DSS trial: Are Medicaid application delays breaking the law?

Paul Shafer, a Trumbull resident, had a seizure disorder and no job when he applied for Medicaid in July 2011. The program would have paid for the $165-a-month anti-seizure medication Shafer relied on.

By law, he should have heard back within 45 days. Instead, Shafer waited months without a decision on his application. He took half the prescribed dose of his medication to make it last longer. At one point he had a major seizure.

Attorneys with the New Haven Legal Assistance Association say thousands of people like Shafer face potentially severe consequences from delays in getting health care coverage, because DSS doesn’t have enough workers to handle Medicaid applications in the time frame required by the federal government.

They filed a federal class action lawsuit on behalf of Shafer and other Medicaid applicants last year. It goes to trial Tuesday in U.S. District Court in Hartford.

DSS officials have acknowledged that the department has struggled as staffing levels eroded over the past decade while demand for social service programs skyrocketed.

But they have disputed the plaintiffs’ allegations, saying the department’s performance doesn’t warrant penalties and that it can’t be held responsible for delays caused by “unusual circumstances,” including the failure of applicants or third parties to provide required information.

Since the lawsuit was filed in January 2012, DSS has made efforts to improve application processing, hiring more than 200 workers to handle eligibility and moving ahead with plans to modernize the way information and work processes are handled. The number of applications that were still pending past the federal deadline has dropped in recent months.

(Another thing that’s changed: Shafer’s Medicaid application was approved — the day after the lawsuit was filed in January 2012.)

Plaintiff attorneys, in court filings, said those changes aren’t good enough, that improvements don’t negate the fact that thousands of applications are still being delayed.

Federal law requires that most Medicaid applications be processed within 45 days of being submitted. The department has 90 days to process applications for people seeking coverage because they have a disability, although those represent a relatively small proportion of applications.

But DSS misses the mark on thousands of applications. Since January 2011, the number of applications still pending at the end of the month that were beyond the federally required processing time frame ranged from 10,189 last May to 3,410 in February 2013. The department considers only a small portion of those delays “unexcused” — something the plaintiff attorneys dispute.

DSS acknowledged that the percentage of unexcused, delayed applications “is unacceptable,” according to court records.

But the department has also cited another measure: 84 percent of the 22,895 applications filed during a recent month were handled within the required time frame.

Both sides have pointed to the dramatic increase in demand for Medicaid in recent years.

According to court documents, DSS got an average of 24,500 applications per month from July 2011 to October 2012 — up 88 percent from 2002, when the average was closer to 13,000 per month.

But during that time, the number of DSS employees handling eligibility for all programs the department administers dropped  about 30 percent, from 845 to 586. It fell still further after a wave of early retirements in October 2011.

Last year, DSS hired about 220 eligibility workers, bringing the total number to about 881, according to court records. That’s higher than in July 2002. But so is the application volume and the number of people in Medicaid, plaintiff attorneys have noted.

While some people are pushing for DSS to hire more workers, DSS Commissioner Roderick L. Bremby has argued that the department’s efforts to modernize its outdated technology and work processes will be more effective than hiring more people.

“We can’t just throw people at this,” Bremby said last January, shortly after the lawsuit was filed. “We need to throw technology and a changing culture and some strong leadership, and that’s what we’re focusing on. It’s the entire system.”

The trial is also expected to address how DSS handles people with a Medicaid “spend down.” Those are people whose incomes are too high for Medicaid, but who spend the additional income on unreimbursed medical expenses. Once they incur those expenses, they can qualify for Medicaid to pay for their medical costs for the remainder of a six-month period. After that, they must “spend down” their income on medical expenses again before getting additional Medicaid coverage.

People with a Medicaid spend down must submit documentation of the expenses to DSS, and the lawsuit alleges that sometimes DSS workers are so busy they don’t have time to review the bills until the six-month period is over. Part of the problem, it argues, is that DSS hasn’t established a standard time frame for getting spend down bills processed.

DSS has said in court documents that it does have a standard — 30 days.  

Last September, the department contracted with Xerox to handle the reviews of medical expenses. Only DSS employees can determine if a person is eligible for Medicaid and activate a person on the program, so if a Xerox worker makes a preliminary determination that the client’s expenses were enough to satisfy the spend down, the information gets forwarded to a DSS worker. Under the contract, Xerox has five business days to process the expenses.

But DSS argued that the department shouldn’t be held to a five-day standard because it can’t be assumed that the Xerox program will be continued, since it “essentially requires unlimited resources to be employed to do the job.”

The trial is expected to take two days. It’s not the only ongoing lawsuit related to how DSS handles applications for assistance programs. In December, U.S. District Judge Vanessa L. Bryant granted a preliminary injunction against DSS over delays in handling applications for food stamps, saying there was evidence of an “ongoing, persistent systemic failure” to comply with federal law.