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In response to the budget agreement signed by President Obama at the end of 2013, the Centers for Medicare and Medicaid Services (CMS) released a memo describing its implications with regards to Medicaid.

Within the memo lies a game-changing component that will affect Medicaid beneficiaries receiving a liability settlement:

“[…] the legislation makes changes to sections 1902(a)(25), 1912, and 1917. The changes give states the ability to recover costs from the full amount of a beneficiary’s liability settlement, instead of only the portion of the settlement designated for medical expenses, and it establishes an option for states to place liens against Medicaid beneficiaries’ liability settlements.”

This is a major policy shift in terms of the portion of a settlement the state can seek reimbursement from.  Prior to this change, the state could not seek reimbursement from the portion of a tort recovery meant to pay for pain and suffering, lost wages, and/or other non-medical damages.

In effect, this renders the popularly referenced Ahlborn decision (2006), in which the Court established that the state could only recover a portion of the medical to satisfy the lien, obsolete.  With the new changes, the state now has the opportunity to take a much larger portion of the settlement, depending on the size of the lien.

In order to ensure that plaintiffs keep as much of their settlement award as possible, this will require diligence on behalf of their attorneys and settlement experts to reduce the amount of the Medicaid lien as much as possible.

The Medicaid third-party liability law will also be affected by two other key changes:

  1. Amend Section 1902(a)(25)(E) to allow a state 90 days to delay payment for prenatal and preventative pediatric care.  The 90-day period begins once the provider initially submits a claim to the third party payer.  The state may delay payment if it determines that to do so would be cost-effective and will not adversely affect access to care.
  2. Amend Section 1902(a)(25)(F) to allow a state 90 days to delay payment for services where child support enforcement is being carried out.  If it is found to be cost-effective an necessary to ensuring care, the state can continue to make payment within 30 days.

All changes are intended to go into effect beginning October 1, 2014.


Related Posts:

Important Change to Medicare Reimbursement Guidelines


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