Medicaid in 2017

The new administration has made the repeal of the Affordable Care Act (ACA) a priority item on their agenda. Under the ACA, many states had opted to expand Medicaid eligibility for certain individuals in order to provide insurance coverage. Although the transition to the new administration is still underway, a review of the backgrounds of Representative Tom Price, chosen as the Secretary of the Department of Health and Human Services (HHS), and Seema Verma, chosen as the Administrator of the Centers for Medicare and Medicaid Services (CMS), allows some insight into their views on federal funding for state Medicaid programs.

Representative Price has staunchly opposed the ACA from early on and has proposed annual alternatives to it since 2009. His latest version of the “Empowering Patients First Act” H.R. 2300, introduced in May of 2015, shows his support for providing federal money to states to subsidize insurance for “high-risk populations”. It also offers fixed tax credits regardless of income, so that people may buy their own insurance through private markets. Seema Verma is known for her work in designing Indiana’s Medicaid model. A newer feature of this program provides that Indiana Medicaid enrollees may be denied all benefits for six months if they fail to make a monthly Medicaid premium payment. Price and Verma have been described by President-elect
Trump as “the dream team that will transform our healthcare system for the benefit of all Americans.”

Given the new administration’s agenda and selection of Price and Verma, we would expect to see significant cuts in the federal government’s contributions to state Medicaid programs. These cuts may result in an increase in an individual state’s contributions to the program, along with a reduction in the benefits offered under the Medicaid program. Enhanced reimbursement efforts by the states to collect payment from other sources are also anticipated. Reimbursement efforts are required by federal law in exchange for the federal contributions to the states’ Medicaid programs.

Whenever a Medicaid recipient receives medical assistance for an injury or condition for which a third party is liable, Medicaid has an enforceable right to recover the amount of the medical assistance paid by the State. Medicaid lien statutes vary from state to state. In a majority of states however, whenever Medicaid has furnished medical assistance for an injury or condition for which a third party is liable, the State has an automatic statutory lien for all medical assistance furnished to the Medicaid recipient. The Medicaid lien is against the judgment amount, award, or settlement in a claim or suit against the third party. In some states, the lien may be reduced to cover the attorney fees and costs of the plaintiff in procuring the judgment, award, or settlement.

In order to collect information about potential third-party recovery, states may have reporting requirements. The reporting will often be made through data exchange or intercept programs. Data exchange programs, such as the Public Assistance Reporting Information System (PARIS), match the Social Security Numbers of Medicaid recipients, or other information, against federal databases and participating states. Currently, 47 states participate in the PARIS program. Many states are considering adding workers’ compensation as a program to be included in the PARIS match metrics. Medicaid intercept programs are also used by some states to intercept payments to claimants for reimbursement to a state’s Medicaid program.

At this time, Medicaid’s lien recovery is limited to that portion of a settlement or judgment that is for health care items or services. In other words, Medicaid may not assert its lien against other aspects of the underlying claim, e.g. lost wages and other nonmedical damages. As a result, settlement or judgment proceeds may be allocated among the various damage elements asserted in an underlying claim based on their relative value. This will, however, change as of October 1, 2017, when Medicaid’s lien may be asserted against all amounts paid to a claimant regardless of the character. This change, which has been delayed several times, is due to the enactment of Section 202(b) of the Bipartisan Budget Act of 2013.

Given the lack of uniformity in the state Medicaid recovery rules, it is imperative that parties familiarize themselves with the relevant statutes in regards to reporting and repaying liens. We will keep you advised as new developments occur in the area of Medicaid.