Printed from

Medicaid rule changes could delay workers comp and liability settlements

Posted On: Mar. 2, 2014 12:00 AM CST

Medicare Secondary Payer Act experts are weighing an effort to change federal Medicaid recovery law that they say could hinder claim settlements this fall.

Like Medicare, state Medicaid programs can seek reimbursement for medical expenses paid to a Medicaid beneficiary when that person receives a settlement. Language in the federal budget approved in December increases the portion of a settlement from which Medicaid programs can seek reimbursement.

Medicare recovery experts say they are concerned that the expanded Medicaid recovery rules, which take effect Oct. 1, will hamper parties' ability to settle liability and workers compensation cases.

Members of the Medicare Advocacy Recovery Coalition plan to meet Wednesday to discuss strategies to deal with the new Medicaid recovery challenges, including a push to change the law, said coalition Chairwoman Michele Adams.

“We're really hoping that Congress will repeal that section and amend it so ... recoveries are balanced and fair, rather than coming 100% off the top of any settlement,” said Ms. Adams, who also is director of claims management and business strategies for risk management services at Walt Disney World Resort in Orlando, Fla.

A portion of the Bipartisan Budget Act of 2013 includes several provisions to strengthen “Medicaid third-party liability.” While federal law previously said Medicaid programs can collect “payment for medical care from any third party,” the recent budget changed that to allowing collection from “any payment from a third party that has a legal liability to pay for care and services available under the plan.”

Liability claims that are eligible for Medicaid reimbursement typically include funds for lost wages, pain and suffering and medical expenses, Ms. Adams said. Previously, Medicaid programs could collect reimbursements only from the medical portion of settlements, leaving lost wage payments and other damages for beneficiaries.


Ms. Adams said allowing Medicaid to collect reimbursement from all portions of a settlement is a disincentive for beneficiaries to close their cases.

“If you're going to take dollar-for-dollar every dime that the beneficiary could receive, then what incentive do they have in resolving their claim?” Ms. Adams said.

Roy Franco, principal of Bradenton, Fla.-based Medicare compliance firm Franco Signor L.L.C. and former MARC chairman, said secondary payer experts hope they can succeed in having the Medicaid recovery changes removed or revised before they take effect this fall.

“It's not quite certain where this is going to land,” Mr. Franco said. “It's a definite political back and forth” between the legislators.

Since Medicaid is a need-based program, experts expect the Medicaid recovery changes would be more likely to affect liability settlements, rather than workers comp settlements involving beneficiaries who earn an income above the federal poverty level.

However, some workers comp settlements could be affected under federal health care reforms, said Jennifer Jordan, Columbia, Md.-based general counsel of Medicare compliance company Medval L.L.C.

The Patient Protection and Affordable Care Act sets the national Medicaid minimum eligibility level at 133% of the federal poverty level. That threshold is $31,721 for a family of four in 2014 — a figure that could include single breadwinners who would be eligible for workers comp benefits as well as Medicaid, Ms. Jordan said.


“It's very likely that we're going to see in the foreseeable future situations where we're going to have dually eligible ... injured workers,” Ms. Jordan said.

Beyond allowing Medicaid programs to be reimbursed from a larger portion of claim settlements, expanding Medicaid recovery could present additional problems, sources say.

While Medicare reimbursement liens can be confirmed through the Centers for Medicare and Medicaid Services, there is no central clearinghouse to determine if a claimant owes money to a state Medicaid program, said Greg McKenna, counsel and head of governmental affairs for Itasca, Ill.-based third-party administrator Gallagher Bassett Services Inc.

That could force payers to turn to individual states for a claimant's Medicaid records, which could be costly and time-consuming, Mr. McKenna said.

“You would have to have ways to identify and confirm that the state Medicaid offices ... and the insurance industry are actually talking about the same beneficiary,” he said.

While Medicare allows settlements to cover legal fees before being subject to reimbursement, Medval's Ms. Jordan said it's uncertain whether the expanded Medicaid recovery language would be the same.

“If (Medicaid has) a right to take it all, and they don't allow for procurement costs, then the attorney's not going to get paid, either,” said Ms. Jordan, who said it would be up to state programs to determine such details. “That's definitely going to make it harder to get cases settled.”