It has become increasingly more common for
government liens and subrogation claims to be
asserted against personal injury settlements. Medicare
and Medicaid both have statutory rights to repayment
when their respective services have been provided as the
result of injuries caused by liable third parties. These two
programs are often confused, but for simple clarification, Medicare
is the Federal Health Insurance Program for workers who have paid into the
Medicare system a sufficient number of quarters. Social Security Act, Title XVIII, 42 U.S.C. §§1395 et seq. Typical Medicare recipients are people 65 years or older; people under age 65 who have certain disabilities; and, people with End-Stage Renal Disease. By contrast, Medicaid is the health care program for individuals and families who meet certain income and asset tests. Social Security Act, Title XIX, 42 U.S.C. §§1396 et seq.

Medicare

Medicare Secondary Payer (MSP) is the general term used when Medicare is not responsible as the source of primary payment. 42 U.S.C. §1395y(b). Medicare benefits are considered secondary to group insurance plans and all other forms of first party insurance. The Medicare statute specifies that Medicare may not make payment if workers compensation, no-fault, or liability insurance is the proper primary payer, but Medicare may make a conditional payment if the first party insurance will not pay or will not pay promptly within 120 days. However, all such payments are conditioned upon reimbursement to Medicare if it is later demonstrated that the first party insurance had or has the primary payment responsibility. 42 C.F.R. §411.24.

The Centers for Medicare and Medicaid Services (CMS) is the agency that administers Medicare, and CMS is given broad recovery rights. CMS may initiate recovery against, “any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” 42 C.F.R. §411.24(g). If the Medicare beneficiary or any other party receives a payment from the primary source, reimbursement must be made to Medicare within 60 days. 42 C.F.R. §411.24(h).

Medicaid

Federal law requires each State to enact statutes to facilitate recovery of medical payments from liable third parties and to collect Medicaid expenditures from the estates of deceased Medicaid recipients. Enacting and enforcing these statutes is a condition to each State’s participation in the Medicaid program and the receipt of Federal funding. However, unlike Medicare which is administered by the same Federal agency everywhere in the country, Medicaid comes with the slight wrinkle of being administered by a collection of 50 different state agencies. This is a natural part of the system because Medicaid is a state administered program, which means that each of the 50 States needs to have its own state Medicaid agency.

Further complicating the inherent administrative variation that comes with 50 state agencies implementing 50 sets of individual rules is the fact that Federal law allows some latitude in how States actually carry out the mandate to recover Medicaid expenditures. In other words, while the Federal requirement to enact recovery statutes is consistent across the country, the statutory scheme that each State has enacted to meet this requirement is different. Perhaps the final complicating factor in resolving Medicaid liens is the effect of case law. Under certain factual circumstances, both State and Federal case law can significantly curtail a State’s ability to recover from a plaintiff’s entire personal injury settlement.