How The Bipartisan Budget Act Affected Medicaid Recipients

February 13th, 2018

As a jointly funded federal and state health insurance program for low-income individuals and families, Medicaid covers children, the elderly, blind, disabled, and other people who are eligible to receive federally funded assisted income maintenance payments. Additionally, Medicaid will cover a beneficiary’s medical bills when that person sustains personal injuries due to someone else’s negligence. But what happens when that personal injury case is settled? Does Medicaid have the right to recover the full amount that it paid on behalf of the beneficiary or will Medicaid only get reimbursed for a portion of its payment? This question was decided in the Supreme Court’s landmark decision in Arkansas Department of Health and Human Services v. Ahlborn.

The Supreme Court Decision

After being seriously and permanently disabled in a motor vehicle accident, plaintiff Ahlborn qualified for Medicaid benefits, which subsequently paid $215,645 for her care. After Ahlborn received $550,000 as a result of her settlement, Medicaid attempted to recover the total $215,645 amount it paid. Because of this, the Supreme Court unanimously held that a state’s Medicaid department will be limited to reimbursement from only that portion of a judgement or settlement that represents payment for medical expenses. Therefore, in this case Medicaid was only able to enforce its lien upon $35,581.47, or one-sixth of the total amount it paid in medical expenses on Ahlborn’s behalf. Subsequently, states are now prohibited from seeking reimbursement for portions of the settlement proceeds that are intended for items other than medical expenses, such as pain and suffering and lost wages.

The Bipartisan Budget Act

Several years after the Supreme Court’s decision, the Bipartisan Budget Act (BBA) of 2013 was enacted. A provision of this act specifically overturned the Ahlborn decision and allowed Medicaid a right of first recovery for full reimbursement of covered medical costs before plaintiffs can receive any recovery for lost wages, pain and suffering, or any other type of recovery. For example, if a Medicaid beneficiary is involved in a motor vehicle accident and his case is settled for $20,000, the state Medicaid department will be entitled to the full $20,000 if it paid that amount or more to medical providers on the beneficiary’s behalf. This means the plaintiff would not get a dime out of his settlement even though he/she is the one who suffered the injuries and endured the monthly medical treatments.

As a result, the American Association for Justice (AAJ) worked hard to delay the implementation of the BBA and initially delayed its enacted until October 2016 and had another successful delay which stopped its enacted until October 2017. However, after the second delay expired the BBA was officially enacted and overturned the Ahlborn decision. Accordingly, AAJ worked diligently to secure a permanent and retroactive repeal of the BBA which was finalized in the budget deal reached by the House and Senate a couple weeks ago. Now Medicaid is entitled to only a portion of its beneficiary’s settlement and not the full reimbursement that the BBA allowed.

Contact Us Today

To protect our clients, the legal team at the Bottaro Law Firm is always on top of the changing laws affecting Medicaid recipients. Experienced lawyers understand that the failure to navigate Medicaid’s rules and regulations in a timely fashion can delay your claim or place you at risk for owing additional money out of a potential personal injury settlement. Contact us today at 401-777-7777 to discuss your potential claim.