On appeal from the Department of Human Services, Division of Medical Assistance and Medical Services.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 22, 2008
Before Judges Lisa and Sapp-Peterson.
Petitioner, the New Jersey Chapter of the National Academy of Elder Law Attorneys, appeals from the denial by the Department of Human Services, Division of Medical Assistance and Medical Services (Division) of its petition for rulemaking. Petitioner requested that the Division amend N.J.A.C. 10:71- 4.7(b)(4)(ii) and N.J.A.C. 10:71-4.10(m)(1) to change the methodology used to calculate the "statewide monthly average" or "average monthly cost" of nursing home services. Essentially, petitioner sought to increase the divisor used to calculate the transfer penalty in instances where individuals transferred non-exempt resources in order to qualify for Medicaid benefits. The higher the divisor, the less time an individual would be excluded from receiving those benefits.
Petitioner argues on appeal:
POINT I N.J.A.C. 10:71-4.7(b)(4)(ii) AND N.J.A.C. 10:71-4.10(m)(1) ARE ULTRA VIRES ON THEIR FACE BECAUSE THEY CONTRAVENE THE PLAIN LANGUAGE OF CONTROLLING FEDERAL LAW.
POINT II N.J.A.C. 10:71-4.7(b)(4)(ii) AND N.J.A.C. 10:71-4.10(m)(1) ARE INCONSISTENT WITH EACH OTHER AND THUS, ARBITRARY AND CAPRICIOUS. POINT III BY NOT ADHERING TO THE MANDATE OF  U.S.C.A. §1396p(c)(1)(E), [THE DIVISION] OVER-PENALIZES MEDICAID APPLICANTS WHO HAVE MADE CERTAIN TRANSFERS OF ASSETS WITHIN THE "LOOK BACK PERIOD" WHICH VIOLATES THE INTENT OF CONGRESS.
We reject these arguments and affirm.
The Medicaid program, established in 1965 as Title XIX of the Social Security Act, 79 Stat. 343, as amended, codified at 42 U.S.C.A. §§ 1396 to 1396v, is a federally-created, state-implemented program established to provide federal financial assistance to states that elected to reimburse specified costs of medical treatment for needy individuals. 42 U.S.C.A. § 1396. States that participate in the program must submit a "State Plan" for federal approval, describing the methods and standards by which, among other things, individuals will be found eligible for the receipt of Medicaid benefits. 42 U.S.C.A. § 1396a.
New Jersey's participation in the Medicaid program was authorized by the enactment of the New Jersey Medical Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -19.5. The Secretary of the U.S. Department of Health and Human Services, through the Health Care Financing Administration, administers the program at the federal level. The Division is the State agency designated to administer the Medicaid program in New Jersey. N.J.S.A. 30:4D-7. The Division, in accordance with its statutory responsibilities, has promulgated regulations establishing Medicaid eligibility criteria. N.J.S.A. 30:4D-7(a); N.J.A.C. 10:70-4.1.
Because Medicaid funds are limited, only those applicants with income and non-exempt resources below specific levels qualify. To be eligible, a person must not have available income or assets in excess of prescribed limits. Applicants with income or assets in excess of those limits must "spend-down" before becoming eligible. 42 U.S.C.A. § 1396a(a)(10), (17). In New Jersey, eligibility for Medicaid requires that an applicant not have resources of more than $2000. N.J.A.C. 10:71-4.5(c). Such resources include "any real or personal property which is owned by the applicant . . . and which could be converted to cash to be used for his/her support and maintenance." N.J.A.C. 10:71-4.1(b).
Medicaid requirements mandate a transfer penalty for applicants who transfer or dispose of non-exempt resources for less than fair market value during or after the start of the thirty-six month*fn1 "look-back" period, before the individual becomes institutionalized or applies for Medicaid as an institutionalized individual. 42 U.S.C.A. § 1396p(c)(1)(A). The federal standard of the transfer penalty is set forth as follows:
With respect to an institutionalized individual, the number of months of ineligibility under this subparagraph for an individual shall be equal to--
(I) the total, cumulative uncompensated value of all assets transferred by the individual (or individual's spouse) on or after the look-back date specified in subparagraph (B)(i), divided by
(II) the average monthly cost to a private patient of nursing facility services in the State (or, at the option of the State, in the community in which the individual is ...