or memory recall.  The documentation requirements demanded by the local Departments of Social Services to secure institutional Medicaid benefits (or “all covered care and services”) can be an insurmountable task for the population for which they are designed — a population that suffers from such debilitating diseases, injuries or deteriorating health they require round the clock skilled nursing services (the highest level of care offered by our medical community).  This process is further complicated by the strict time constraints demanded by the local Departments of Social Services.  The customary deadline for inquiries for additional documentation are returnable within ten (10) days of the issuance date (this deadline is inclusive of weekends, holidays and mailing time).  It should come as no surprise many institutional Medicaid applications are, therefore, denied for an applicant’s failure to provide the requested documentation within the prescribed time-frame. 

One of the only available means of overcoming a denial of Medicaid benefits for an applicant’s failure to provide the requested documentation is through the establishment of “good cause.”  Despite numerous references to an applicant’s demonstration of “good cause” found in the New York State Medicaid Reference Guide (MRG), New York Code of Rules and Regulations and Social Services Law, the definition of good cause is, in a word, ambiguous.  This leaves the interpretation of this phrase and the establishment of good cause up to creative thinking and a compilation of solid evidence to support the contention.  

By way of example, there are two successful appeals where denials of Medicaid benefits for failure to provide documentation were overturned through the establishment of good cause.  The first appeal was a denial issued for failure to verify the disposition of reverse mortgage proceeds.  In the Matter of the Appeal of JP3 a denial of institutional Medicaid benefits issued by the Suffolk County Department of Social Services was reversed by the New York State Department of Health when good cause was established through the demonstration of the applicant’s cognitive limitations and her inability to access the requested documentation due to her institutionalization.  The State found the appellant met her burden of establishing good cause through the production of sufficient evidence to prove the applicant’s institutionalization resulted in her inability to access the eligibility documentation requested.  The Agency asserted the appellant’s failure to timely respond during the application’s pendency rendered the decision correct when made and further argued the delay in providing the information requested after the retention of legal counsel demonstrated a continued failure to provide the documentation necessary to render an eligibility determination.  However, the State held the applicant’s difficulty in obtaining the information after her discharge home due to her rehabilitation and recovery in the community and her impaired cognitive abilities as a result of multiple strokes was sufficient “good cause” to overturn the original denial of benefits.  The evidence presented at this hearing included copies of the outstanding financial records and supporting letters corroborating verification of the disposition of the appellant’s reverse mortgage proceeds and a supporting affidavit from the applicant attesting to her inability to procure the documents during her institutionalization and her difficulties in recalling and retrieving same upon her discharge to her home.  It is most notable the applicant in this appeal did not have a Power of Attorney and despite her efforts to enlist the cooperation of her son and his failure to locate the requested documentation, there was no person with the legal authority to act in the applicant’s stead.  

The second appeal where the State held good cause was established demon-strates the significance of an attorney’s investigation of the facts and circum-stances of the Medicaid applicant and his/her representative.  In the Matter of the Appeal of DR4 a denial of institutional Medicaid benefits issued by the Suffolk County Department of Social Services was overturned by the State upon a sufficient showing of good cause where the applicant suffered from severe dementia and her power of attorney was also stricken by a debilitating disease.  The State held the applicant and his/her representative failed to provide the documentation requested during the pendency of the Medicaid application and the denial notice was, therefore, properly issued.  However, the appeal succeeded upon sufficient proof of the “good cause” which precipitated the Attorney-in-fact’s failure to act.  The appellant presented extensive medical records documenting the attorney-in-fact’s testing, diagnosis, procedures, surgeries and ongoing treat-ments over a three (3) year time period including the seven (7) months during which the applicant’s application was pending before the Agency.  The Agency argued the applicant had appointed a co-Attorney in Fact in the applicant’s advance directive and the application and the underlying resulting responsibility to provide all documentation requested to establish eligibility should have been delegated to the named co-agent.  However, the appellant successfully argued the applicant’s failure to act and failure to delegate her duties were caused by her relatively young age and the effects of her opioid pain regimen.  Documentation of the side effects of the prescribed pain medication was also presented at the hearing.  Notably, the medical records confirmed the attorney-in-fact underwent a significant surgery a mere seven (7) days prior to the deadline of the only document request issued by the Agency.  The State, in its decision, recognized the procedural requirements of a Medicaid Application are crucial and must be met, but it further found “good cause” is established through a demonstration of uncontroverted cir-cumstances beyond the applicant’s or representative’s control which resulted in their incapacity to make diligent, good faith efforts to procure the requested documentation. 

These appeals demonstrate the importance of an attorney’s initial fact-gathering and investigation at every client interaction.  In the Matter of the Appeal of JP, the entirety of the supporting evidence for the appeal was in the sole custody and control of the applicant who struggled with the memory recall necessary to provide a sufficient response to the Agency’s document request and whose institutionalization denied her access to the documents requested.  This appeal is a classic example with wide applicability to overcome denials of this type.  Additionally, In the Matter of the Appeal of DR, upon sufficient proof of the applicant’s incapacity, good cause may also be demonstrated by medical documentation of an attorney-in-fact’s incapacity as well.  Since the facts and circumstances of each applicant (and their financial agent(s)) varies, it is imperative elder law attorneys be mindful of the medical histories and related personal issues of clients, which may stand as a cornerstone to a successful appeal. 

Diana Choy-Shan, Esq. is a Senior Associate at Genser Dubow Genser and Cona, LLP 
in Melville.  Choy-Shan practices in the Healthcare Reimbursement and Recovery Department where her work focuses pri-marily on government benefits eligibility, including Medicaid applications and appeals.

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