How do nursing homes get paid?

Sick people go to nursing homes and sick people die. According to the American Health Care Association, “Medicaid is the primary provider of coverage for nearly two out of every three (63 percent) nursing home residents,” although in Georgia the figure is 71%. One reason why residents turn to the Medicaid program is the cost of care. Georgia’s Attorney General states “nursing home care [costs] upwards of $105,850 per year for a semi-private room.” Medicaid applications should be processed within 45 days, but frequently the agency takes significantly longer to approve or deny an application. So, if a nursing home Medicaid applicant dies while the application is being processed, how does the nursing home get paid? Or worse, does the nursing home go unpaid?

A recent case that threatens payments to nursing homes

In a recent case, London, before the Georgia Office of State Administrative Hearings, the State filed a Motion to Dismiss the applicant’s Fair Hearing. The applicant died while the application was being processed. No estate was opened. Historically, no one was required to open an estate to finish a Medicaid application, but London took a different turn. The State argued the designation of an authorized representative premised on a power of attorney terminates with the applicant’s death. Thereafter, the State argued only an estate representative can appoint an authorized representative to continue the appeal. The Administrative Law Judge granted the State’s motion and dismissed the appeal. Whether this result was correct is an open question. Once an authorized representative is appointed, the federal regulation states:

“The power to act as an authorized representative is valid until the applicant or beneficiary modifies the authorization or notifies the agency that the representative is no longer authorized to act on his or her behalf, or the authorized representative informs the agency that he or she no longer is acting in such capacity, or there is a change in the legal authority upon which the individual or organization’s authority was based. Such notice must be in accordance with paragraph (f) of this section and should include the applicant or authorized representative’s signature as appropriate.”

There is nothing in the regulation indicating that death somehow terminates the authorized representative’s authority.

The Right to Appeal Agency Decisions

The rule in Georgia, as it relates to Medicaid applications, is that “[i]n any contested case, all parties shall be afforded an opportunity for hearing.” O.C.G.A. § 50-13-13(a)(1). There does not seem to be any wiggle room in the language granting a right to a hearing. The reason, as the U.S. Supreme Court recognized in Loper Bright Enterprises v. Raimondo, is that agencies make mistakes; in Loper. Justice Roberts stated “Congress in 1946 enacted the APA “as a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in legislation creating their offices.” It is worth noting that HB 1247, the Georgia Bureaucratic Deference Elimination Act, follows the same logic.

In Richards v. Ga. Dept. of Community Health, 278 Ga. 757 (2004), a Medicaid case, the Georgia Supreme Court said “It is a well-established principle that a statute must be viewed so as to make all its parts harmonize and to give a sensible and intelligent effect to each part. It is not presumed that the legislature intended that any part would be without meaning.” If that is true, shouldn’t all Medicaid applicant’s have a right to a hearing if the caseworker reaches the wrong conclusion?

Due Process includes the right to Appeal

The result in London goes against basic notions of due process. The Medicaid applicant believed the agency improperly denied her Medicaid application and she was denied a hearing on the merits. In Goldberg v. Kelly, 397 U.S. 254 (1970), the Court established a right to a hearing. The question before the Supreme Court was “whether a State that terminates public assistance payments to a particular recipient without affording him the opportunity for an evidentiary hearing prior to termination denies the recipient procedural due process in violation of the Due Process Clause of the Fourteenth Amendment.” The Court held that it did violate due process. In the context of public benefits like Medicaid, “termination of aid pending resolution of a controversy over eligibility may deprive an eligible recipient of the very means by which to live while he waits. Since he lacks independent resources, his situation becomes immediately desperate. His need to concentrate upon finding the means for daily subsistence, in turn, adversely affects his ability to seek redress from the welfare bureaucracy.” See 42 C.F.R. § 431.205.

Six years later, the Court held in Mathews v. Eldridge, 424 U.S. 319 (1976), that due process is not the same in every situation. There, the Supreme Court said:

This Court consistently has held that some form of hearing is required before an individual is finally deprived of a property interest. Wolff v. McDonnell, 418 U. S. 539, 557-558 (1974). See, e. g., Phillips v. Commissioner, 283 U. S. 589, 596-597 (1931). See also Dent v. West Virginia, 129 U. S. 114, 124-125 (1889). The “right to be heard before being condemned to suffer grievous loss of any kind, even though it may not involve the stigma and hardships of a criminal conviction, is a principle basic to our society.” Joint Anti-Fascist Comm. v. McGrath, 341 U. S. 123, 168 (1951) (Frankfurter, J., concurring). The fundamental requirement of due process is the opportunity to be heard “at a meaningful time and in a meaningful manner.” Armstrong v. Manzo, 380 U. S. 545, 552 (1965). See Grannis v. Ordean, 234 U. S. 385, 394 (1914).

Still, in Mathews v. Eldridge, a pre-termination hearing was not required when objective medical reports provided support for the decision. One reason for the Court’s decision to strike a balance in weighing what due process means was “the incremental cost resulting from the increased number of hearings and the expense.” That language is interesting here because the recent OSAH decision requires the Probate Courts, and those who must open estates, to absorb additional unnecessary expense. The cheapest and most sensible way to assure due process is to have the Medicaid agency finish what it started. The agency should process the application and permit an administrative law judge to review the decision.

Wasted Resources and Unnecessary Expense

Unless there is something in the estate requiring probate (e.g., a home subject to estate recovery), the Medicaid applicant’s family has no incentive to open an estate. The Medicaid applicant already spent down to less than $2,000 to become qualified so the estate is usually insolvent. That means the health care provider trying to get Medicaid to pay the bill must open an estate as a creditor. Assuming the application is resolved and coverage is approved, Medicaid pays the health care provider directly so nothing flows through the estate. There would, however, still be attorney fees (probably paid by the health care provider), court costs (probably paid by the county or the health care provider), and Probate Court resources would be wasted. While this is a practical reason for not requiring an estate, other reasons such as basic due process also indicate that everyone should have the right to an appeal.

Requiring that unnecessary estates be opened – when nothing will actually flow through the estate – also seems to run counter to federal Medicaid law. 42 U.S. Code § 1396a(a)(19) provides: “A State plan for medical assistance must … provide such safeguards as may be necessary to assure that eligibility for care and services under the plan will be determined, and such care and services will be provided, in a manner consistent with simplicity of administration and the best interests of the recipients. Opening estates so payments may be made directly to a health care provider, not through the estate, seems to be inconsistent with simplicity. It is also inconsistent with common sense. The IRS seemed to believe a waste of it’s resources was unnecessary when it issued a letter stating it did not want to issue Employer Identification Numbers for Miller Trusts (another Medicaid technical rule). Hopefully we’re at least as smart as the IRS.

Without Action, Hundreds of Families could be harmed

Hundreds of Medicaid applications are processed by non-attorneys each year. Individuals trying to get nursing homes paid will have a new land mine to deal with if London is not reversed. If nursing home Medicaid applications are unpaid on a technicality when they should be approved, the loss of revenue will impact nursing home care and it will harm the public good. House Bill 1475 was  introduced in the Georgia legislature on February 26, 2026 to reverse the result in this recent case. For now the safest course of action is to open an estate if there is an adverse decision and a fair hearing is required after the applicant dies. But our legislature can fix this problem. The federal regulations look to state law in determining how an Authorized Representatives may be appointed so a change in Georgia law would reverse the result in London.

Take Action

If you believe this situation should be fixed, you can get your Georgia Representative or Senator’s contact information on the Georgia General Assembly website. If you hear from any State official who opposes this Bill, then you might ask them how, as a public servant, they are properly serving their constituents by increasing the cost of processing Medicaid applications and by wasting Probate Court resources. You might also ask why they are dragging out the decision-making process when it’s supposed to be completed within 45 days.