Congress Votes on Delays To New Medicaid Liability Provisions
Roy Franco
March 27, 2014

Update 4/1/2014 – Monday evening the Senate passed H.R. 4302, the SGR Doc Fix, which included Section 211, deferring for two years the implementation of the Murray-Ran Medicaid allocation provision.  The vote, 64-35, now finalizes the legislation. 

At the end of last year, a budget compromise was reached in Washington D.C. between both political parties.  Commonly referred to as the Murray-Ryan compromise, the new budget promises sweeping changes to Third Party Liability (TPL) recoveries by states for Medicaid payments made related to a liability claim.  This compromise adjusted the statutory language analyzed by the U.S. Supreme Court in two important cases:  Ahlborn and U.S. Airways.   Those cases held for the most part that a State could not recover 100% of its Medicaid “lien” from a liability case without regard to other damage elements in the case.  Even more important, was the ruling, that even after considering other damage elements, such recovery for the Medicaid “lien” had to be reduced in proportion to the settlement amount versus the full value of the case.

What the Murray-Ryan compromise had achieved was to make Medicaid TPL recoveries equal in application to the way Medicare currently recovers conditional payments.  In other words, Medicaid takes its recovery off the top of any settlement, less attorneys’ fees and costs, without regard to any proration or other allocation between damage elements.  This new law was to take effect on 10/1/2014, giving the States time to adjust state legislation or put rules in place to meet the new requirements.

This new change does not sit well with Medicaid beneficiaries and there has been significant uproar to reverse it.  Congress has apparently heard these concerns and has now poised to pass in the next few days legislation delaying the implementation of the new provision for at least two years.  The proposed legislation amends Section 211 of the Murray-Ryan Compromise to now read:

SEC. 211. DELAY OF EFFECTIVE DATE FOR MEDICAID AMENDMENTS RELATING TO BENEFICIARY  LIABILITY SETTLEMENTS.

Effective as if included in the enactment of the Bipartisan Budget Act of 2013 (Public Law 113–67), section

202(c) of such Act is amended by striking ‘‘October 1, 17 2014’’ and inserting ‘‘October 1, 2016’’.

We at Franco Signor applaud this effort by Congress to grant additional time to properly analyze the impact of this sudden change in the law.  The delay is helpful and allows for more discussion to make certain the rights of government for immediate reimbursement are balanced properly against the right of the Medicaid beneficiary to be properly compensated for his or her injuries.  Our own analysis of the change indicated a short window of time for Medicaid to enjoy a windfall in collections, but once the law settled in as written, Medicaid beneficiaries would lose interest in pursuing claims, as there could be no financial benefit.  If this were to occur, we believed in the long run Medicaid programs would be hurt.  A more equitable system is needed in our opinion, which is why as steering committee member for the Medicare Advocacy Recovery Coalition (MARC) we supported visits to the Hill in March to share our concerns.

3/27/2014 – Update

Section 212 of the bill delays ICD 10 implementation for another year.  More information on this topic to follow.