The Relationship Between Medicaid and Social Security Administration Disability Determinations: An Introduction for Advocates

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2 Copyright 1992 by the National Clearinghouse for Legal Services. All Rights Reserved. 25 Clearinghouse Review 1566 (April 1992) The Relationship Between Medicaid and Social Security Administration Disability Determinations: An Introduction for Advocates By Michael C. Parks. Michael Parks is a Staff Attorney at the National Health Law Program, 2639 S. La Cienega Blvd., Los Angeles, CA 90034, (213) In January 1990, the federal Health Care Financing Administration (HCFA) /1/ codified in regulations its long-standing policy that disability determinations made by the Social Security Administration (SSA) are controlling over Medicaid disability determinations. /2/ The ensuing criticism of this policy led to action by Congress allowing states to opt for a limited exception /3/ and a policy pronouncement by HCFA itself authorizing continued Medicaid coverage for individuals receiving Medicaid at the time of the SSA determination. /4/ These actions sought to resolve important questions about the interplay between Medicaid and SSA disability determinations that had been litigated for several years. The answers are important to millions of low-income persons with disabilities who depend on Medicaid for health care coverage. This column reviews the relevant federal regulatory, statutory, and policy provisions in order to inform advocates about the legal principles emerging from these provisions and to provide a basis for more detailed examination and advocacy. I. General Summary The following are the general rules of disability-based Medicaid eligibility determinations, which are derived from the more detailed discussions below: (1) If an individual applies for Medicaid based on disability, and an applicable eligibility category exists, the state Medicaid agency must make an eligibility determination within 90 days (or within a shorter period, if any, used by the state); /5/ (2) If SSA has made an initial disability determination, that determination is controlling over Medicaid eligibility based on the same disabling condition, /6/ unless the state has adopted the "OBRA-90" (Omnibus Budget Reconciliation Act of 1990) option described next; (3) States have the option of making Medicaid disability determinations even after a finding of nondisability by SSA, until the time that SSA's decision is "final"; /7/ and (4) Whenever an individual has been found to be Medicaid-eligible based on disability prior to an SSA determination of nondisability, the individual is entitled to continued Medicaid coverage until the time that any administrative appeals of SSA's determination are exhausted. /8/

3 II. Background A. Interplay Between Medicaid and SSI Persons with disabilities may seek SSI cash assistance through SSA, /9/ Medicaid coverage from the state Medicaid agency, or both. /10/ SSI and Medicaid are separate programs, authorized and regulated by separate laws, and administered by separate agencies. However, there is considerable interplay between the programs and the agencies that administer them. For example, as described in more detail below, Medicaid eligibility is frequently based in whole or in part on the receipt of SSI benefits or meeting the SSI definition of disability. SSA and the state Medicaid agencies have administrative relationships involving matters such as exchange of eligibility information /11/ and Medicaid purchase of beneficiaries' Medicare premiums. /12/ B. Medicaid Eligibility Based on Disability Persons with disabilities can qualify for Medicaid under several different eligibility categories, although the available categories vary from state-to-state because most are state options. The individuals must also meet any other applicable Medicaid eligibility conditions. /13/ The discussion in this column focuses on disability determination issues. In all but 13 states, the Medicaid Act requires that coverage be provided to all persons receiving SSI benefits (including SSI based on disability). /14/ The other 13 states are the socalled "Section 209(b)" /15/ states, /16/ which have elected to use eligibility requirements for the aged, blind, and disabled that are more restrictive than SSI. Two other states, however, use disability standards that are more restrictive than the SSI definition. /17/ In most of the non-section 209(b) states, pursuant to Section 1634 agreements between the states and SSA, /18/ an SSI eligibility determination constitutes the Medicaid determination as well, and no separate Medicaid application is required. /19/ The Section 209(b) states are able to make all disabled persons, including SSI recipients, apply separately for Medicaid. The same is the case in the six non-section 209(b) states that have not entered into Section 1634 agreements. /20/ States have the option of providing Medicaid coverage to several other groups, including persons with disabilities. These include (1) the "medically needy"--individuals who would qualify for SSI but have incomes in excess of SSI eligibility levels; /21/ (2) individuals who meet SSI eligibility requirements but do not receive SSI; /22/ (3) individuals who are age 65 or who are disabled under SSI standards, with income up to 100 percent of the federal poverty level; /23/ (4) individuals in medical institutions who are age 65 or older or who are disabled under SSI standards and who meet specially set income standards that can be as high as 300 percent of the federal SSI payment level; /24/ and (5) individuals receiving home- and community-based services under certain "waiver" programs, who would be Medicaid-eligible if they resided in a medical institution. /25/

4 Individuals seeking Medicaid under any of these categories must apply with the state agency, except in one special situation. /26/ C. "Independent" Medicaid Disability Determinations Federal law has long required state Medicaid agencies to make Medicaid eligibility determinations, including those based upon disability, within fixed time periods. In the case of disability-based applications, the maximum time limit is 90 days. /27/ What happens when the same individual has also applied for benefits with SSA and is determined not to be disabled? HCFA has maintained that SSA determinations of nondisability are controlling over (i.e., preempt) Medicaid eligibility based on the same alleged disability. /28/ This policy was challenged in a number of cases. Some courts rejected it, holding that Medicaid agencies were required to make "independent" determinations in such situations even if SSA and the Medicaid agency rendered conflicting decisions. /29/ Other courts upheld the policy, in part concluding that persons denied SSI could not be found by Medicaid to meet SSI eligibility criteria. /30/ III. The Regulatory, Legislative, and Policy Material A. The Regulations In January 1990, HCFA codified its policies in the federal Medicaid regulations, at 42 C.F.R. Sec /31/ Although not a model of drafting clarity, the regulation purports to clarify when SSA disability determinations are binding on Medicaid eligibility and when Medicaid agencies may make such determinations. The regulation first sets forth the two overarching principles of HCFA's policy. The first principle is that Medicaid agencies may not make independent determinations if, prior to the expiration of the Medicaid time limit, SSA has made a disability determination "on the same issues presented in the Medicaid application." /32/ The second principle is that SSA disability determinations are binding on the Medicaid agency until changed by SSA. /33/ The regulation then proceeds to provide exceptions to and clarifications of these requirements. The regulation specifies four circumstances under which the Medicaid agency must make disability determinations. Disability will be found (1) if the individual applies for Medicaid "as a non-cash recipient" and either has not applied for SSI or has been found ineligible for SSI for a reason other than disability; /34/

5 (2) in states with Section 1634 agreements, if the individual has applied for both SSI (at SSA) and Medicaid (with the state agency), and SSA has not made a determination "within 90 days" of the date of the Medicaid application; /35/ (3) in the Section 209(b) states and the five other states without Section 1634 agreements, if the individual has applied for both SSI and Medicaid, and either SSA has not made a determination within Medicaid's time limits or the state uses criteria for disability determinations that are more restrictive than SSI's criteria; /36/ and (4) if the individual applies for Medicaid as a noncash recipient and makes one of the following substantive allegations regarding the claimed disability: (a) alleges a disabling condition "different from, or in addition to" that considered by SSA; /37/ (b) more than 12 months after the most recent SSA determination denying disability, alleges that the condition has "changed or deteriorated" since the SSA determination, alleges a new period of disability meeting durational requirements, and has not applied to SSA regarding the allegations; /38/ or (c) less than 12 months after the most recent SSA determination denying disability, alleges that the condition has "changed or deteriorated," alleges a new period of disability meeting durational requirements, and either (i) has applied to SSA for reopening or reconsideration, but SSA refused to consider the allegations; or (ii) no longer meets SSI nondisability requirements. /39/ The remainder of the regulation addresses issues of the evidentiary bases of state agency determinations, and disability review teams. /40/ A separate regulatory amendment increased from 60 to 90 days the time limits within which states must, in the absence of a controlling SSA determination, make disability-based Medicaid determinations. /41/ B. Medicaid Continuation and the OBRA-90 Option The new regulations received significant criticism from beneficiaries, state agency representatives, and members of Congress. Two general types of critiques were received. The first was that, given the high degree of reversal of initial SSA nondisability determinations, /42/ it was unfair to allow such determinations to control Medicaid eligibility. The second was that the exchange of information between SSA and the state Medicaid agencies was inadequate to inform states whether they could make independent determinations. 1. Right to Continued Medicaid On May 16, 1990, in response to a congressional letter of concern raising the first critique noted above, /43/ HHS Secretary Sullivan announced a Medicaid continuation policy by which individuals who were already receiving Medicaid based on disability when an initial determination of nondisability was made by SSA would be entitled to continued Medicaid

6 coverage until they exhausted their administrative appeals of SSA's denial. /44/ For nearly a year, this policy was documented primarily in Secretary Sullivan's May 16, 1990, letter and miscellaneous correspondence from HCFA to state agencies. /45/ In March 1991, it was codified in HCFA's State Medicaid Manual, /46/ but it has never been mentioned in the regulations. This Medicaid continuation right is basically the same as the aid paid pending right under Medicaid regulations, /47/ but is more advantageous to the beneficiary. For example, the right applies as long as the beneficiary continues to pursue the SSA appeals process, within the 60- day time limits applicable to each stage of the appeal. /48/ The protection continues until SSA's administrative appeals process is final, i.e., through the time of an Appeals Council determination (assuming the appeal is timely pursued to that stage). /49/ 2. The OBRA-90 Option The Medicaid continuation right assists beneficiaries already receiving Medicaid when an SSA determination is rendered, but it does not affect the state agency's ability to make Medicaid eligibility determinations following SSA determinations. This matter was addressed by Congress by a provision of the Omnibus Budget Reconciliation Act of 1990 (OBRA-90), /50/ adopted about 5-1/2 months after the May 16, 1990, "Sullivan letter." Section 4724 of OBRA-90 enacted 42 U.S.C. Sec. 1396a(v), which provides that states may make disability-based Medicaid eligibility determinations up until the time that SSA makes a "final" determination of disability with respect to the individual. /51/ Although the legislative history of the provision is sparse, it seems reasonable to conclude that the history supplements the 1990 regulations rather than replacing them (by broadening states' independent determination authority). HCFA concurs in this interpretation. /52/ The statutory language provides that states "may" exercise this authority, and it is likely to be found to be a state option. However, the adoption of the authority could be beneficial to both low-income clients and the states. /53/ C. The State Medicaid Manual Provisions The regulations have not been amended since their January 1990 implementation, and they do not include any reference to the OBRA-90 option or the Medicaid continuation right. In March 1991, HCFA published State Medicaid Manual Transmittal No. 51, which discusses the rules governing disability determinations under Medicaid. /54/ Although its terminology frequently differs from that of the regulations, /55/ Transmittal No. 51 is useful in that it contains a comprehensive overview of the disability determinations, the best articulation of the "Medicaid continuation" right, and other potentially useful comments. /56/ IV. Miscellaneous Advocacy Issues

7 A. Implementing the Medicaid Continuation Right The right of beneficiaries already receiving disability-based Medicaid to maintain their Medicaid coverage in spite of an initial SSA determination of nondisability is extremely important. It will of course be meaningless unless effectively implemented. Since this right is not codified in regulations and operates differently from the "aid paid pending" rights with which state Medicaid agency personnel are familiar, advocates will want to be sure that their states are implementing the continuation right correctly. Basic issues of notice /57/ and effective implementation /58/ merit examination. /59/ B. Monitoring State Compliance with Disability Determination Duties 1. Compliance with Medicaid Time Limits In the absence of a disability determination by SSA, the state agency must make its eligibility determination, including a determination of disability, within 90 days (or the state's shorter time limit, if any). In those cases in which the individual has an SSI application pending with SSA, the state agency may well be reluctant to devote the time and resources to processing the Medicaid application. However, the regulation and HCFA's interpretive comments make it clear that the Medicaid agency must process the Medicaid application in order to be able to make a determination within the Medicaid time limits. /60/ Advocates may wish to monitor their state agencies' compliance with this requirement. /61/ 2. Allegations of Different or Additional Disabilities Even if SSA has determined that an individual is not disabled, the individual will still be entitled to a disability determination by the state Medicaid agency if, for example, the individual alleges a different or additional disabling condition. /62/ In order to implement this right, the state agency will need to know the disabling condition(s) for which SSA made a determination. Advocates have questioned whether the necessary information is in fact communicated between SSA and the state agencies. HCFA has directed states to negotiate agreements with SSA for exchange of necessary information. /63/ Advocates may wish to monitor their state agencies' implementation of these rights. C. Lengthened Medicaid Determination Time Limits When the disability determination regulations were adopted, HCFA also lengthened from 60 to 90 days the time within which states must make disability-based eligibility determinations. HCFA's primary rationale for lengthening the long-standing 60-day time limit was based upon delays in SSA's processing of SSI applications--the agency concluded that lengthening the time limit would reduce the number of instances in which SSA and the Medicaid agency would render conflicting decisions. /64/ There are no time limits for SSI eligibility determinations.

8 Medicaid's time limits, however, are based on the Medicaid Act requirement that assistance be furnished with "reasonable promptness." /65/ HCFA's regulatory change significantly altered Medicaid rights to accommodate problems with SSA administration. The agency maintains that the change promotes efficiency, /66/ but does not address why the policy underlying Medicaid's reasonable promptness standard should be changed. D. Requiring Independent Determinations As discussed in part II.C., above, several lawsuits have successfully challenged HCFA's policy that SSA disability determinations are binding on Medicaid eligibility. In light of the fact that the OBRA-90 provision was enacted as a state option and its legislative history acknowledges HCFA's regulation, /67/ the prospect for success under federal law of future litigation appears dim. We welcome contacts with advocates wishing to discuss in greater detail this issue or any others raised by the subject of this column. footnotes 1. HCFA is the division of the U.S. Department of Health and Human Services (HHS) that administers the Medicaid program C.F.R. Sec (effective Jan. 10, 1990), adopted at 54 Fed. Reg (Dec. 11, 1989) U.S.C. Sec. 1396a(v). 4. HCFA, STATE MEDICAID MANUAL Sec (Mar. 1991). 5. See part III.A., infra. 6. Id. 7. See part II.B.2., infra. 8. See part III.B.1., infra. Advocates should also ascertain whether any laws or court decisions in their states affect these rules. 9. For a good discussion of SSI, as well as social security benefits and applications, see Sweeney, Representing Individuals with Disabilities in Securing Social Security and Supplemental Security Income Disability Benefits, 25 CLEARINGHOUSE REV. 860 (Nov. 1991).

9 10. Such persons quite often receive state-funded General Assistance (GA) benefits prior to seeking SSI/Medicaid. 11. For example, SSA regularly sends "SDX" tapes with computer data on SSI and social security beneficiaries to state Medicaid agencies. See also, e.g., 42 U.S.C. Sec. 1382b(c)(2). 12. See, e.g., 42 C.F.R. Secs and See generally National Health Law Program, An Advocate's Guide to the Medicaid Program (July 1991). Copies of this looseleaf guide are distributed to all legal services offices U.S.C. Sec. 1396a(a)(10)(A)(i)(I); 42 C.F.R. Sec States are also required to cover disabled individuals who qualify under special categories, such as "Qualified Severely Impaired Individuals" and "Qualified Medicare Beneficiaries." 42 U.S.C. Sec. 1396a(a)(10)(A)(i)(II) and (E). Medicaid agencies are not involved in disability determinations for these groups U.S.C. Sec. 1396a(f); 42 C.F.R. Sec The term "209(b)" derives from the section number of the legislation that authorized the option. 16. The Section 209(b) states are Connecticut, Hawaii, Illinois, Indiana, Minnesota, Missouri, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, and Virginia. 17. These two states with more restrictive standards are Indiana and New Hampshire U.S.C. Sec. 1383c(a); 20 C.F.R. Secs The term "Section 1634" refers to the statutory provision's Social Security Act codification C.F.R. Sec (b). 20. The five non-section 209(b) states are Alaska, Idaho, Kansas, Nevada, Oregon, and Utah U.S.C. Sec. 1396a(a)(10)(C); 42 C.F.R. Sec U.S.C. Sec. 1396a(a)(10)(A)(ii)(I); 42 C.F.R. Sec U.S.C. Sec. 1396a(a)(10)(A)(ii)(X). 24. Id. at Secs. 1396a(a)(10)(A)(ii)(IV) and (V); 42 C.F.R. Sec and U.S.C. Sec. 1396a(a)(10)(A)(ii)(VI); 42 C.F.R. Sec The exception involves what may be called "automatic eligibility redeterminations." For example, if an individual has been receiving Medicaid as an SSI cash recipient and loses SSI, the state agency is required to do an ex parte eligibility redetermination to determine whether the individual remains Medicaid-eligible under some other category. See, e.g., Crippen v. Kheder, 741 F.2d 106 (6th Cir. 1984).

10 C.F.R. Sec (a)(2). The time limit is a maximum; states can and do use shorter periods. Prior to HCFA's January 1990 regulatory changes, the maximum time limit was 60 days. 28. See, e.g., Rousseau v. Bordeleau, 624 F. Supp. 355 (D.R.I. 1985) (Clearinghouse No. 40,357). 29. Id.; Perea v. Sullivan, No. 87-NC-0076 (D. Utah 1989 & 1990), reprinted in Medicare & Medicaid Guide (CCH) Para. 38,331 and Para. 38,617 (1990 transfer binder); Norton v. Atkins, No (Mass. Super. Ct. 1987); Hays v. Concannon, No MA (D. Or. 1989), reprinted in Medicare & Medicaid Guide (CCH) Para. 38,329 (1990 transfer binder), remanded, 921 F.2d 240 (9th Cir. 1990); Hankerson v. Coler, No CIV (S.D. Fla. 1989) (consent judgment). 30. Armstrong v. Palmer, 879 F.2d 437 (8th Cir. 1989) (Clearinghouse No. 42,033); Disabled Rights Union v. Kizer, 744 F. Supp. 221 (C.D. Cal. 1990); Fratone v. Division of Pub. Welfare, No (D.N.J. 1988), reprinted in Medicare & Medicaid Guide (CCH) Para. 37,093 ( transfer binder); Gnutti v. Heintz, 539 A.2d 118 (Conn. 1988) (holding based on abstention) Fed. Reg (Dec. 11, 1989) C.F.R. Sec (a)(2). Compare the quoted language to that used in subsection (c)(4)(i), described in the text at note 37, infra, codifying an important exception C.F.R. Sec (b)(1)(i). 34. Id. at Sec (c)(1). 35. Id. at Sec (c)(2). Although the regulation specifies 90 days--the maximum allowable time limit for Medicaid determinations--states using shorter time limits are presumably bound by those shorter limits. 36. Id. at Sec (c)(3). 37. Id. at Sec (c)(4)(i). 38. Id. at Sec (c)(4)(ii). 39. Id. at Sec (c)(4)(iii). 40. Id. at Secs (d) (evidentiary basis for determinations), (e) (medical report and nonmedical evidence), and (f) (disability review teams). 41. Id. at Sec (a)(1), as amended, effective Jan. 10, 1990, at 54 Fed. Reg (Dec. 11, 1989).

11 42. See, e.g., Kizer, 744 F. Supp. at Letter from U.S. Senator Patrick Leahy and 16 other Congresspersons to HHS Secretary Louis Sullivan (Mar. 15, 1990). 44. Letter from HHS Secretary Louis Sullivan to U.S. Senator Patrick Leahy (May 16, 1990). 45. See, e.g., Letter from HCFA Region I to Vermont Social Welfare Commissioner Veronica Celani (Sept. 20, 1990). It was also reported to the court in Kizer. 46. HCFA, supra note 4, at Sec See part III.C., infra C.F.R. Sec (e). 48. See, e.g., Sweeney, supra note 9, at HCFA, supra note 4, at Sec Omnibus Budget Reconciliation Act of 1990 (OBRA-90), Pub. L. No , 104 Stat (Nov. 5, 1990). 51. "Final" has the same meaning as it does under the Medicaid continuation right, i.e., through the time of an Appeals Council determination. HCFA, supra note 4, at Sec (A). 52. Id. 53. Former NHeLP attorney David Gates has noted that states exercising this option could save money by enabling GA recipients denied SSI to qualify for Medicaid coverage and get the medical tests needed to appeal the SSI denials successfully. National Health Law Program, The Omnibus Budget Reconciliation Act of 1990: An Analysis of Health-Related Provisions, 167 HEALTH ADVOC. 1, 7 (Winter 1991). 54. HCFA, supra note 4, at Transmittal No. 51 (Mar. 1991), adopting MANUAL Secs Compare, e.g., HCFA, supra note 4, at Sec (first two bullets), with 42 C.F.R. Sec (c)(4)(i) and (ii). 56. For example, section contains a reference to states making automatic redeterminations of beneficiary eligibility (see note 26, supra); and section 3275 directs the state agencies to maintain "close links" with the agency making disability assessments for SSA and to negotiate agreements with this agency and/or SSA for sharing of information. 57. E.g., whether the SSA or the state Medicaid agency, or both, should be providing adequate notice of the right.

12 58. E.g., how and when does the state agency know that the beneficiary has pursued his or her SSA appeals on a timely basis? 59. Issues also may arise involving the relationship between this Medicaid continuation right and the duty of state agencies to make automatic redeterminations of Medicaid eligibility after receiving information that a beneficiary has lost an existing basis for Medicaid eligibility. See note 26, supra. 60. See, e.g., 54 Fed. Reg. at 50759, (Dec. 11, 1989). See also 42 C.F.R. Sec (e), which prohibits states from using the time limits as a "waiting period." 61. See, e.g., Alexander v. Hill, 707 F.2d 780 (4th Cir. 1983) (Clearinghouse No. 13,475) C.F.R. Sec (c)(4)(i). In addition, for example, the agency will have to make the determination if, more than 12 months after an SSA denial, the individual alleges that the disabling condition has changed or deteriorated. Id. at Sec (c)(4)(ii). These requirements apply irrespective of whether the state has adopted the OBRA-90 option. 63. HCFA, supra note 4, at Sec (Mar. 1991), discussed at note 55, supra. See also 54 Fed. Reg (Dec. 11, 1989) Fed. Reg , (Dec. 11, 1989) U.S.C. Sec. 1396a(a)(8); 42 C.F.R. Sec (a). See also 42 U.S.C. Sec. 1396a(a)(19); 42 C.F.R. Sec Fed. Reg , (Dec. 11, 1989). 67. H. CONF. REP. NO , 101st Cong., 2d Sess (1990); 136 CONG. REC. S15663 (Oct. 18, 1990).