Tony Leys, Kff Health News

This story comes to Newsline from KFF Health News.

OTTUMWA, Iowa — Leisa and Kent Walker recently received a disturbing notice: The private company managing their son’s Medicaid coverage intends to cut nearly 40% of what it spends for caregivers who help him live at home instead of in a nursing home.

Sam Walker, 35, has severe autism and other disabilities. He is deaf and cannot speak. Sometimes when he’s frustrated, he hits himself or others.

Medicaid provides about $8,500 a month for health workers who visit his apartment in the basement of his parents’ home. The staffers help him with everyday tasks, including dressing, bathing, and eating. They also take Walker on outings, such as dining at restaurants, volunteering at Goodwill, and exercising at a recreation center or on park trails. They stick to a strict routine, which soothes him.

His parents say that without the in-home services, their son would need to move to a specialized residential facility in another state. Sending him away would break their hearts and cost taxpayers much more money. They strive to keep him home because they know change makes him anxious.

“The last thing I want is to put him into some kind of care facility, where he’ll just get kicked out,” said his mother, Leisa. The Iowa Department of Health and Human Services did not respond to KFF Health News’ questions about the Walkers’ case.

Federal cuts raise pressure

Patient advocates say state administrators in Iowa appear to be reining in Medicaid spending by cutting what are known as home and community-based services for people with disabilities, and they’ve heard of multiple families facing battles like the Walkers’.

Disability rights advocates expect the pressure to intensify as states respond to reductions in federal Medicaid funding called for under the Trump administration’s signature tax and spending law, which passed last year.

June Klein-Bacon, CEO of the Brain Injury Association of Iowa, said the cuts and proposed rule changes appear to be part of a quiet attempt to save money in response to the state’s budget deficit and expected reductions in federal Medicaid funding.

Medicaid, jointly financed by the federal and state governments, covers people with low incomes or disabilities. Walker is one of nearly 2 million people served by “Medicaid waiver” programs, which pay for care that allows people with disabilities or who are at least 65 to live at home.

Unlike most parts of Medicaid, waiver programs are optional for states. Idaho’s governor noted that fact in January, when he suggested legislators consider cutting them. Disability rights groups fear other states will do the same. Leaders in Colorado, Missouri, and Nebraska have considered such cuts this year.

Leisa Walker has heard Trump administration officials claim the national Medicaid cuts are intended to reduce waste, fraud, and abuse. That’s not how it will play out, she said. “These are real people, real families, and this causes real suffering when you do this to people,” she said. “It’s a very scary time.”

Iowa Total Care, a private insurance company that manages Sam Walker’s Medicaid benefits, intends to cut his in-home care coverage by about $3,200 per month, his mother said. Company leaders told a judge they are following state officials’ direction, but they did not dispute Leisa Walker’s math.

Walker has been on the waiver program for three decades. It covers assistance from workers known as “direct service providers” — one of whom has been with him for 25 years. His parents receive no pay for the hours they spend caring for him when the aides aren’t working.

On a February morning, Leisa and Kent Walker drove an hour and a half to Des Moines for an appeal hearing. An administrative law judge sat behind a wooden desk in a conference room as the Walkers and their lawyer faced off against three representatives from Iowa Total Care, a subsidiary of the national insurer Centene Corp.

Leisa testified that her son is 6 feet tall and weighs 230 pounds. Although he knows some sign language, he has trouble communicating, she said. When he becomes frustrated or his routine is interrupted, he sometimes wails and hits himself or other people. “It’s devastating to watch,” she testified.

He’s not a bad person, she said. “He doesn’t understand how strong he is.”

She said her family would try to keep his main caregiver employed under the planned Medicaid reduction but would have to drop others who cover nights and weekends. She said no residential facility near their southern Iowa home could address her son’s complicated needs. She said a case manager told her that a Florida facility might be the closest one that could safely handle him.

Leisa Walker testified that the state’s Medicaid program would pay about $22,000 per month to put him in an institution, more than double what the program spends on his home care.

Sam Walker’s longtime psychiatrist, Christopher Okiishi, testified that Walker’s family and their support staff spent years developing a “fragile” but stable existence for him.

Lori Palm, a senior manager for Iowa Total Care, testified that Sam Walker gets about 16 hours of daily assistance financed by Medicaid. Palm said much of that time amounts to “supervision.” She said state officials recently advised her company that the program should pay mainly for “skill-building” time, not supervision.

The Walkers showed the judge a 2018 document in which a previous Iowa Medicaid director stipulated that supervision of people with disabilities is an allowable service for workers paid under the program.

Judge Rachel Morgan asked the Iowa Total Care representatives if the recent policy change was made in writing by the state Department of Health and Human Services. They said it was not and that they couldn’t specify who at the department had given them the new guidance.

The judge suggested during the hearing that for someone like Sam Walker, learning to regulate emotions could be an important form of skill-building. Three days later, the judge ruled in the Walkers’ favor, writing that the insurer’s attempt to cut care hours was improper. The insurer appealed the decision to the director of the Iowa Department of Health Human Services, who could overrule it. The dispute could eventually wind up in district court.

Iowa Total Care and the state Department of Health and Human Services did not respond to questions about the reports that many other Iowans with disabilities face reductions in care hours covered by Medicaid. Department spokesperson Danielle Sample said in an email that the agency supports home and community-based services, which, she noted, help “states save money by avoiding expensive long-term facility care.”

Spokespeople for the federal Department of Health and Human Services, which oversees Medicaid nationally, did not respond to a request for comment on the issue.

Medicaid waiver programs started in the 1980s, after President Ronald Reagan heard about an Iowa girl with a disability who was forced to live in a hospital for months because Medicaid wouldn’t pay for home care. The Republican president thought it was outrageous that the girl, Katie Beckett, had to live that way, even though home care would have been cheaper.

Members of Congress approved allowing states to use their Medicaid programs to pay for in-home care. But they made the change optional, to offer states flexibility and encourage innovation.

Designating such spending as optional “waiver programs” also made the change more politically palatable, said Kim Musheno, senior director of Medicaid policy for The Arc of the United States, which represents people with intellectual and developmental disabilities.

Prospects were much different for babies born with serious disabilities before the change, Musheno said. “Doctors instructed families to forget they existed, and to put them in an institution.”

Waivers have been cut before

All states have Medicaid waiver programs, but benefits and the number of people covered vary significantly. Applicants often wait months or years to get into the programs because of limited funding. More than 600,000 Americans were on waiting lists or “interest lists” for waiver services in 2025, according to KFF, a health information nonprofit that includes KFF Health News.

Disability rights advocates and care providers have fought for decades to maintain funding for the programs, but a national leader said the threat feels especially severe now.

“When Medicaid is cut, people with disabilities are at the center of the impact,” said Barbara Merrill, CEO of the American Network of Community Outcomes and Resources, which represents agencies that care for people with intellectual disabilities or autism.

That’s what happened after Congress reduced Medicaid funding in 2011, according to a recent paper published by Health Affairs.

States could again rein in waiver programs by limiting enrollment, reducing covered services, or cutting pay for caregivers, who already are in short supply.

However, states that try to cut the in-home care programs could face legal challenges, Musheno said. The U.S. Supreme Court declared in 1999 that people with disabilities have a right to live outside of institutions if possible. The decision, in the case of Olmstead v. L.C., has been cited in lawsuits against states that fail to provide care options apart from nursing homes and similar facilities.

Several Iowans who belong to a Facebook group for Medicaid participants have posted in recent weeks that their families were notified of impending cuts in coverage of home care services for people with disabilities.

Sam Walker’s main caregiver, Andy Koettel, has worked with him since Walker was in fourth grade. Koettel, who works full-time, knows how to keep Walker calm in most situations and soothe him during a blowup. Their relationship took years to build, and it is a key reason Walker can continue to live at home with his parents, Koettel said.

“If I was not there, it would be incredibly difficult for all of them,” he said.

In retrospect, Erica Kahn realizes she made two big mistakes.

The first was choosing to temporarily forgo health insurance when she was laid off from her job.

The second was screaming when a wild bat later landed on her face.

The bizarre encounter happened last August, while the Massachusetts resident was photographing the night sky during a vacation at the Glen Canyon National Recreation Area in Arizona. Kahn, now 33, noticed a few bats flying around but didn’t worry about them — until one flew up to her and got tangled between her camera and her face.

She screamed, and part of the bat went in her mouth. She doesn’t know which part or for how long, though she estimates it was only a few seconds. “It seemed longer,” she said.

The bat flew away, leaving Kahn shaken.

She didn’t think the animal had bitten her. Regardless, her father, who is a physician and was traveling with her, said she should go to a hospital within a day or so and begin vaccinations against rabies.

Figuring she would be covered as long as she obtained insurance before going to the hospital, Kahn said, she found a policy online the day after the bat incident. She said she called the company before she bought its policy and was told services related to an accident or “life-threatening” emergency would be covered.

Kahn went the next day to a hospital in Flagstaff, Arizona, where she started rabies prevention treatment. Over the next two weeks, she received the rest of the rabies shots at clinics in Arizona and Massachusetts and at a hospital in Colorado.

Then the bills came.

The Medical Procedure

Kahn received a total of four doses of the rabies vaccine. The doses are administered over the course of 14 days. Along with her first vaccination, she received three shots of immunoglobulin, which boosts antibodies against the virus.

Rabies is typically transmitted through bites or scratches from an infected animal. Experts recommend precautionary measures when a person has been potentially exposed to rabies, because once the neurological disease causes symptoms, it is fatal. The Centers for Disease Control and Prevention says postexposure rabies treatment has reduced the number of human fatalities to fewer than 10 a year in the U.S.

The Final Bill

According to explanation-of-benefits statements, Kahn owed a total of $20,749 for her care at the four facilities. Most of the charges were from the hospital where she was first treated, Flagstaff Medical Center: $17,079, including $15,242 for the rabies and immunoglobulin shots.

The Billing Problem: Most Insurance Doesn’t Start Immediately

Kahn’s policy did not pay for any of the services. “The required waiting period for this service has not been met,” said an explanation-of-benefits letter she received in December.

Kahn was stunned. “I thought it must have been a mistake,” she said. “I guess I was naive.”

When Kahn was laid off from her job as a biomedical engineer last summer, she had the option to temporarily stay on her former employer’s insurance under a COBRA plan, at a cost of about $650 a month. But as a young, healthy person, she gambled that she could get by without insurance until she found another job. She figured that if she needed medical care, she could quickly buy a private policy.

According to the Centers for Medicare & Medicaid Services, those who qualify for COBRA must be given at least 60 days to sign up — and if they do, the coverage applies retroactively. Kahn, who was still within that period at the time of the incident, said recently that she did not realize she had that option.

The policy she purchased after the bat episode, which cost about $311 a month, was from a Florida company called Innovative Partners LP. Documents Kahn provided to KFF Health News say the policy has a 30-day waiting period, which “does not apply to benefits regarding an accident or loss of life.”

Kahn said that after receiving notice that her claims were denied, she called the company to ask how she could appeal and was told a doctor would have to file paperwork. She said she wrote a letter that was signed by a doctor at Flagstaff Medical Center and submitted it in March but was unable to reach doctors at the other facilities.

Kahn said she was given conflicting answers about where to send the paperwork. She said a representative with the company recently told her it had not received any appeals from her.

Benefits statements Kahn received in early July show Innovative Partners had not paid the claims. The company did not respond to requests for comment for this article.

Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University, said most health coverage plans take effect on the first day of the month after a customer enrolls.

“The insurance companies — for good reason — don’t want people to wait to sign up for coverage until they are sick,” she said, noting the premiums healthy people pay help balance the costs of paying for health care.

The Affordable Care Act requires insurers to cover preexisting conditions, such as diabetes or heart issues. But that doesn’t mean they have to pay for treatment of an injury sustained shortly before a person enrolls in coverage, she said.

Corlette, who reviewed a brief benefits overview provided by Kahn, said the policy appears to have been a limited, “fixed indemnity” plan, which would pay only set amounts toward treatments per day or other period regardless of total expenses incurred. Such plans have been around for decades and aren’t required to meet ACA standards, she said.

But she said even if Kahn had bought comprehensive health insurance, it probably wouldn’t have covered treatment received so soon after she purchased it.

David Shlim, a travel medicine specialist in Wyoming who studies rabies, said Kahn made the right choice by promptly seeking treatment, even though she didn’t feel the bat bite her. The disease is deadly, and the fact that the bat went into her mouth meant she could have been infected from its saliva, he said: “You could hardly have a more direct exposure than that.”

Shlim, who recently co-wrote a federal advisory about rabies prevention, added that healthy bats don’t normally fly into people, as the one in this case did. The animal’s entanglement with Kahn suggests it could have been sick, possibly with rabies, he said.

Rabies prevention treatment is much more expensive in the United States than in most other countries, Shlim said. The priciest part is immunoglobulin, which is made from the blood plasma of people who have been vaccinated against rabies.

The treatment is often administered in hospital emergency rooms, which add their own steep charges, Shlim noted.

The Resolution

Kahn said she is employed again and has good health insurance but is still facing most of the bills from her misadventure at Glen Canyon. She said she paid a doctor bill from Flagstaff Medical Center after negotiating it down from $706 to $420. She said she’s also arranged a $10-a-month plan to pay off the $530 she owes for one of her rabies shots at another facility.

She said she plans to continue appealing the denials of payment for the rest of the bills, which total more than $19,000.

In a statement on behalf of the Flagstaff hospital — where Kahn incurred the highest charges — Lauren Silverstein, a spokesperson at Northern Arizona Healthcare, said the health system does what it can to limit costs. “We have less ability to control the prices of critical supplies that we use to treat patients, including pharmaceuticals, biologics, diagnostics and medical devices made by other companies,” she said.

Silverstein said the hospital needs to keep immunoglobulin on hand to prevent rabies, even though such cases are relatively rare and the drug is expensive.

The Takeaway

COBRA insurance policies, named for the Consolidated Omnibus Budget Reconciliation Act of 1985, enable many people who lose job-based coverage to pay to stay on those plans temporarily. There is a 60-day window to choose COBRA coverage, and once a beneficiary pays for it, the coverage applies retroactively — meaning that medical care is covered even if it occurred when the person was uninsured.

Corlette said Kahn’s predicament illustrates why people need to make sure they have health insurance.

She said people who lose employer-based coverage should consider enrolling in individual insurance plans sold on federal or state marketplaces. Many people who buy such policies qualify for substantial ACA subsidies to help pay premiums and other costs.

“If you are losing your job, COBRA is not your only option,” Corlette said.

Kahn wishes she had signed up for insurance coverage when she was laid off, even though she felt confident she would find another job within a few months. “That’s a very big lesson I learned the hard way,” she said.

Her wildlife encounter did not destroy her love of the outdoors. She even sees humor in it.

“I know what bats taste like now. It’s an earthy, sweet kind of flavor,” she joked. “It’s actually a pretty funny story — if it weren’t for the horrible medical bill that came with it.”

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Collection agents for the state of Iowa have sent letters seeking millions of dollars from the estates of at least two people with disabilities who died after spending most of their lives in a state institution.

The amounts represent what Medicaid spent covering the residents’ care when they lived at the Glenwood Resource Center, a state-run facility that closed last summer.

The bills are extraordinary examples of a practice called Medicaid estate recovery. Federal law requires states to try to collect money after some types of Medicaid recipients die. The point is to encourage people to use their own resources before relying on the public program. But some states, including Iowa, are particularly aggressive about the collections, national reports show.

Joy Higgins was stunned by a letter she received a few weeks after her 41-year-old daughter, Kristin, died last May. The letter was written on Iowa Department of Health and Human Services stationery. At the top, in bold letters, it said, “Re: Kristin Higgins.”

“Dear Joy Higgins,” the letter read. “Our sincere condolences to you, as we understand the above person is deceased.”

The letter explained that any money Kristin Higgins left behind would have to be remitted to the state to help repay Medicaid $4,263,148.67. Her family had 30 days to respond.

Joy Higgins, who lives in Council Bluffs, wonders why state debt collectors would send a massive bill to the family of someone like her daughter, who had little income because of a severe developmental disability stemming from a premature birth.

“What are they gaining? That’s my question. Except for kicking someone in the face right after they lost a loved one?” Higgins said.

Kristin Higgins’ only income was a Social Security disability benefit of $1,105 monthly. Most of that went directly to the state institution, where she lived for more than 30 years. Just $50 was set aside monthly as an allowance for personal expenses, according to a state ledger obtained by her family. “They knew exactly how much she had,” her mother said.

When she died, Kristin’s personal account had a balance of $2,239.84. The family put that money toward her funeral, an allowed expense. Nothing was left for the state to take. Higgins said receiving the letter was traumatic even though the family didn’t have to pay the Medicaid bill.

The Higginses have heard about similar attempts to collect from other families, including that of Eric Tomlyn, who died in 2020 at age 29 after spending most of his life at the Glenwood Resource Center.

Shortly after his death, the Tomlyn family received a Medicaid bill of more than $4.2 million. His mother, Susan Tomlyn, was shocked by the letter. “I was like, ‘What? What? Oh my God,’” she recalled.

She filled out a form explaining that the small balance in her son’s personal account had gone toward his funeral. “That’s the last I heard of it,” Tomlyn said.

Supporters of estate recovery efforts say the rules encourage people to pay for their own care before applying for Medicaid, which is mainly intended to help those with little money.

Critics of estate recovery programs say they often target families with little to give. Wealthier families tend to have lawyers who can structure estates in ways that avoid Medicaid repayment demands, the critics note.

Like Higgins, Tomlyn thought her Medicaid recovery bill came from state officials because it was printed on letterhead from the Iowa Department of Health and Human Services. The people who signed the letters identified themselves as being from the “Estate Recovery Program.” But the people who produce such letters work for private contractors hired to collect Medicaid debts, according to Alex Murphy, a spokesperson for the state agency. Their contract requires them to use state stationery.

Murphy said in an email to KFF Health News that such letters are sent after every death of an Iowa Medicaid recipient who was at least 55 years old or who lived in a long-term care facility. He said the letters “request information from family members regarding the deceased person’s assets and expenses,” and the letters note that repayments are expected only from the person’s estate.

Iowa’s Medicaid collections are handled by Sumo Group, a Des Moines company. Its director, Ben Chatman, declined to answer questions, including why the company sent bills to families of people with disabilities who lived most of their lives in state institutions. “I don’t do media relations,” Chatman said.

Sumo Group is a subcontractor of a national company, Gainwell Technologies, which has handled Medicaid collections for several states. In Iowa, the company is paid 11% of whatever it can collect from the estates of Medicaid participants. A spokesperson for Gainwell declined to comment.

Iowa’s Medicaid estate recovery program brought in $40.2 million in the fiscal year that ended last June, up nearly 14% from two years earlier, state records show. That total represents a sliver of the state’s total Medicaid budget, which is expected to hit $9 billion this year.

Nearly two-thirds of Iowa estate recovery cases wound up being closed with no collection of money last fiscal year, according to the state. In cases in which money was recouped, the average amount paid was about $10,000.

Thirty-five Iowa families were granted hardship waivers, which the state allows if an heir’s health or life would be endangered because payment of the Medicaid bill would deprive them of food, clothing, shelter, or medical care. Officials denied an additional 20 requests for hardship waivers.

A 2021 report to Congress estimated states collected more than $700 million annually from Medicaid participants’ estates. That money is shared with the federal government, which helps finance Medicaid. Some states claw back much less than others. Hawaii, for example, collected just $31,000 in 2019, the latest year analyzed in the federal report. Iowa, with about twice as many residents as Hawaii, raked back more than $26 million that year.

Americans aren’t subject to such clawbacks for using any other federal health program, including Medicare, which covers older people of all income levels.

The national group Justice in Aging has helped lead opposition to Medicaid estate recovery programs. Eric Carlson, a California attorney for the group, said the issue usually comes into play after the death of a person who had nursing home care covered by Medicaid. Recovery demands often force survivors to sell homes that are their families’ main form of wealth, he said.

Carlson said he hadn’t previously heard of Medicaid estate recovery bills topping $4 million, like the ones sent to survivors of the two Iowans with disabilities.

He wondered why debt collectors would pursue such cases, which are unlikely to yield any money but could cause anxiety for families. “Of course, if you open up a piece of mail that says you owe millions of dollars, you’re going to think the worst,” he said.

Carlson said he would advise anyone who receives such a letter to respond to it with documentation showing that their loved one’s estate can’t repay a Medicaid debt. “It’s never a good idea to ignore it,” he said. Failure to respond to the bill could lead to continued collection efforts, which could threaten a family member’s finances or property, he said.

Some states have reined in their Medicaid clawback efforts. For example, Massachusetts legislators last year voted to drastically limit their program. This was the second time Massachusetts reduced its Medicaid estate recovery effort, which once was one of the most aggressive in the U.S.

Critics in Congress have also tried to limit the practice.

Rep. Jan Schakowsky (D-Ill.) has twice introduced bills to eliminate the federal requirement that states claw back Medicaid spending from recipients’ estates. Last year’s bill gained 47 Democratic co-sponsors, but it received no support from the Republicans controlling the chamber, and there was no similar bill in the Senate. She plans to try again this year, even though her party remains in the minority.

Schakowsky said in an interview that she’d never heard of Medicaid estate recovery demands reaching millions of dollars, as the Iowa families faced. But demands for hundreds of thousands of dollars are common. For many families, “that’s still impossible” to meet, she said.

Schakowsky hopes that members of Congress from both parties will agree to curtail the program once they realize how much angst it causes their constituents and how relatively little money it returns to the government. “The whole program is ridiculous,” she said.

Her quest could become even tougher if the Trump administration moves ahead with proposals to trim Medicaid spending.

The office of Sen. Chuck Grassley, who is the senior member of Iowa’s all-Republican congressional delegation and has taken leading roles in many health policy debates, declined to comment on the issue.

The Iowa Department of Health and Human Services said it notifies families about the estate recovery process when they apply for Medicaid. Joy Higgins said she doesn’t recall seeing such a notice.

The institution where Kristin Higgins spent most of her life was closed last year after federal officials investigated complaints of poor medical care. But Joy Higgins said her daughter was treated well there overall. “If I had millions in the bank, I’d give it to the state,” she said. “I would. It was worth it.”

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