Q & A: Katie Beckett Category of Eligibility for Medicaid

Executive Summary

One of the criteria for qualifying for Medicaid eligibility under the ñKatie Beckettî category of eligibility is that a child must need the level of care provided in a hospital,nursing facility or intermediate care facility for the mentally retarded. While states have some leeway to establish level of care standards, it raises concerns when they appear to tighten these standards in a way that terminates eligibility. This Q&A examines this category of eligibility and provides answers to common questions.

Question: My client, a ten year-old girl with severe mental retardation and physical disabilities, has been eligible for Medicaid for several years. She is able to live at home with her family because of the services that Medicaid covers, including personal care services, 
physical therapy and durable medical equipment. She qualifies under the ?Katie Beckett? category of eligibility. Thus, she is eligible even though her parents? income is too high to qualify for Medicaid. Her condition has not improved or changed for several years. Last month, however, when her eligibility was redetermined, her caseworker told her parents that she no longer qualified because she did not meet the level of care requirements.  
What does this mean? Is this legal? 
Answer: One of the criteria for qualifying for Medicaid eligibility under the ?Katie Beckett? category of eligibility is that a child must need the level of care provided in a hospital, nursing facility or intermediate care facility for the mentally retarded. While states have some leeway to establish level of care standards, it raises concerns when they appear to tighten these standards in a way that terminates eligibility. In some cases, these actions may be illegal.
 
Background 
Medicaid is a cooperative state/federal program that covers health care services for people with limited ability to pay for their health care.2 In order to qualify for Medicaid eligibility, an person must be a resident of the state in which he is applying, a citizen of the U.S. or qualified immigrant, have an income below a certain level, and fit into one of a number of categories of pregnant women and children, caretaker relatives, older individuals and individuals with disabilities.3 
Participating states are required to cover a some of these categories of eligible individuals, such as pregnant women and infants below 133% of the federal poverty level, low income Medicare beneficiaries and, in most states, individuals who qualify for Supplemental Security Income (SSI).4 In addition, states may choose to cover certain other categories of individuals, such as pregnant women and infants below 185% of poverty, poor elderly and disabled individuals and certain women with breast and cervical cancer.5
One of the options available to states is coverage of disabled children 18 or younger who are living at home but who do not qualify for SSI or other state supplementary payments for people with disabilities because their family?s income is too high.6 Generally, a arent?s income and resources will be considered available, or ?deemed,? to a child under 21. After one month in an institution, however, there is no more deeming of parental income.7 When states choose to cover this category, it allows them to waive financial requirements that deem a parent?s income to a child living at home. This option is sometimes known as ?TEFRA,? because the statutory provision was added by the Tax Equity and Fiscal Responsibility Act of 1982. It is also referred to as the ?Katie Beckett? option, after an institutionalized, ventilator-dependent child who was unable to live at home, not for medical reasons, but because her parents income would have made her ineligible. 
In order to qualify for eligibility under this category, a child must be disabled under the standards of the SSI program.8 In addition, if the child were institutionalized, the child must meet all the standards for eligibility for Medicaid.9 The statute also provides that the state have determined that the child ?requires a level of care provided in a hospital, nursing facility, or intermediate care facility for the mentally retarded;? it is appropriate to provide care outside of an institution; and that the estimated amount that will be spent on care provided in the home is equal to or less than the amount that would be spent to keep the child in an institution.10 When states select the TEFRA option of eligibility, they must cover all individuals who meet the eligibility criteria..11

The Centers for Medicare and Medicaid Services (CMS), in its State Medicaid Manual, provides some guidance for determining whether the child ?requires? an institutional level of care:

In determining whether the child requires a level of care provided in a hospital, skilled nursing facility or intermediate care facility, determine that the child requires the level of care appropriate to these facilities as defined in 42 CFR 440.10 (hospital), 440.40 (skilled nursing facilities) or 440.150 (intermediate care facilities).12
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