Federal lawsuit filed against NJ to expand Medicaid eligibility Frugard v Velez

Federal lawsuit filed against NJ to expand Medicaid eligibility Frugard v Velez

The Director of the NJ Division of Medical Assistance and Health Services refused to accept the well reasoned decision by Judge JOSEPH PAONE, ALJ and denied Medicaid eligibility to certain senior citizens. Director John Guhl wrote: held “Simply put, if you are seeking to shift the cost of nursing home care to the taxpayers by giving away assets so as to artificially create impoverishment, there must be a financial price to pay. Based on the basic eligibility rules, the penalty can only apply to those eligible for waiver services as the receipt of which is an eligibility requirement for that particular category.
I FIND that there is no comparability issue as this case deals with the
actual receipt of waiver services before Petitioners' penalty periods begin, not the
treatment of their assets and income. Moreover, it is disingenuous to argue the
same treatment as nursing home patients since the Petitioners are seeking
waiver services which is entirely based on permitting states to waiver of the
requirements of section 1902(a)(1) (relating to state-wideness), section
1902(a)(10)(B) (relating to comparability), and section 1902(a)(10)(C)(i)(III)
(relating to income and resource rules applicable in the community).
The income level in the community is much lower than the one afforded to
those seeking institutional level of care services either through nursing facility
services or services furnished under the waiver. If Petitioners want to be treated
like nursing facility patients, they need to enter such a facility. Without the receipt
of waiver services, Petitioners are not eligible under the waiver or entitled to the
higher income levels afforded waiver recipients. Without eligibility, there is no
start date for the penalty period.”

On of the losing plaintiffs in this case has filed a lawsuit in the United State District Court for the District of New Jersey seeking to force the NJ Department of Human Services and Division of Medical Assistance and Health Services to change this policy and permit Medicaid eligibility.

Portions of the Decisions are below:
Decision by John R. Guhl, Director
Division of Medical Assistance and Health Services


STATE OF NEW JERSEY
DEPARTMENT OF HUMAN SERVICES
DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES



O.B., :
:
PETITIONER, : ADMINISTRATIVE ACTION
:
v. : FINAL AGENCY DECISION
:
DIVISION OF MEDICAL ASSISTANCE : OAL DKT. NO. HMA 6519-07
:
AND HEALTH SERVICES AND : CONSOLIDATED
:
MIDDLESEX COUNTY BOARD OF :
:
SOCIAL SERVICES, :
:
RESPONDENTS. :
________________________________________


As Director of the Division of Medical Assistance and Health Services, I
have reviewed the record in this case, including the Initial Decision, the OAL
case file, the briefs filed, the exceptions submitted by both parties and the
documents in evidence. Petitioners and Respondent filed exceptions.
Procedurally, the time period for the Agency Head to file a Final Agency Decision
in this matter is July 14 , 2008, in accordance with an Order of Extension.
Based on my review of the record, I hereby REVERSE the Initial Decision
as inconsistent with federal law. This matter concerns date on which the transfer
penalty should start for Petitioners. All admit that they transferred assets for the
purpose of impoverishing themselves to qualify for Medicaid. The transferred
amounts ranged from $41,927.81 (O.B.) to $128,986.26 (J.B.). They also are
not residing in nursing facilities but in the community. Petitioners were denied
Medicaid eligibility due the transfers.
Petitioners argue that New Jersey's actions regarding their eligibility have
created only two options (1) to enter the nursing facility for 30 days or (2) wait
five years. What Petitioners' fail to acknowledge that this situation is of their own
making and that they can have family members return the assets. They may
also seek a hardship waiver, however, to meet that criterion they would have to
take legal action against those relatives if they did not return the assets willingly.
Petitioners have failed to pursue either option and prefer to argue that they
should be able to wait out the penalty period in the community.
This case turns on the reading of the Medicaid provisions of the Deficit
Reduction Act of 2005, which was passed in large part to stop elder law
attorneys from "exploit[ing] loopholes to get people with means onto Medicaid."
http://finance.senate.gov/hearings/statements/020906cg.pdf. The section in
4
question deals with the start date of the transfer penalty, which Petitioners' all
agree should be imposed.
c) Taking into account certain transfers of assets.
(1)
(A) In order to meet the requirements of this subsection for
purposes of section 1902(a)(18) [42 USCS § 1396a(a)(18)], the
State plan must provide that if an institutionalized individual or the
spouse of such an individual (or, at the option of a State, a
noninstitutionalized individual or the spouse of such an individual)
disposes of assets for less than fair market value on or after the
look-back date specified in subparagraph (B)(i), the individual is
ineligible for medical assistance for services described in
subparagraph (C)(i) (or, in the case of a noninstitutionalized
individual, for the services described in subparagraph (C)(ii)) during
the period beginning on the date specified in subparagraph (D) and
equal to the number of months specified in subparagraph (E).
(B) (i) The look-back date specified in this subparagraph is a
date that is 36 months (or, in the case of payments from a trust or
portions of a trust that are treated as assets disposed of by the
individual pursuant to paragraph (3)(A)(iii) or (3)(B)(ii) of subsection
(d) or in the case of any other disposal of assets made on or after
the date of the enactment of the Deficit Reduction Act of 2005
[enacted Feb. 8, 2006], 60 months) before the date specified in
clause(ii).
(ii) The date specified in this clause, with respect to--
(I) an institutionalized individual is the first date as of which
the individual both is an institutionalized individual and has applied
for medical assistance under the State plan, or
(II) a noninstitutionalized individual is the date on which the
individual applies for medical assistance under the State plan or, if
later, the date on which the individual disposes of assets for less
than fair market value.
(C)
(i) The services described in this subparagraph with respect
to an institutionalized individual are the following:
(I) Nursing facility services.
(II) A level of care in any institution equivalent to that of
nursing facility services.
(III) Home or community-based services furnished under a
waiver granted under subsection (c) or (d) of section 1915 [42
USCS § 1396n(c) or (d)]
. . .
(D) (i) In the case of a transfer of asset made before the date of
the enactment of the Deficit Reduction Act of 2005 [enacted Feb. 8,
2006], the date specified in this subparagraph is the first day of the
first month during or after which assets have been transferred for
5
less than fair market value and which does not occur in any other
periods of ineligibility under this subsection.

(ii) In the case of a transfer of asset made on or after the date
of the enactment of the Deficit Reduction Act of 2005 [enacted Feb.
8, 2006], the date specified in this subparagraph is the first day of a
month during or after which assets have been transferred for less
than fair market value, or the date on which the individual is eligible
for medical assistance under the State plan and would otherwise be
receiving institutional level care described in subparagraph (C)
based on an approved application for such care but for the
application of the penalty period, whichever is later, and which does
not occur during any other period of ineligibility under this
subsection.

42 U.S.C.A. 1396p

The Initial Decision reads the clause "would otherwise be receiving
institutional level care described in subparagraph (C)" in isolation and finds that
since it is in future tense, Congress permits the penalty period to run while the
individual is in the community.
However, the both clauses must be read together. For Petitioners "the
date on which the individual is eligible for medical assistance under the State
plan" is contingent on their actual receipt of waiver services. In the Stipulation of
Facts, Petitioners claim that but for the uncompensated transfer they were
eligible for benefits under the waiver program. This is not the same as being
eligible for medical assistance under the State plan.
Due to Petitioners' income level, they could only be found eligible for State
plan services by virtue of residing in a nursing home or through the waiver
program. As they are not in a nursing home, they must show that they are
eligible through the waiver program. As Petitioner are not receiving waiver
services, they are not eligible for services under the State plan.
6
To be eligible under a section 1915 waiver, a person must actually be
receiving services. Further, 42 U.S.C.A 1915(c)(1) states that "The Secretary
may by waiver provide that a State plan approved under this title may include as
“medical assistance” under such plan payment for part or all of the cost of home
or community-based services (other than room and board) approved by the
Secretary which are provided pursuant to a written plan of care to individuals
with respect to whom there has been a determination that but for the provision of
such services the individuals would require the level of care provided in a
hospital or a nursing facility or intermediate care facility for the mentally retarded
the cost of which could be reimbursed under the State plan." No such services
are being provided to Petitioners.
42 C.F.R. 435.217 provides that a state may provide services in the
community to individuals that would be eligible for Medicaid if institutionalized
and that individual actually "receives the waivered services." Since the home
and community based waiver program uses the institutional income limit (300%
of the Federal Benefit Rate) to access both waiver and State Plan services, the
individual must actually be receiving a waiver service in order to access State
Plan services. For example, if an individual stops using waiver services, they are
no longer eligible for the waiver and lose access to State Plan services. Similarly
if a waiver program's slots are full, those individuals on the waiting list are not
considered eligible and cannot access services. Their eligibility is contingent on
the receipt of waiver services. Without the provision of waiver services,
Petitioners' Medicaid eligibility does not exist.
Nor can an individual procure similar home and community based services
outside a waiver so as to mimic eligibility. Congress was very general in defining
7
the first two levels of care as nursing facility and level of care services equivalent
to nursing facility services. 42 U.S.C.A. 1396p(c)(1)(C). However, when
describing home and community services, Congress defined those services
furnished under a waiver. There was no need to qualify 42 U.S.C.A.
1396p(c)(1)(C) "is receiving" services since by virtue of the definition of
institutional level services, Congress specified that the waiver services must be
furnished under 42 U.S.C.A. 1396n(c). In the community, there is no way to
ascertain whether the individual is receiving services so that Congress specified
that the penalty period begins only if home and community based services are
furnished under a waiver, thus penalizing the individual for the transfer as those
services would no longer be paid for by Medicaid.
The Initial Decision finding would permit individuals in the community to
operate under the old rules, whereby the penalty period can lapse before any
financial hardship on the individual. Under the old rules the start date was the
date of transfer. Individuals were coached to transfer assets in such a way as to
either wait out the penalty period or the look back period. The DRA sought to
stop the choreographed transfers that resulted in little, if any, penalty and create
a financial burden that would give pause to individuals who sought to protect
assets at the taxpayers' expense.
The DRA was designed to make the penalty period more onerous as a
disincentive for individuals who transferred assets. Under Petitioners' argument,
individuals, such as themselves would have a different outcome than those in a
nursing facility. In a nursing facility, Medicaid's refusal to pay for care creates a
financial burden as medical charges are accrued. There is no penalty as
Medicaid cannot refuse to pay for services as there are no services furnished
8
under the waiver being accessed. Thus, Congress crafted a start date of the
penalty period that would have some teeth – namely not permit individuals to wait
out the penalty in the community.
Simply put, if you are seeking to shift the cost of nursing home care to the
taxpayers by giving away assets so as to artificially create impoverishment, there
must be a financial price to pay. Based on the basic eligibility rules, the penalty
can only apply to those eligible for waiver services as the receipt of which is an
eligibility requirement for that particular category.
I FIND that there is no comparability issue as this case deals with the
actual receipt of waiver services before Petitioners' penalty periods begin, not the
treatment of their assets and income. Moreover, it is disingenuous to argue the
same treatment as nursing home patients since the Petitioners are seeking
waiver services which is entirely based on permitting states to waiver of the
requirements of section 1902(a)(1) (relating to state-wideness), section
1902(a)(10)(B) (relating to comparability), and section 1902(a)(10)(C)(i)(III)
(relating to income and resource rules applicable in the community).
The income level in the community is much lower than the one afforded to
those seeking institutional level of care services either through nursing facility
services or services furnished under the waiver. If Petitioners want to be treated
like nursing facility patients, they need to enter such a facility. Without the receipt
of waiver services, Petitioners are not eligible under the waiver or entitled to the
higher income levels afforded waiver recipients. Without eligibility, there is no
start date for the penalty period.


9

THEREFORE, it is on this 14TH day of JULY 2008,
ORDERED:
That the Initial Decision is hereby REVERSED.



/S/
John R. Guhl, Director
Division of Medical Assistance and Health Services


The well reasoned decision by Judge JOSEPH PAONE, ALJ
State of New Jersey

OFFICE OF ADMINISTRATIVE LAW
INITIAL DECISION

SUMMARY DECISION CONSOLIDATED


O.B., OAL DKT. NO. HMA6519-07
Agency Final Decision
Petitioner,
v.
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES AND MIDDLESEX COUNTY BOARD OF SOCIAL SERVICES,
Respondents.
__________________________________________

E.B., OAL DKT. NO. HMA8059-07
Petitioner,
v.
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES AND OCEAN COUNTY BOARD OF SOCIAL SERVICES,
Respondents.
__________________________________________
E.A.F., OAL DKT. NO. HMA8310-07
Petitioner,
v.
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES AND MONMOUTH COUNTY BOARD OF SOCIAL SERVICES,
Respondents

Record Closed: April 8, 2008 Decided: April 9, 2008

BEFORE JOSEPH PAONE, ALJ:
STATEMENT OF THE CASE AND PROCEDURAL HISTORY

Petitioners O.B., E.B., E.A.F., J.B. and R.M. each appeal their denial of Medicaid eligibility. Each filed for a fair hearing and the Division of Medical Assistance and Health Services (DMAHS) transmitted the contested cases to the Office of Administrative Law between August 15, 2007, and February 27, 2008. N.J.S.A. 52:14B-1 through -15; N.J.S.A. 52:14F-1 through -13. Their respective cases were consolidated at the request of their attorneys because the cases presented a common question of law. (Second Amended Order, dated April 8, 2008). Petitioners contend that when an applicant for a Medicaid waiver program makes an uncompensated transfer of an asset during the look-back period, the penalty period begins to run the month the transfer is made and the applicant is otherwise eligible for Medicaid benefits but for the application of the penalty period. Respondent DMAHS posits that a penalty period never commences in such a situation.

All parties moved for summary decision and submitted initial briefs and multiple reply briefs. Oral argument was heard on March 17, 2008. Upon receipt of the final stipulation of facts, related to the R.M. case, on April 8, 2008, the record closed.

STATEMENT OF FACTS
The parties have stipulated to the following relevant FACTS:
1. Petitioners are each elderly individuals within the meaning of the regulations governing the Medicaid program.
2. Petitioners have each applied for benefits under a community-based services Medicaid waiver program established pursuant to 42 U.S.C.A. ��1396n(c). O.B. applied for benefits on December 8, 2006; E.B. applied on May 1, 2007; E.A.F. on April 16, 2007; J.B. on January 29, 2007; and R.M. on June 4, 2007
3. Petitioners have each made certain uncompensated transfers of assets after February 8, 2006. O.B. transferred $34,400.66 on July 27, 2006, and $7,527.15 on August 18, 2006. E.B. transferred $80,000 on March 2, 2007. E.A.F. transferred $115,447 on April 11, 2007. J.B. transferred $128,986.26 between November 2, 2006, and January 25, 2007. R.M. transferred $47,817.25 on March 22, 2007.
4. Petitioners have each been denied Medicaid benefits under their respective community-based services Medicaid waiver program as a result of the transfers.
5. But for the uncompensated transfer of assets, petitioners were each eligible for benefits under a community-based services Medicaid waiver program.
CONCLUSIONS OF LAW
Since it is undisputed that petitioners are otherwise eligible for a community-based services Medicaid waiver program but for an uncompensated transfer of assets made after February 8, 2006, and during the look-back period, and are each subject to a period of ineligibility for those services as a result of the transfer, there are no genuine issues of material fact. Therefore, pursuant to N.J.A.C. 1:1-12.5(b) and Brill v. Guardian Life Insurance Co. of America, 142 N.J. 520, 523 (1995), the matter is ripe for summary decision.
The Medicaid Act was established in 1965 pursuant to Title XIX of the Social Security Act. 42 U.S.C.A. �� 1396 et seq. The joint federal-state program provides medical assistance to “aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical care.” 42 U.S.C.A. � 1396. These individuals are known as the “categorically needy.” Although participation is not obligatory, if a state chooses to participate in the program, it must submit a state plan to the Secretary of the United States Department of Health and Human Services for approval, which must comply with the comprehensive requirements provided in 42 U.S.C.A. � 1396a. The Medicaid Act also allows a participating state to offer coverage to a class of individuals known as “optionally needy.” 42 U.S.C.A. ��1396a(a)(10)(A)(ii)(I) to (XVIII). Individuals eligible for community-based waiver services (42 U.S.C.A. � 1396a(a)(10)(A)(ii)(VI)), as well as individuals residing in a nursing facility for at least thirty consecutive days (42 U.S.C.A. � 1396a(a)(10)(A)(ii)(V)), are included in this category. As a participant in the program offering coverage to the optionally needy, the State of New Jersey is responsible for enforcement of the Medicaid Act in New Jersey. N.J.S.A. 30:4D-1 et seq. Medicaid eligibility is based upon an applicant's income and resources. When it is determined that an applicant has transferred a resource for less than fair market value during a specified period of time known as a “look-back period,” a penalty period arises. 42 U.S.C.A. � 1396p(c)(1). Compare N.J.A.C. 10:71-4.7(a); N.J.A.C. 10:72-4.5(b)(3). A penalty period is a measurable period of time during which the applicant is ineligible for an institutional level of services. 42 U.S.C.A. � 1396p(c)(1).

The Deficit Reduction Act of 2005 (DRA) modified the Medicaid Act by increasing the look-back period from three to five years. The State of New Jersey has not enacted any statute or regulation implementing the DRA. The DRA provides that the look-back begins on the “first date as of which the individual both is an institutionalized individual and has applied for medical assistance under the State plan.” 42 U.S.C.A. ��1396p(c)(1)(B)(ii)(I). Accordingly, “if an institutionalized individual . . . disposes of assets for less than fair market value on or after the look-back date . . . the individual is ineligible for medical assistance services described in subparagraph (C)(i) . . . during the period beginning on the date specified in subparagraph (D) . . . .” 42 U.S.C.A. ��1396p(c)(1)(B)(i). The length of the period of ineligibility is governed by 42 U.S.C.A. ��1396p(c)(1)(E), and is not an issue in dispute in this case. 42 U.S.C.A. ��1396p(c)(1)(C)(i) lists the following medical assistance services:

(I) Nursing facility services.

(II) A level of care in an institution equivalent to that of nursing facility services.
(III) Home or community-based services furnished under a waiver granted under [42 U.S.C.A. � 1396n(c) or (d)].
42 U.S.C.A. � 1396p(h)(3) defines an “institutionalized individual” as one
who is an inpatient in a nursing facility, who is an inpatient in a medical institution and with respect to whom payment is made based on a level of care provided in a nursing facility, or who is described in [42 U.S.C.A. � 1396(a)(10)(A)(ii)(VI)].

[Emphasis added.]
42 U.S.C.A. � 1396a(a)(10)(A)(ii)(VI) adds that an institutionalized individual is one
who would be eligible under the State plan under [42 U.S.C.A. �� 1396 et seq.] if [she] were in a medical institution, with respect to whom there has been a determination that but for the provision of home or community based services described in [42 U.S.C.A. ��1396n(c),(d), or (e)] [she] would require the level of care provided in a hospital, nursing facility or intermediate care facility for the mentally retarded the cost of which could be reimbursed under the State plan, and who will receive home or community-based services pursuant to a waiver granted by the Secretary under [42 U.S.C.A. � 1396n(c), (d), or (e)].
[Emphasis added.]
Petitioners additionally urge consideration of N.J.A.C. 10:71-4.7(b)(3) and N.J.A.C. 10:71-4.10(b)(2), which the parties agreed in their Joint Stipulation were enacted to implement 42 U.S.C.A. � 1396p(c)(1)(B), and which also define an institutionalized individual as “a person seeking benefits under a home or community care waiver program” (emphasis added). Neither the federal statute nor the State regulation requires the actual receipt of home- or community-based services in order for a person to be characterized as an institutionalized individual. Therefore, I CONCLUDE that petitioners' applications seeking community-based waiver services are sufficient to classify petitioners as institutionalized individuals.
Since the parties have stipulated that each petitioner made an uncompensated transfer of an asset within months, and in E.A.F.'s case days, of their respective applications seeking community-based waiver services, I CONCLUDE, as the parties agreed during oral argument, that the uncompensated transfers of assets in question were each made during the look-back period. And I further CONCLUDE that as institutionalized individuals, the petitioners must each be subject to a penalty period or period of ineligibility for community-based services furnished under a waiver.
The issue in dispute in this matter is at what point the penalty period begins when an applicant for a Medicaid waiver program has made an uncompensated transfer of an asset during the look-back period. While the DMAHS agrees with petitioners that they are subject to a penalty period, the DMAHS contends that a penalty period can never begin because an applicant seeking community-based waiver services must await the expiration of the look-back period before she can seek those services. Petitioners, however, contend that if an applicant is otherwise eligible for Medicaid benefits but for the transfer of assets, the penalty period must start the month the uncompensated transfer of the asset is made.
The DRA added 42 U.S.C.A. � 1396p(c)(1)(D)(ii), a new subclause, to the Medicaid Act. Prior to enactment of the DRA, the penalty period resulting from an uncompensated transfer of assets commenced the month that the applicant made the uncompensated transfer, irrespective of what resources remained in the applicant's name. Since the parties have stipulated that the transfers were made after February 8, 2006, their periods of ineligibility must commence
the first day of a month during or after which assets have been transferred for less than fair market value, or the date on which the individual is eligible for medical assistance under the State plan and would otherwise be receiving institutional level care described in subparagraph (C) [a community-based waiver service] based on an approved application for such care but for the application of the penalty period, whichever is later, and which does not occur during any other period of ineligibility under this subsection.
[42 U.S.C.A. � 1396p(c)(1)(D)(ii) (emphasis added).]
Petitioners persuasively argue that according to the plain-language canon, the statute means what it says “and no further search is necessary or appropriate in the absence of clear ambiguity.” In re M.G., 307 N.J. Super. 348, 354 (App. Div. 1998), certif. denied, 154 N.J. 607 (1998). This cardinal doctrine of statutory construction directs that the penalty period assessed against an applicant must begin when the applicant 1) is eligible for medical assistance under the state plan, and 2) would otherwise be receiving home- or community-based services furnished under a waiver based on an approved application for such care, 3) but for the application of the penalty period. Simply stated, the penalty start date is the point in time when the applicant is eligible and would otherwise be receiving services, but for the penalty period. Petitioners submit that the insertion of “would otherwise be” and “but for” in the statute creates the grammatical tense known as the “present unreal conditional,” which is used to express what one would do in an unreal or imaginary situation. They urge that the application of this grammatical analysis to the statute makes it apparent that the statute intends that the penalty period begins when “an applicant for Medicaid benefits would otherwise be receiving services furnished under a waiver but for the fact that the applicant made an uncompensated transfer.” The applicant, however, isn't really receiving those services.
The DMAHS argues that the penalty period for an uncompensated transfer cannot start against an applicant for community-based waiver services until she is eligible for medical assistance under the State plan and is actually receiving community-based waiver services. But, as the DMAHS's reasoning continues, such an applicant cannot actually receive waiver services because the uncompensated transfer of assets prohibits receipt of waiver services. In reaching this circuitous position, the DMAHS relies on an enclosure that accompanied a letter to the State Medicaid Director from the Centers for Medicare and Medicaid Services (CMS), dated July 27, 2006. The CMS enclosure provides that
[f]or transfers of assets made on or after February 8, 2006, the period of ineligibility will begin with the . . . date on which the individual is eligible for medical assistance under the State plan and is receiving institutional level of care services (based on an approved application for such services) that, were it not for the imposition of the penalty period, would be covered by Medicaid.
[Emphasis added.]
The CMS enclosure, however, misquotes the statute, and the DMAHS's reliance on it is, thus, misplaced. In order to accommodate the language of the CMS enclosure, the DMAHS is obligated to take an inherently contradictory position. While the DMAHS deems petitioners “institutionalized individuals” in determining the look-back period start date, it denies that petitioners are “institutionalized individuals” for purposes of determining the penalty period start date. The DMAHS reasons that an applicant must be receiving waiver services in order to be denominated an institutionalized individual. Otherwise, the penalty period cannot commence. But, as had been previously noted, an “institutionalized individual” is not only an inpatient in a nursing facility or medical institution, but also, as the federal statute provides, one who would be eligible for community-based waiver services if she were in a medical institution, or, as State regulations allow, is seeking those services. 42 U.S.C.A. � 1396p(c)(1)(D)(ii) does not require that one actually receive institutional-level care as respondent contends. The statute merely demands that one “would otherwise be receiving institutional level care�.�.�. but for the application of the penalty period.”
Petitioners proffer that the Congressional Record refutes the DMAHS's construction. A proposed House Bill had provided that the beginning date for a period of eligibility be


[t]he date on which the individual is eligible for medical assistance under the State plan and is receiving services described in subparagraph (C) based on an approved application for such care but for the application of the penalty period.
[151 Cong. Rec. H10571 (daily ed. Nov. 17, 2005) (emphasis added).]
But the “is receiving services” language in the proposed legislation was later changed by Conference Agreement to the present text — “would otherwise be receiving institutional level care.” Id. at H12709-H12710. Petitioners point out that the use of the present participle “is receiving” would have suggested that the applicant must actually be receiving waiver services. But the verb tense change made during Conference Committee demonstrates that Congress was aware that an applicant for benefits under a community-care waiver program, who had made an uncompensated transfer of an asset, could not be receiving waiver services before applying for those services.
The purpose of the DRA is to deter self-impoverishment in order to qualify for Medicaid by penalizing those who transfer assets for less than fair market value. There is no evidence in the legislative record cited by the DMAHS that Congress intended to eliminate community-based waiver services completely to those who made such transfers. Application of the DMAHS's tortured construction of the DRA, however, would entirely eliminate the imposition of a penalty period and require anyone making uncompensated transfers within a look-back period and seeking waiver services to wait up to five years from the date of the transfer before an application could be made for home- or community-based waiver services. While the DMAHS suggests that its interpretation is consistent with the DRA's objective, which was to lighten the taxpayers' burden, its interpretation would actually encourage placement in a nursing facility over less-costly waiver services and undermine the impetus for the DRA's enactment.
The plain meaning of 42 U.S.C.A. � 1396p(c)(1)(D)(ii) is clear and the DMAHS's strained interpretation is conflicting, contrived and inconsistent with the statute's legislative history. I, therefore, CONCLUDE that the penalty period for an applicant for a Medicaid waiver program who has made an uncompensated transfer of an asset during the look-back period begins on the date on which she is otherwise eligible for Medicaid waiver services based on an application that would be approved, but for the transfer of assets. Thus the penalty period for each petitioner should commence on the date each petitioner submitted her application for community-based waiver services.
ORDER
Accordingly, I hereby ORDER that a penalty shall be assessed against each petitioner as a result of her uncompensated transfer of an asset and that the start date of the penalty period shall be the date on which the application for waiver services was made after the uncompensated transfer.
I hereby FILE my initial decision with the DIRECTOR OF THE DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES for consideration.
This recommended decision may be adopted, modified or rejected by the DIRECTOR OF THE DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, the designee of the Commissioner of the Department of Human Services, who by law is authorized to make a final decision in this matter. If the Director of the Division of Medical Assistance and Health Services does not adopt, modify or reject this decision within forty-five (45) days and unless such time limit is otherwise extended, this recommended decision shall become a final decision in accordance with N.J.S.A. 52:14B-10.

Within seven (7) days from the date on which this recommended decision was mailed to the parties, any party may file written exceptions with the DIRECTOR OF THE DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, Mail Code #3, P.O. Box 712, Trenton, New Jersey 08625-0712, marked “Attention: Exceptions.” A copy of any exceptions must be sent to the judge and to the other parties.