Medicaid Recoveries and Workers’ Compensation
Let the games begin. It was recently reported to me that TPAs throughout the State of Kentucky were blanketed with “we understand that you may be responsible” letters for a number of state Medicaid recipients also on workers’ compensation. Don’t panic but we are about to embark on a whole new world of government bureaucracy in our claims practices.
To begin, understand that Medicaid is a secondary payer just as Medicare has always been. And much like Medicare prior to the turn of the century, just because Medicaid has historically rarely ever proactively come after reimbursements does not mean that the right did not exist. If, as the workers’ compensation carrier you are responsible for medical treatment related to an industrial injury, then you are obligated to pay for it and just because Medicaid has already does not relieve you of that obligation. The state agencies have lacked access to insurance claim data and the necessary manpower to pursue such debts, but clearly that is about to change.
As a brief background, Medicaid is a state administered social health care program for families and individuals of limited means. Despite it being called the Centers for Medicare and Medicaid Services, the federal government is not involved beyond the oversight of the federal laws that created the program. Just like Medicare, Medicaid was created in 1965 by amending the Social Security Act to add Title XIX which permits the federal government to match funds to states to enable them to create medical assistance programs to residents who meet certain eligibility requirements. The states are not required to participate, however if they want the federal contribution, they must meet certain minimum standards established by the federal government. One such standard is that they must seek reimbursements from responsible third parties whenever possible [see generally 42 U.S.C. 1396 et seq.]. Compound that with the Deficit Reduction Act of 2005 amendment requiring states to take all reasonable measures to ascertain the legal liability of third parties for health care items and services provided to Medicaid beneficiaries, and the authority to contract with Managed Care Organizations to administer state programs, we get the letters that spurred this post.
It is uncommon but not impossible for workers’ compensation claimants to also be entitled to Medicaid, therefore one of the reasons why comp carriers have so little experience with states seeking reimbursements. Essentially if you were employed, the chances of having too much income to qualify were pretty good. And Medicare and Medicaid are not mutually exclusive either so it is entirely possible to be on both of those programs simultaneously as well. But what has changed with the Medicaid expansion provided by the Affordable Care Act is that we will see more workers qualify for the program. Today all U.S. citizens and legal residents, including adults without dependent children, with income up to 133% of the published poverty threshold qualify for coverage. As noted in the chart below, these new income levels now have the potential to reach beyond minimum wage jobs and dual eligibility will likely become more commonplace in workers’ comp. Once a worker on Medicaid gets injured on the job and is out of work for over a year and not likely to return for the foreseeable future, he may apply for Social Security Disability. If accepted and receives 24 SSDI payments, he will automatically become entitled to Medicare. Once eligible for both programs, Medicare provides the care and Medicaid pays the premiums, out of pockets and anything that Medicare doesn’t, however all subject to the Medicare Secondary Payer Act that makes work comp (or any other form of insurance) primary and subject to statutory recovery rights.
2015 DHHS Figures for Poverty
|Persons in Family Unit||Poverty Line||Medicaid Qualification Income|
(Note: figures for Alaska and Hawaii are higher)
So the message to workers’ comp carriers is if you receive one of these letters, your claimant is apparently on Medicaid and the state is looking to see what your claim covers to see if you owe it any money. The letter is essentially the same as those sent by Medicare Advantage Organizations in recent times which tells me that the state is merely receiving enough information to see that there is a reported claim that matches one of its beneficiaries and not the details about the claim itself. Your obligations to make reimbursement will be driven by the state workers’ compensation law so look to it when deciding how to respond to such demands for information or payment.
While a little more complicated and beyond the message I intended to send today, liability carriers understand that you too have an obligation to reimburse the states but that the Supreme Court has placed some limitations on it which are about to expire. The federal law requires that the states include in their plan a requirement for recipients to assign their rights against third parties to the state and require their cooperation in seeking reimbursement [see 42 U.S.C. 1396k]. In the Arkansas Dept. of Health and Human Services v. Ahlborn [547 U.S. 268], more recently reinforced by WOS v. E.M.A., the Supreme Court basically said that Medicaid reimbursements were limited to settlement funds allocated to medical expenses and could not be assessed against the entire settlement amount. But Section 202 of Bipartisan Budget Act of 2013 [House Joint Resolution 59], titled “Strengthening Medicaid Third-Party Liability”, passed on December 12, 2103, will remove language from 42 U.S.C. 1396a(a)(25) that limits recoveries to the “extent of such legal liability,” meaning that just like Medicare, the states will be able to assert a full recovery demand upon the entirety of the settlement amount with no regard to how that amount was arrived at or agreed upon. Although originally scheduled to take effect October 1, 2014, the Protecting Access to Medicare Act of 2014 [H.R. 4302], passed by President Obama on April 1, 2014, delayed implementation until October 1, 2016. Until that time, Ahborn still controls so settle quickly.
One last note before I conclude; the contractor working on behalf of the State of Kentucky is HP Enterprise Services, as in Hewlett Packard, the computer manufacturer. A quick internet search shows that HP developed an interchange Medicaid Management Information System (MMIS) and successfully sold it to several states to replace antiquated systems that likely stood as part of the impediment to recovery attempts. Among just the first pages of the google results, these states include but are not limited to: Alabama, Arkansas, Colorado, Connecticut, Delaware, Indiana, Kansas, Massachusetts, Nevada, Oregon and Wisconsin. So once you’ve locked down the IT, why not offer ancillary services? (Watch out, Sedgwick). HP maintains an entire portfolio of comprehensive health and life sciences services so not only can it update the states’ Medicaid systems, it can also fully administer their programs for them. So understand that these letters appear to actually be coming from the MCO and not a collection agency. Not that this changes your obligation to reimburse or not, just that it is nice to know who you are dealing with.
Love it or hate it, Medicaid bureaucracy has begun and it will only grow until it becomes in integral part of our claims practice just as Medicare did starting in 2001. The biggest difference is however that each state administers its own program and there is no central clearing house to deal with like we do for Medicare. Each state law is different and each agency is administered differently. The most important thing you can do before October 1, 2016 is figure out how the system in your jurisdiction(s) works.