Medicaid Statute Updates

What the Supreme Court giveth, Congress can take away. The federal Medicaid statute has long required that Medicaid agencies recover from third parties legally liable for health care items or services to the extent that the Medicaid program had paid for those items or services. 42 U.S.C. § 1396a(a)(25)(H). States also were required to have individuals assign to the State the individual’s right to payment for medical care from any third party. 42 U.S.C. § 1396k(a)(1)(A).

In Arkansas Dept. of Health and Human Servs. v. Ahlborn, 547 U.S. 268 (2006), the Court held that those statutes limited any claim by Medicaid programs to the portion of the recovery in a tort action to medical expenses, not to other items of damages like pain and suffering, lost wages, etc. It did not directly decide whether or not the Medicaid program’s recovery could be done by way of a lien, but strongly intimated that it could not. This was reiterated nine months ago in Wos v. E.M.A., 133 S. Ct. 1391, 185 . Ed. 2d 471 (2013).

Section 202(b) of the Bipartisan Budget Act of 2013 enacted last week modifies those two statutes, which the Supreme Court held limited Medicaid recoveries, to permit recovery not just for health care items or services but for “any payments by such third party.” § 1396a(a)(25)(H) as amended by § 202(b)(1)(B) of the Budget Act. Likewise, § 202(b)(2) amended § 1396k(a)(1)(A) to replace the provision for reimbursement “for medical care from any third party” with a provision for reimbursement of “any payment from a third party that has a legal liability to pay for care and services available under the plan.” Those amendments effectively reverse Ahlborn and Wos.

To resolve any ambiguity about lien rights against tort recoveries, § 202(b)(3) amended 42 U.S.C. § 1396p(a)(1)(A) to permit Medicaid programs to place a lien against “rights acquired by or assigned to the State in accordance with section [1396a(a)(25)(H)] or section [1396k(a)(1)(A)]. The good news, if any, is that those amendments only take effect October 1, 2014. Section 202(c).

The report describing the provisions of the Budget Act doesn’t say that it reverses Ahlborn and Wos. Rather it somewhat vaguely says that “Section 202 would affirm Medicaid’s position as the payer of last resort by strengthening third-party liability to improve states’ and providers’ abilities to receive payments for beneficiary services, as appropriate.”