On March 8, 2023, the Centers for Medicare and Medicaid Services (CMS) sent a letter to all state Medicaid Directors in the United States suggesting they create or update their state plans to assert Medicaid Liens whereby monies have been paid on behalf of Medicaid Beneficiaries who have Third Party Liability Claims. CMS points to case law to support this request: Gallardo vs. Marstiller; and Wos vs. E.M.A.
The above referenced US Supreme Court cases support lien recovery for past medical treatment paid on behalf of a Medicaid beneficiary by a state Medicaid program whereby treatment resulted from a third-party liability claim.
In the Gallardo vs. Marstiller case (2022), the key question was:
Does the Federal Medicaid Act allow a state Medicaid program to recover reimbursement for Medicaid’s payments of a beneficiary’s past medical expenses by taking funds from the portion of the Medicaid beneficiary’s settlement that provides payment for future medical expenses?
As determined by the Supreme Court in 2022, the answer was yes. These findings provide a basis for a state Medicaid program to pursue lien recovery from the portion of the settlement proceeds that represent past medical expenses, as well as settlement proceeds established or designated for future medical treatment. These cases do not allow for lien assertion as it relates to other benefits within the settlement proceeds (not designated for medical treatment).
What is Medicaid?
Medicaid is a state-administered medical assistance program serving low-income people, families with children, pregnant women, elderly people, and people with disabilities. Medicaid is in part funded by federal Medicaid dollars. Federal Medicaid funds approximately 64% of the total Medicaid costs in the individual states (based on state demographics) resulting in state contributions of approximately 34% of the medical costs (for Medicaid beneficiaries). While federal Medicaid financially contributes to state Medicaid programs, the individual states manage all funds and administer all state Medicaid benefits for eligible beneficiaries. As such, eligibility, rules, requirements, copays, and coverages may vary from state to state.
Why do I need to know this Information?
Following the Supreme Court findings in 2022, we shared information about the Gallardo vs. Marstiller case, recognizing this case may have a downstream impact on the way each state Medicaid program pursues Medicaid liens moving forward.
Final Thoughts
The downstream impact from these cases is taking shape, and we expect to see proactive attempts to recover lien money from state Medicaid programs. It is more important than ever to determine what government or state benefits injured people are receiving or have received when settling claims. With the various states potentially taking a larger part of the settlement, structured settlements may be more important than ever in stretching available dollars to meet the injured party’s future needs. Reach out to your Arcadia Consultant today to discuss how our expert settlement consultants can help you resolve claims with ease and confidence.
By Alisa Hofmann | VP, Workers’ Compensation and Medicare Practices
Alisa has nearly three decades of claims experience, Managing and Leading Claims teams prior to coming to Arcadia Settlements Group. At Arcadia, Alisa is responsible for relationship management, training, and providing expertise in Workers’ Compensation and Medicare Practices.
