Medicaid; Divestment penalty on medical benefits; Whether the personal-care & homecare contract requirements in Bridges Eligibility Manual 405 (BEM 405) are inconsistent with federal law; 42 USC §§ 1396a & 1396p; MCL 400.6; § 1396p(c)(2)(C)(ii); “Shall not”; Irrebuttable presumption; Administrative law judge (ALJ)

The court affirmed “the circuit court’s conclusion that the personal-care and homecare contract requirements in [respondent-]DHHS’s BEM 405 are inconsistent with federal law[.]” It also concluded “that BEM 405 must be applied in a manner that does not create an irrebuttable presumption resulting in a divestment penalty.” But it vacated “the circuit court’s reversal of the ALJ’s decision to uphold the imposition of a divestment penalty,” and remanded “for the ALJ to reevaluate divestment under the proper legal framework.” The case arose from payments made by plaintiff’s decedent (Brown) and her husband for care provided at home by family members and a friend. DHHS appealed the circuit court’s order reversing the ALJ’s decision “to uphold the DHHS’s imposition of a divestment penalty on medical benefits of” Brown. Although the DHHS attempted to frame the “issue as one of construction regarding BEM 405’s personal-care contract policy, whether the applicable federal and state statutes authorized the DHHS to institute such a policy at all was the basis of the circuit court’s decision.” Thus, the court found that the issue called for analysis of those statutes – §§ 1396a, 1396p, and MCL 400.6. It held “that because federal Medicaid law requires the DHHS to consider evidence of a transfer made for a purpose other than qualification for Medicaid when assessing a divestment penalty, the application of BEM 405’s personal-care contract policy is not authorized by federal law, and the circuit court properly reversed” respondent’s determination. The court concluded that § 1396p(c)(2)(C)(ii) “prohibits state Medicaid programs from imposing a divestment penalty without considering the claimant’s evidence that ‘the assets were transferred exclusively for a purpose other than to qualify for medical assistance . . . .”’ The court found as “written, BEM 405’s personal-care contract policy does precisely what [§] 1396p(c)(2)(C)(ii) prohibits: instituting an irrebuttable presumption of divestment in the absence of a policy-compliant written and notarized contract. BEM 405’s personal-care and homecare contract requirements are therefore inconsistent with federal law.”