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       More and more Kentucky Medicaid recipients are receiving unwelcome

news from the Cabinet for Health Services (CHS)1, that they no longer qualify for

home and community based waiver programs.2             Many disabled and elderly

Kentuckians rely on various waiver programs to live a free and independent life

and avoid institutionalization.    Waiver programs provide an alternative to

placement in a nursing facility (NF) or other medical institution and offer services

such as personal care, homemaker, attendant care, and adult day health care.3

Fortunately for recipients, CHS must afford procedural due process when it

terminates their services.4   The right to an administrative hearing is a major

component of that process, and the hearing provides a forum to explore both the

procedural and substantive predicates of the termination.

       A Medicaid recipient or their authorized representative has thirty (30) days

to file a written request with the Department for Medicaid Services (DMS), a

department within CHS, for a hearing.5 Filing within ten (10) days, however,

preserves Medicaid payments and services until CHS renders a final order. 6 This

"ten-day rule" allows a recipient time to plan for life without waiver services and

it provides uninterrupted services for the wrongly terminated.         While most

service providers are aware of the ten-day rule and advise recipients accordingly,

counsel should ensure a ten-day filing if timely retained.

       After filing an appeal, or by noticing an appearance with the

Administrative Hearing Branch (AHB) of CHS, counsel will then receive a "Notice
of Scheduled Hearing." The notice will cite the specific regulation that governs

the client's waiver coverage. Waivers include such programs as Supports for

Community Living7, Home and Community Based8, Model Waiver II (ventilator

dependent)9, Home Care10, and Aquired Brain Injury11.          All of the foregoing

waivers use the NF level of care regulation12 as a gateway for entry into the

program, and this is where most substantive eligibility issues are contested.

Counsel should carefully examine the NF regulation as it has numerous sections

and subsections whose applicability to the hearing may vary.

       In addition to familiarity with the NF regulation, counsel should review the

Kentucky administrative regulations (KAR) website13 or the Administrative

Register as CHS makes frequent changes to the waiver and NF regulations. An

emergency regulation, which becomes effective upon filing, may have

superseded the ordinary regulation.     The effective date may impact counsel's

tack on appeal as the initial eligibility or review date could precede the regulation


       In an attempt to alleviate the State's burgeoning Medicaid deficit, CHS

recently amended the NF regulation to restrict NF and waiver eligibility.14 Prior

to the amendments, the regulation gave the hearing officer broader discretion in

determining NF level of care by using "a significant combination" of needs

standard. Now the hearing officer must find that the recipient has at least three

of the enumerated needs regardless of the acuity of any one need.15
       The burden of proving level of care is met by a preponderance of

evidence. If the recipient is seeking a benefit, she has the burden and CHS has

the burden if it is removing a benefit previously granted.16 AHB's hearing officers

traditionally place the burden on the recipient. Evidence usually consists of oral

testimony, the record that the peer review organization (PRO) 17 reviewed to

generate the termination, a case review by the PRO's physician and any

supporting letters from the recipient's medical and health providers. The PRO's

physician is typically CHS's only witness. While a recipient's physician will usually

agree waiver services should continue, rarely will that physician appear at the

hearing. Consequently, the recipient's counsel faces litigating what is essentially

a bench trial against an expert witness without a competing expert.             This

imbalance may be buffered by introducing a letter of support from the recipient's

physician and exploring the scope of the PRO's review.

       The proceedings are less formal than court, and many recipients, who

may be frail or have cognitive limitations, welcome this type of atmosphere. This

relaxed atmosphere notwithstanding, counsel's obligation to make timely

objections stands.18   Counsel should also take care to prevent the recipient's

desire to appear and participate at the hearing from jeopardizing the recipient's

health. Given the fragile nature of many recipients, the option of taking frequent

breaks should not be overlooked.19

       The filing of motions and pre and post hearing briefs is a common practice

and the adequacy of CHS's termination notices has recently been the subject of
much argument. Federal and state regulatory law require that the termination

notice contain a statement explaining what action will be taken, the reasons for

the action, the specific regulation(s) that supports the action, an explanation of

the right to request a hearing and how Medicaid may be continued.20 Counsel

should compare the recipient's termination notice to these requirements and

ensure the notice is sufficient.       A successful notice challenge will not end

Medicaid payments and services that have been continued via the ten-day rule.

      Other arguments have included violations of KRS 13A.130 and the

termination of benefits absent a change in the recipient's health. KRS 13A.130

generally prevents administrative bodies from modifying or expanding a statute

or regulation "by internal policy, memorandum, or other form of action." Thus,

CHS cannot vary its interpretation of the NF regulation absent a proper 13A

change to that regulation.21 Additionally, case law suggests that due process

and principles underlying the doctrines of collateral estoppel and res judicata

prevent CHS from terminating a recipient's benefits unless the recipient's

condition has changed.22    Frequently CHS is terminating the continuation of

waiver benefits rather than approving an initial request.23     Consequently, the

recipient has had a history of approvals. This history may prevent CHS, without

an intervening change in an applicable regulation, from ending benefits when a

recipient's health has not improved.

      Researching the resolution of these and other Medicaid issues, however, is

problematic, as AHB does not have a searchable case database.          Often the
decision to appeal or abandon an appeal is clouded by the lack of any access to

precedent. The Federal regulations that shape AHB's system require that "[t]he

public must have access to all agency hearing decisions . . . ."24       While this

requirement is limited by the concurrent obligation to safeguard information

about recipients and applicants,25 not having any access forces an already

burdened AHB to issue duplicative rulings.

       Lastly, parties may seek disposition by summary judgment. 26         Waiver

denials, however, are factually intense as the recipient's health and mental needs

or lack thereof are usually the gravamen of most disputes. Thus, the absence of

a genuine issue of material fact is rare.

       Following the hearing and after the parties submit any post hearing briefs,

the hearing officer will issue a recommended order containing findings of fact,

conclusions of law and a recommended disposition. Either party has fifteen (15)

days to file exceptions to the recommendations.27 The failure to file exceptions

may curtail further review in Circuit Court.28 A final order is then issued29 and

either party has thirty (30) days to file a petition for appeal in Circuit Court. 30

Medicaid payments and services preserved via the ten-day rule do not generally

continue beyond a final order affirming the termination.31 As KRS 13B.150 limits

the scope and manner of Circuit Court review, counsel should caution recipients

that the administrative hearing is much more than the first step to the

courthouse door.
        Without creative new approaches, the ever-expanding projected Medicaid

deficit will continue to fuel terminations. Attorneys who represent terminated

recipients should become familiar with the substantive and procedural aspects of

Medicaid administrative hearings. Familiarity may generate more welcome news,

a final order reversing the termination.

      Governor Fletcher has proposed combining the Cabinet for Health Services and the Cabinet
for Families and Children to form the Cabinet for Health and Family Services.
        Charles Wolfe, Fletcher Urges Patience on Fixing Medicaid, Courier J., Dec. 17, 2003
(3,247 total denials, including 389 nursing facility denials, as of November, 2003).
       See Medicaid Waivers, at ("Under
section 1915 (c) of the Social Security Act (the Act), States may request waivers of certain
Federal requirements which impede the development of Medicaid-financed community-based
treatment alternatives. The requirements that may be waived are in section 1902 of the Act and
deal with statewideness, comparability of services, community income and resource rules, and
rules that require States to provide services to all persons in the State who are eligible on an
equal basis").
       42 C.F.R. § 431.202 (2003) ("A state plan must provide that the requirements of §§
431.205 through 431.246 of this subpart [Fair Hearings for Applicants and Recipients] are met");
907 KAR 1:563 § 2(1) (2003) ("An applicant, recipient or guardian shall be informed of his right
to a cabinet level administrative hearing in writing if an adverse action is taken affecting covered
        907 KAR 1:563 § 4(2)(c) (2003).
        907 KAR 1:563 § 5 (2003).
        907 KAR 1:145E (2003).
        907 KAR 1:160 (2003).
        907 KAR 1:595 (2003).
         907 KAR 1:070 (2003).
         907 KAR 3:090E (2003).
         907 KAR 1:022 (2003).
        See 907 KAR 1:022E (2003) ("This emergency administrative regulation is being
promulgated to revise the Department for Medicaid Services nursing facility and intermediate
care facility for the mentally retarded and developmentally disabled level of care criteria to
ensure that only the most acutely ill or needy individuals qualify for nursing facility or
intermediate care facility for the mentally retarded and developmentally disabled services. This
action must be implemented on an emergency basis in order to ensure that necessary funds will
be available for the continued operation of the Medicaid Program").
         907 KAR 1:022 § 4(3) (2003).
         KRS 13B.090(7).
        The PRO contracts with Medicaid and determines whether the recipient's request for
services meets eligibility rules.
       See Kupper v. Kentucky Bd. of Pharmacy, Ky., 666 S.W.2d 729, 730 (1983) ("[M]ovant
appeared at the hearing on the charges and did not raise any question whatever that he did not
understand that nature, time or place of the accusations or that he was not prepared to defend.
He made no request to have the charges made more specific, and he did not request that the
hearing be continued. Movant cannot raise this issue for the first time on appeal").
       See KRS 13B.080(1) (providing in part that "[a] hearing officer shall preside over the
conduct of an administrative hearing and shall regulate the course of the proceedings in a
manner which will promote the orderly and prompt conduct of the hearing").
         42 C.F.R. §431.210 (2003); 907 KAR 1:563 §2 (2003).
        See Hagan v. Farris, Ky., 807 S.W.2d 488, 490 (1991) ("A construction of a law or
regulation by officers of an agency continued without interruption for a long period of time is
entitled to controlling weight"); Revenue Cabinet v. Humana, Inc., Ky. App., 998 S.W.2d 494,
496 (1998) (Even the rectification of an incorrect interpretation is subject to KRS 13A).
        See Weaver v. Colorado Dep't. of Soc. Services, Co. Ct. App., 791 P.2d 1230, 1235 (1990)
("The presumption that a condition, once shown to exist, continues to exist, as well as the
considerations that underlie the doctrines of res judicata and collateral estoppel, require a
showing of some change in circumstances if the termination of benefits is not to be deemed
        See 907 KAR 1:160 § 4(2) (2003) ("An NF level of care determination regarding an HCB
recipient shall be performed by the department at least once every twelve (12) months, or more
often if necessary"); 907 KAR 1:145E § 2(2)(c) (2003) ("An ICF/MR/DD level of care
determination shall be performed by the department at least once every twelve (12) months");
907 KAR 1:070 § 2(3) (2003) ("Redetermination of eligibility factors pursuant to subsection (1) of
this section shall occur: (a) At twelve (12) month intervals; (b) More frequently if the individual’s
condition or needs change"); 907 KAR 3:090E § 3(6)(b) (2003) ("A reevaluation shall be
conducted at least once every six (6) months to determine if the individual continues to meet the
nursing facility level of care criteria established in 907 KAR 1:022").

          42 C.F.R. § 431.244(g) (2003).
          42 CFR 431.300, et seq. (2003).
       KRS 13B.090(2) (Providing in part that "[t]he hearing officer may make a recommended
order in an administrative hearing submitted in written form if the hearing officer determines
there are no genuine issues of material fact in dispute and judgment is appropriate as a matter of
          KRS 13B.110(4).
        See Swatzell v. Commonwealth, Ky., 962 S.W.2d 866, 869 (1998) ("holding that the filing
of exceptions is mandatory is logical and consistent with the basic premise that questions should
first be presented to the ultimate fact finder . . . for consideration before seeking judicial
review"); But see Philpot v. Tourism Dev. Cabinet, Ky. App., 2002 WL 538467 discretionary rev.
granted (failure to file exceptions not fatal as Personnel Board did not meet KRS 13B.110(1) and
13B.120(3) obligations).
          KRS 13B.120.
          KRS 13B.140.
      See 907 KAR 1:563 § 5 (2003); KRS 13B.140 (4) ("A petition for judicial review shall not
automatically stay a final order pending the outcome of the review, unless . . .").