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Good News: Medicaid Lien Delayed

If you haven’t heard already, Section 202(b) of the Bipartisan Budget Act of 2013 effectively reverses two U.S. Supreme Court decisions, Arkansas Department of Health and Human Services v. Ahlborn and Wos v. E.M.E., that 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. The Act amended the Social Security Act to give states the right to recover from Medicaid beneficiaries’ entire settlements and to place a lien on those settlements or awards.

For injured people receiving favorable settlements or judgments in the areas of personal injury and medical malpractice, this law could mean they will be left with nothing.

Now, thanks to recent legislative action, there’s good news and bad news.

First the good news – Congress has delayed the provision in the budget bill that gives states the ability to recover Medicaid costs from a beneficiary’s full personal injury settlement or award by two years. The law, which was set to go into effect on October 1, 2014 is now delayed until October 1, 2016. This means that Medicaid will continue to only be able to recover from the portion of a personal injury settlement or award that was allocated to medical expenses.

HR 4302, which was passed last month by Congress and signed by President Obama, postpones pending Medicare physician payment cuts by one year. At first glance it has nothing to do with Section 202(b), but if you look close into the legislation there is a one-sentence provision (Sec. 211) that delays the effective date of Section 202(b) of the Bipartisan Budget Act of 2013 for two years.

Now the bad news – Revising effective date of Section 202(b) to October 1, 2016 is only delaying the inevitable. This means that come October 1, 2016, there is a real possibility that Medicaid recipients will receive less in personal injury settlements because their full recovery will be subject to a Medicaid lien. Delaying the effective date only provides a temporary band-aid to a major issue. The silver lining is that now advocates will have more time to address these concerns and potentially help effectuate a repeal of the provision.

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