Medicaid Can Now Only Recover Portion of Settlement Allocated to Medical Costs
Section 53102 of the Bipartisan Budget Act of 2018, fully repeals Medicaid’s expanded third-party recovery rights. Now, Medicaid can only seek reimbursement from a portion of the settlement allocated to medical costs . Medicaid cannot recover monies from lost wages, pain and suffering or any other damages awarded to the injured party.
The law was passed in February 2018 and signed in to law by President Trump. This is good news for anyone handling a personal injury, medical malpractice, product liability case or other legal case with a Medicaid lien and means that more dollars can be allocated to the injured party.
A provision included in Section 202(b) of the Bipartisan Budget Act of 2013, had created an expansion of third-party recovery rights allowing Medicaid to recover from the entire settlement, not just the medical portion. That legislation had been postponed several times until finally taking effect in October 1, 2017, raising questions about its impact on the structured settlement outcomes for claimants, who risked losing their entire settlements.
The 2018 Act effectively resets the standard for Medicaid lien recovery to the standard of Arkansas DHHS v. Ahlborn a Supreme Court ruling in 2006 and Wos v. E.M.A. , another Supreme Court ruling in 2013, affirming Ahlborn, which limited recovery claims by state Medicaid against tort settlement to only amounts allocated for medical costs, or a state framework that provided a set portion for recovery.
