During a time when State budgets are being stretched, US Supreme Court issues decision that will challenge administrators on how best to recoup expenses paid on behalf of Medicaid recipients when a tort case is settled. When the US Supreme Court declined to take certiorari in the Hadden v. US, it effectively cemented the rule that Medicare always gets 100% of its reimbursement amount from the settlement. Medicaid has to play by different rules than Medicare Secondary Payer.
That rule is the anti lien portion of the Medicaid Act which under this newly decided case allows a beneficiary to have the full benefit of a settlement. As such settlements are always discounted from what could ultimately be a verdict at trial, Medicaid must take a proportionate discount to its lien. The challenge for the State is how this ratio is to be calculated, as the ultimate jury verdict is a subjective number at best.
My suspicion is that Medicaid will not be able to come up with the appropriate framework and give up on countless opportunities to make the Medicaid fund whole. I also suspect that States burdened with new Medicaid exposures under the Affordable Healthcare Act may ask Congress to repeal the anti lien provision.
Roy A. Franco and Jeff Signor