Medicaid Involvement in Your Third Party Claims

Medicare Set-Aside Blog on April 25, 2011
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As I painfully reviewed a 14 page opinion out of DC following the dismissal of a Medicaid qui tam action yesterday, I was left thinking how badly Medicaid gets treated like a bastard step-child. Even though the agency is referred to as the Centers for Medicare and Medicaid Services, its focus is clearly on Medicare. Recently, more and more questions are being submitted through our blog about Medicaid and it is becoming abundantly clear that Medicaid is even more misunderstood than Medicare. Here are a few basic facts I thought we’d share that might illuminate how the issue may be impacting your third party liability claims.

1. Medicaid is a joint federal-and-state-funded program that provides medical assistance to individuals whose income and financial resources are insufficient to pay the cost of necessary medical services. All states and the District of Columbia participate in the Medicaid program.

2. The federal government has historically contributed between 50 to 85 percent of each state’s Medicaid expenditures. Each state receives a quarterly advance based upon certain estimates from the federal government to help finance the program. At the close of each quarter, the states submit a quarterly statement of expenditures to reconcile the amount of contribution.

3. Medicaid is intended to be the payer of last resort. A state Medicaid agency must “take reasonable measures to determine the legal liability of the third parties who are liable to pay for services furnished under the” state Medicaid plan. 42 C.F.R. ยง 433.138(a).

4. When dually eligible for both Medicare & Medicaid, Medicaid will pay the beneficiary’s Medicare premiums & deductibles. The actual medical care provided by Medicaid is actually provided by Medicare.

What does that mean for your third party liability claims???

1. You do care about protecting Medicare eligibility because your assumption that your client can rely upon Medicaid for treatment may not be entirely accurate.

2. Just like Medicare, Medicaid is also entitled to reimbursement, but more than the subrogation rights provided under state law, you also need to keep in mind that federal payments to the state Medicaid program are in play and therefore any act that induces an “overpayment” would place potential recovery actions under the Federal False Claims Act, which pursuant to the FERA Amendment of 2009 does not require the action to be fraudulent any longer.

3. Don’t disregard the dual eligibility because if you negotiate a Medicare set-aside and fail to protect the funds, it will become a disqualifying asset for Medicaid purposes. Once disqualified from Medicaid, the individual can’t spend down the asset on anything other than Medicare covered services related to the settlement, judgment or award because Medicare will continue to be excluded until it can be demonstrated that the MSA funds were properly exhausted.

4. Unlike Medicare reimbursements, at least you have apportionment to look forward to [Ark. Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275 (2006)].

And for anyone interested in the opinion that sparked my attention today:
Plaintiff/Relator, v. AFFILIATED COMPUTER SERVICES, INC., Defendant.
Civil Action No. 06-1299 (RBW)
2011 U.S. Dist. LEXIS 42586
April 20, 2011, Decided