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Software glitch cut off Medicaid to 40,000 By Sheba R. Wheeler Denver Post Staff Writer Jan. 21, 2001 - Aloha Tatum thought she had the problem fixed - until a nurse came into the delivery room just minutes after she'd given birth. The nurse said the Sheridan resident no longer had Medicaid benefits. And treatment for Tatum and her 3-pound, 8-ounce premature baby girl was disrupted, Tatum said.

Mother and daughter should have been covered. The state had made a mistake.

From July 1997 to August 2000, 40,000 parents statewide including Tatum had their Medicaid cut off when they moved from welfare to work - or had their welfare cut for other reasons - despite federal provisions guaranteeing those health care benefits would remain intact.

The state blames the blunder on computer software that was not updated when 1996 federal laws changed the way welfare worked. The software was reprogrammed last August.

"It did take too long for us to act; there is no question about that," said Marilyn Golden, acting executive director of the Colorado Health Care Policy and Financing Department, which distributes Medicaid. "I don't think we want to be chicken about it. We have a problem that we have to remedy, and we are doing it with all due haste."

Tatum is one of four plaintiffs in a classaction lawsuit against the state.

"I just don't want them to treat anybody else like this," said Tatum, who had attempted to get her rightful benefits restored before having the baby. "I want the state to get their facts straight and check through all the options before they just say no and cut somebody off Medicaid.

"If they were in the situation, they would want the same respect given to them," she said.

If a federal judge approves a settlement reached between the parties during a hearing Feb. 8, Colorado will spend about $17.2 million over the next two years reinstating Medicaid benefits and reimbursing people who spent their own money for medical care.

The bulk of the money will pay for setting up office space and paying salaries for temporary staff who will locate recipients, determine their eligibility and reimburse them.

Officials say it will cost the state about $279,230 to reimburse clients for proven out-of-pocket medical expenses and at least $1.2 million to reimburse health-care providers for outstanding bills.

The federal government would pay half of the state's costs of fixing the problem. Plaintiffs won't get extras for pain, suffering or aggravation. Attorneys say to get damages, they would have to opt out of the class-action lawsuit and sue on their own.

Welfare-reform advocates report that as many as 1.25 million people nationwide lost their Medicaid benefits because of the computer error, two-thirds of them children.

Pennsylvania quickly discovered its mistake and reinstated Medicaid benefits to 32,000 former welfare recipients about a year after welfare reform took effect. Colorado has yet to do so.

Colorado officials admit they didn't know how serious the impacts from the computer error were until December 1999, when a group of lawyers who represent poor people told them they intended to sue the state.

Historically, people receiving welfare cash assistance automatically received Medicaid and vice versa. If a person stopped receiving the cash, they were no longer eligible for the Medicaid benefits.

But Congress built safety nets into its welfare reform law that protect people who are moving from welfare to work, allowing them to keep their Medicaid benefits even when their welfare checks and food stamps are terminated.

Unfortunately for Colorado and other states, their computer software didn't know that. As many families began getting off the dole, computers automatically cut their Medicaid.

The immediate drop in people receiving Medicaid benefits alerted human services officials in other states, helping them to discover the computer error quicker. Legal actions similar to Colorado's are pending in Florida, while Washington state is reinstating Medicaid to thousands because of the same error.

But Colorado officials say they didn't catch the problem because the number of people dropping off Medicaid here steadily rose several years before welfare reform took effect.

By the time welfare reform took effect in 1997, the number of children receiving Medicaid had dropped by nearly 17 percent since the 1994-95 fiscal year, and adult recipients by 45 percent since the 1993-94 fiscal year.

Plus, many affected families didn't know how the laws worked. They assumed they were supposed to stop receiving Medicaid when they lost their cash, so no one complained, according to officials.

The federal government gave Colorado $5 million to carry out welfare reform. Instead of altering the software, state officials trained 750 technicians beginning in January 1999 to manually uncouple the welfare from the Medicaid and keep Medicaid coverage going.

"It worked in many instances, but we know it didn't catch everyone," said Diana Maiden, a manager with the state health care department.

Maiden said that although the computer error was regrettable, she didn't believe anyone's health was seriously in jeopardy because of it.

"Legally hospitals are required to treat individuals that need emergency medical care," she said. "Health care organizations and clinics are knowledgeable about assisting clients with reapplication or some other mechanism for care." Tatum says things didn't work that way for her.

The first-time mother had her welfare benefits cut off when the pregnancy left her too ill to work at a local Blimpie's. Although she had a doctor's note, it wasn't enough to prevent her from being kicked off welfare, according to the lawsuit.

She spent weeks afterward trying to regain her Medicaid benefits, which had been mistakenly dropped as well in August 1999 - 10 days before Tearney Rose was born. When hospital computers showed Tatum had no benefits, she said, nurses released her premature baby too early, saying the infant was stable. Yet the baby weighed 3 pounds, 14 ounces - 4 ounces less than the day before, the lawsuit says.

Since then, Tatum has had more problems with Medicaid, often not receiving the monthly cards that verify coverage. Tatum could not schedule the baby's four-month checkup, and she said she continues to receive hospital bills that should have been covered by Medicaid.

Lawyers who filed the lawsuit said they had been hearing stories much like Tatum's. Word circulated among colleagues who served poor people that many of them had lost their Medicaid coverage.

""People were getting cut off Medicaid for even the most minor of infractions," said Tracy Ashmore, a lawyer with the Perkins Coie firm who worked on the case. "Many times, there weren't any infractions."

Ashmore teamed with lawyers at other firms to investigate their clients' claims pro bono, including Lawrence Theis with Perkins Coie; Lawrence Volmert with Holland and Hart; Lawrence Treece with Sherman and Howard; and Greg Parham with Parham & Associates.

Colorado officials immediately acknowledged their mistakes to the lawyers and spent the next 10 months negotiating a settlement.

Of the 40,000 who had lost health care, 16,558 gradually got Medicaid back on their own, mainly by participating in other government programs that routinely screen children for Medicaid eligibility. The state will reinstate the remaining 23,442.

If the settlement is approved Feb. 8, the state is expected to contact all clients within 12 weeks and re-evaluate everyone's Medicaid eligibility and reimburse expenditures over an additional four to five months.

Everything should be wrapped up by September, Maiden said.

Child with cerebral palsy`may not get benefits in time

Benefits may come too late for Deanna Gabler-Alonzo, a plaintiff who may face the death of her child in the next six months.

The Northglenn mother of two said her welfare benefits and Medicaid were cut off when she had to stop working and couldn't attend work-training classes. Her caseworker refused to accept documentation from doctors that said her son Thomas needed full-time, 24-hour care.

Thomas, who has spastic quadriplegic cerebral palsy, is in a wheelchair and requires physical therapy twice a week and speech therapy once a week. He also was recently diagnosed with degenerative muscle disease, which may kill him, his mother says.

Caseworkers attempted to override the computer error at least once, she said, but then the system would not send Gabler-Alonzo her monthly Medicaid card.

"One month the computer would say I had benefits, and the next month it wouldn't," Gabler-Alonzo said. "Some months a card would come, and sometimes it wouldn't. Sometimes (Thomas) would get a card, but me and my daughter wouldn't."

The mother had to cancel doctor appointments for Thomas, and his younger sister, Yasmine, and spend long periods of time waiting for health care providers to sort out their Medicaid status.

The family recently regained their Medicaid benefits, but continue to have problems because they're not covered for expensive medicines and the specialized wheelchair that Thomas needs.

"It's hard enough to try and take care of a sick child and still have to fight with your health care provider," Gabler-Alonzo said in a tearful interview.

"Everyone is mad at me because sometimes it looks like I've given up the fight," she said. "But it's hard. It's just so hard."

http://www.denverpost.com/news/news0121f.htm

-- Martin Thompson (mthom1927@aol.com), January 21, 2001