Excess Property Applied to Medical Bills

Individuals who have excess property in a month for which MC is requested must spenddown their excess property within that month to be eligible for MC. If they use their excess property to pay all or a portion of their medical expenses and a BIC is issued:

The provider may not bill MC and then reimburse the client for services which were paid by the client to reduce excess property in order to be eligible for MC.
Any amount previously paid on a medical expense to reduce the client's excess property cannot be reapplied to meet the client's share of cost (if there is one).

EWs must compute the amount of excess property applied to medical bills and inform providers not to bill MC for services when clients have spentdown, encumbered or liened excess property to be eligible for MC for the month the services were provided.

When It Applies

There are three situations in which the client, rather than MC, remains liable for his/her medical expenses incurred in a month for which MC is requested:

An applicant states that excess property was reduced during the month of application, by payment of, or encumbrances or liens against medical expenses, either in the interview and/or on the Statement of Facts.
An applicant requests retroactive MC and indicates that excess property was reduced, encumbered, or liened to pay all or part of those medical expenses before the end of that retroactive month.
- Note: There is no retroactive spenddown. The client must be within the property limit during the retroactive month to be eligible.
A period of ineligibility due to a transfer of property occurring before January 1, 1990 has been established and:
- The period of ineligibility expires mid-month; and
- Actual medical expenses in that month were used to reduce the period of ineligibility.

Medi-Cal Information Notice to Providers- Clarification of Liability (MC 174)

EWs must send an MC 174 to providers when a medical expense (or a portion of a medical expense) was used by a client to reduce excess property in order to establish or maintain MC eligibility.

Excess Property Paid on Medical Expenses in Month of Application

ExampleExample

On 2/10 Susan B. applies for MC on behalf of her aged mother, who entered Sunny Hills nursing home on 2/3. During the initial intake interview on 2/27, the EW determines that the client currently has $1700 in her checking account and no other countable property. The client also had $2,500 in a savings account at the beginning of February. Her daughter withdrew this money, closed the account, and paid the nursing home $2,500 for her mother's care.

The client is eligible for MC in February as she is within the property limit; however, the EW must also:

Determine what portion of the $2,500 paid on medical expenses incurred in February was excess property and send an MC 174 to the provider (Sunny Hills).

Property spent in February medical care:	$2500
Checking Account:	+1700
Total:	$4200
Property Limit:	-2000
Excess Property applied to February medical bills:	$2200

Sunny Hills may not bill MC for the $2,200 that was used to establish MC eligibility and then later reimburse the client when the MC payment is received. Any additional medical expenses may however, be billed. Also, the $2,200 previously used to reduce excess property cannot be used again to meet the client's share of cost.

The EW must document the computation of excess property.

Excess Property Paid on Medical Expenses in Retroactive Month

ExampleExample

A child was hospitalized in March due to an accident, then was discharged later that month. Her hospital bill is $25,000. Her mother paid $5,000 to the hospital in March, then decided to apply for retroactive MC in April. There is one other child in the home (MFBU = 3, Property Limit $3,150).

When reviewing the MC 210 PS, the EW notes that the client has used her savings to pay for medical care. She currently has $2,000 remaining in her savings account and $100 in a checking account.

The EW must determine what portion of the $5,000 paid to the hospital in March is excess property.

Savings spent in March medical care:	$5,000
Savings Account (lowest March balance):	+ 2,000
Checking Account (minus March income):	+ 100
Total:	$7,100
Property Limit:	- 3,150
Excess Property applied to March medical bills:	$3,950

$3,950 of the $5,000 that mom paid towards the hospital bill was excess property and cannot be reimbursed to her. The EW must send an MC 174 to the hospital. The hospital can then bill MC $21,050 ($25,000 - $3,950) and must reimburse $1,050 to the client once MC has paid the claim.

If the client also has a share of cost, none of the $3,950 which was used to reduce excess property can be applied to the share of cost. The share of cost could be collected from the additional $1,050 and the client would only be reimbursed the remaining amount.

Hunt v Kizer

The excess property applied to medical bills rule applies to situations where the client has spent excess resources on medical expenses to be eligible for MC in the month that those expenses are incurred. This will usually occur at application. This change does NOT affect the Hunt v. Kizer provisions, which allow old medical bills to be used to offset a current or future share of cost.

Reviewing Property Balance at Intake

If the property reserve limit is met at any time during the month, the MFBU is “property eligible” for the entire month.

Over Limit

If, at the point of the intake interview, the client has excess property, the EW will explain property spenddown rules. Issue an MC 174 if the client chooses to reduce excess property by paying medical bills.

Under Limit

If, at the time of the intake interview, the property is within the limit, the EW must ask the client if property was used to pay any medical expenses incurred in the month(s) for which MC is being requested:

If...	Then...
The client has paid medical bills incurred in the month(s) for which MC is being requested,	The EW will need to determine if the money spent on medical bills when added to the lowest property balance results in excess property applied to medical bills”.
No medical expenses were paid,	This section does not apply. Review expenditures if there is any indication that property was transferred without adequate consideration, as a period of ineligibility may result if the client enters LTC.

EW Action

The EW must determine if excess property has been applied to medical bills and compute the amount of excess property used. They must then notify the provider that MC is not liable for those services.

Ask the client and review the MC 210 PS (currently question 11) to determine if excess property was spent on medical bills to establish MC eligibility or if any nonexempt property was encumbered or liened due to medical expenses.
1. NOTE: While the client's property may be within the property limit at the time of the intake interview, the EW will need to ask if property was used to pay for any medical expenses for the month(s) that MC is being requested.
Verify any paid medical expenses (to whom paid, for what, how much, who received the care and on what date).
Compute and document the amount of excess property used to pay medical expenses incurred in the month that MC is being requested. The full amount paid does not necessarily equal excess property. The client may have paid more than was necessary to qualify for MC.
1. Add current nonexempt property (lowest balance) to the property that was paid on medical expenses.
2. Subtract the applicable property limit from the total (above).
3. The difference is the “excess property applied to medical bills” that must not be billed to Medi-Cal.
Complete an MC 174, with the information obtained from the client and your computation, for each provider that has been paid for services that cannot be billed to MC.
Have the client complete, sign and date the authorization for release of information at the bottom of each MC 174.
Distribute each MC 174 as follows:
1. The original to the provider.
2. A copy to the client.
3. Scan into IDM.