Important change regarding Medicaid secondary payer claim compliance

by | May 15, 2019

Important change regarding Medicaid secondary payer claim compliance

February 26, 2018
by Lavonya Chapman, Esq., R.N., C.M.S.P.

On February 9, 2018 President Trump signed into law a new budget deal. The new law also contained an important change regarding Medicaid Secondary Payer compliance.

What Optum had been anticipating
Optum Settlement Solutions had been anticipating an Oct 1, 2017 effective date for state Medicaid agencies to begin enforcing the Medicaid Secondary Payer Act enacted in Section 202(b) of the Bipartisan Budget Agreement of 2013, referred to as the “Murray-Ryan bill”. The act permitted state Medicaid agencies to recover all payments Medicaid made related to the underlying personal injury claim before settlement. The recovery was to occur regardless of whether the damages/injuries claimed were related to the medical component of damages within a personal injury settlement or third party settlement.

Practically speaking, each state Medicaid agency was entitled to recover proceeds from a personal injury settlement if the Medicaid paid for medical treatment related to the underlying accident, up to the total settlement amount if that was indeed what Medicaid had paid.  Had the federal law not been reversed, some Medicaid recipients may have been left with no money in their pockets after settlement in order for Medicaid to recover money spent.

What has changed overnight
Section 53102 of the Bipartisan Budget Act of 2018 fully repealed Medicaid’s expanded recovery rights regarding third party, personal injury settlements. The new legislation overturned what had been anticipated for several years.

The new budget permanently repealed the ability of Medicaid to recover up to the total settlement amount. Now Congress has restored the ability of Medicaid recipients to settle third party liability claims. In other words, the recent repeal allows Medicaid recipients to pursue and settle third‐party insurance claims without fear that all of the settlement proceeds will go towards repaying Medicaid.

What this means for the claim handler 
Liability insurers and claim handlers are not totally off the hook. Medicaid still has recovery rights in third party liability settlements and Medicaid will still be permitted to recover some of their payments via third party liability units within each state Medicaid agencies. However, the new legislation will improve the ability to settle the claim and removes the need to pay higher settlement amounts because the claim involves a Medicaid recipient.

Claim handlers will still receive notices from Medicaid reminding you not to settle without contacting Medicaid for their recovery demand. However, these rights will be limited based upon the agreement of the parties as to how funds are allocated under the settlement.

Who deserves credit
We applaud the Finance Committee Chairman, Orrin Hatch, Senator Rob Portman, as well as the House Energy and Commerce Health Subcommittee Chairman Michael Burgess, and the House and Senate leaders, who have been worked over the last several years to eliminate this provision. The Medicare Advocacy Recovery Coalition (MARC) has been pressing for a reversal for several years. Our thanks to the MARC Chairman, Greg McKenna for staying behind this effort.

What Optum can do for you
If you have a claim you would like to settle and are not sure the claimant is a Medicaid recipient, Optum can contact the state Medicaid liability recovery unit and provide them notice of the pending settlement and request an itemization of payments Medicaid has made pertaining to the underlying claim.

If you have a Medicaid demand seeking recovery of medical expenses related to the personal injury claim that includes unrelated treatment for pre-existing or co-morbid conditions, Optum can dispute and negotiate the amount you owe Medicaid.

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