Press Release  Audit Calls on MassHealth to Enhance Measures to Prevent Unnecessary Financial Hardship in its Estate Recovery Process

Boston — In an audit released today, the Office of State Auditor Suzanne M. Bump (OSA) called on MassHealth to enhance measures to prevent individuals and families from incurring unnecessary financial hardship during its estate recovery process, which is used to recoup funds from the deceased for Medicaid expenses paid on their behalf. The audit shows that although MassHealth allows undue-hardship waivers to exempt possessions and holdings from the recoupment process, only a small number of members’ survivors petition for them, and even fewer are approved. In addition, unlike 20 other states, Massachusetts did not have an established threshold to automatically exempt estates with minimal assets from the recovery process. The audit, which examined July 1, 2016 through December 31, 2018, recommends MassHealth establish a cost-effectiveness threshold and improve promotion of its waiver process for members’ survivors in order to prevent financial hardship.

During the audit period, MassHealth recovered $96,618,866 for Medicaid expenses paid by 3,440 estates. The average estate recovery was approximately $28,087. Federal law allows states to waive recovery when it is not cost effective to pursue. The cost effectiveness threshold is made public through the state’s official Medicaid plans. For example, the state of Georgia does not pursue estate recovery amounts under $25,000. In Massachusetts, however, a cost-effectiveness threshold from estates with minimal assets was not established during the time of the audit period. As such, 46% of MassHealth’s recoupments were for amounts of $25,000 or less, and the total of these recoveries ($3,430,026) represented only 4% of the total cash receipts for the audit period. On May 14, 2021, MassHealth took steps to establish a cost-effectiveness threshold that exempts estates with a total value of $25,000 or less from the recovery process.

“The pain that comes with losing a loved one should never be compounded by the added stress of enduring financial hardship when settling matters of an estate,” said Auditor Bump. “I am proud that this audit has led to reforms at MassHealth to become more sensitive to the individual financial circumstances of each family going through this process, while also putting in place practical exemptions that have the potential to be more cost effective for the Commonwealth.”

MassHealth recovers funds by filing claims in probate court against deceased members’ estates for Medicaid expenses paid on their behalf, and to limit the tax burden on the citizens of the Commonwealth. The process is used to supplement funds available for medical assistance programs. Recouped funds are returned to state and federal medical programs to help provide assistance to those in need. MassHealth may waive estate recovery if it determines that moving forward with a claim would cause undue hardship on the member’s survivors. The audit determined that only 152 undue-hardship waivers were applied for during the audit period and only 20% were granted, with the others either pending, rejected or withdrawn. In its response, MassHealth reported it has expanded its criteria for undue hardship waivers, has streamlined the waiver process and created new waiver request forms, which are available online. The agency estimates that these expanded waivers will return approximately $17,200,000 to Massachusetts families each year.

MassHealth is the state’s Medicaid program that provides access to healthcare for approximately 1.9 million low- and moderate-income children, families, seniors, and people with disabilities annually. In fiscal year 2018, MassHealth paid healthcare providers more than $15 billion, of which approximately 50% was funded by the Commonwealth. Medicaid expenditures represented approximately 39% of the Commonwealth’s total fiscal year 2018 budget of approximately $40 billion. The MassHealth program falls under the jurisdiction of the Executive Office of Health and Human Services, through the Division of Medical Assistance.

The full audit report is available here.

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