It is no secret that Medicare secondary payer compliance issues often dominate the claims landscape and discussion. However, insurers should not forget about the other “M”– Medicaid. Recent changes to the Medicaid program have resulted in increased enrollment and Medicaid expenditures continue to consume significant portions of state and federal budgets. From another angle, some states, such as Rhode Island and Texas, have recently implemented electronic Medicaid reporting programs. Also, in June 2022, the United States Supreme Court issued an important decision which can be interpreted as expanding Medicaid’s recovery rights.
As Medicaid compliance issues take on greater significance, it is time for insurers to get Medicaid on their radars. Toward that goal, the following outlines five points to help insurers improve their Medicaid compliance practices:
1. Medicaid and Medicare are two different programs.
To start, it is important to keep the two “M’s” straight. Medicare and Medicaid are two different programs with distinct eligibility criteria, funding sources, and secondary payer rules. Medicare is a federally funded program administered nationally by the Centers for Medicare & Medicaid Services (CMS). Eligibility is based on age and disability, including individuals who are aged 65 and older, those accepted as disabled under Social Security disability, and those who have end-stage renal disease or amyotrophic lateral sclerosis (ALS).[1] In contrast, Medicaid is a program funded jointly by the federal government and states.[2] In general, Medicaid provides health coverage for eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities.[3] Medicaid is administered by the states,[4] with each state setting its own rules and regulations regarding eligibility, coverage options, covered services, and payment mechanisms in accordance with federal regulations and guidelines.[5]
2. Medicaid enrollment and expenditures are on the rise.
Medicaid is the largest public health insurance program in the United States covering approximately 82.8 million people as of July 2022.[6] Medicaid eligibility and enrollment have increased over the past several years due, in large part, to the Affordable Care Act (ACA). Specifically, the ACA expanded Medicaid coverage to nearly all adults with incomes up to 138% of the Federal Poverty Level ($38,295 for a family of four in 2022.)[7] While the United States Supreme Court generally ruled that ACA’s expansion was optional,[8] approximately 40 states (including DC) have opted to expand their eligibility criteria for Medicaid as of November 2022.[9] It is also noted that California has expanded Medicaid eligibility to all young adults under age 26 regardless of immigration status.[10]
Medicaid expenditures continue to account for a significant part of state and federal budgets. For example, it is reported that federal Medicaid spending accounted for $748 billion in FY 2021.[11] According to one source, Medicaid represents $1 out of every $6 dollars spent on healthcare in the United States.[12] In fiscal year 2020, the federal government paid 67% of total Medicaid costs with the states paying 33% of those program costs.[13] In fiscal year 2019, spending for ACA expansion was reported to be $93.8 billion, with the federal government picking up $84.9 billion of this cost.[14] In addition, Medicaid is the largest source of federal revenues to state budgets.[15] The three states with the highest Medicaid expenditures are California ($97.8 billion); New York ($72.88 billion); and Texas ($42.54 billion).[16] Significantly, Medicaid expenditures are projected to top one trillion dollars by 2027.[17]
3. Medicaid recovery claims are on the rise and need to be on the radar.
Over the past few years, many insurers have reported an increase in Medicaid recovery claims which is likely not surprising given the continuing increase in program expenditures. A review of the Medicaid.gov website indicates that improper Medicaid payments in fiscal year 2021 totaled approximately $98.7 billion.[18] Under federal law, the Medicaid program has recovery rights.[19] On this point, states have their own state-specific recovery statutes and regulations governing Medicare recovery, and state Medicaid programs are tasked with creating their own reimbursement and collection processes.[20]
Against this backdrop, the U.S. Supreme Court’s recent ruling in Gallardo v. Marstiller, 142 S.Ct. 1751 (U.S. June 6, 2022) has placed Medicaid recovery rights back in the spotlight. In Gallardo, the U.S. Supreme Court ruled, in part, that the Medicaid Act’s anti-lien provision did not preempt Florida’s Medicaid Third-Party Liability Act and that under the Medicaid Act the Florida Medicaid program could seek reimbursement of its Medicaid expenses from tort settlement amounts representing payment for both past and future medical care.[21] In doing so, the Court rejected the argument that Florida’s Medicaid’s recovery was limited to only that portion of the settlement representing past medical care. In the bigger picture, the Court’s ruling can be viewed as expanding Medicaid’s recovery rights. As such, it will be interesting to see if this decision prompts other state Medicaid agencies to pursue reimbursement more aggressively going forward. Of note, in July, 2022, a New York audit reported that a lack of oversight by the state Department of Health (DOH) and the Office of the Medicaid Inspector General (OMIG) resulted in nearly $300 million in pharmacy claims that Medicaid never tried to recover from patients’ insurance providers, underscoring the importance of exploring third party health insurance options.[22] As health insurance costs increase and federal and state budgets are continually scrutinized it is likely more states will look to review their Medicaid costs and recovery options.
4. State Medicaid “reporting” programs are starting to emerge.
On the Medicare side, insurers are familiar with Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA.) In general, this federal law requires insurers and certain other responsible entities to report claims electronically to CMS that involve Medicare beneficiaries.[23] A major objective of Medicare’s Section 111 law is to provide Medicare with claims information and data to assist their recovery efforts.[24]
Currently, Medicaid has no similar federal reporting law. However, we are starting to see some states, such as Rhode Island and Texas, implement electronic reporting processes, as described below, to help them better identify claims involving Medicaid beneficiaries for secondary payer recovery purposes.
In 2012, Rhode Island enacted its Medical Assistance Intercept Act, which established the Medical Assistance Intercept System (MAIS).[25] In general, the focus behind this law is to provide for the efficient and prompt reporting in one centralized location or database to identify Medicaid recipients involved in insurance claims. As of March 14, 2022, what was previously referred to as MAIS, is now known as the Medicaid Recovery Network (MRN). Rhode Island chose the MRN as the platform for insurers to use to fulfill their mandatory reporting obligation. In terms of operation, MRN provides a daily electronic data match used to identify Medicaid recipients with liability and workers’ compensation insurance claims. This daily matching results in the early identification of a Medicaid recipient’s involvement in an insurance claim, which, as noted below, has significantly increased Medicaid recoveries for its state partners. Under this program, daily data matching improves communication among all parties (insurers, attorneys, state stakeholders etc.) and expedites claim processing to assist participating states recover Medicaid reimbursement at the time of settlement. In addition, all notices and liens are generated, distributed, and available electronically. While traditional Medicaid recovery workflows can take three (3) to four (4) months to identify a match and notify the appropriate parties, the MRN typically notifies insurers within seven (7) days.
In December 2018, Texas became the second state to join the MRN. Texas is looking to MRN to “act as a cost control initiative which will intercept insurance payments [and other lump sum payments] to claimants who receive medical assistance through Medicaid. Retaining MRN will allow the State to receive relevant, quality assured data matches thereby increasing medical assistance subrogation through the interception of insurance claim settlements, before proceeds are allocated to an insurance claimant.”[26] According to executives at MRN, internal administrative statistics indicate that in both states collectively, the MRN has processed over 1.4 million claims resulting in over $80 million in lien identification of which $21 million has been collected to date.[27]
Of note, as of February 1, 2022, MRN was selected as a Third-Party Liability (TPL) recovery tool to be made available via a Master Agreement with the State of Georgia [acting as lead state] in collaboration with NASPO ValuePoint. [28] This means that the MRN program is available to any state which submits a Certificate of Intent to Participate and may wish to leverage these services through a Participating Addendum. In light of this development, it will be interesting to monitor if other state Medicaid agencies opt to join the MRN going forward, especially given the MRN’s focus on streamlining and reducing the identification and processing of Medicaid reimbursement claims via its data matching capabilities.
In the interim, outside of the MRN in Rhode Island and Texas, it is important to keep in mind that other states may have their own existing Medicaid reporting requirements under their Medicaid statutes and regulations. While a 50-state survey of Medicaid reporting requirements is beyond the scope of this article, by way of a recent example, it is noted that California in 2017 enacted a law that requires Medicaid beneficiaries (or their representatives) to report tort and workers’ compensation claims within thirty (30) days of filing to the Department of Health Care Services (DHCS). [29] In addition, Cal.Welf. & Inst.Code § 14124.76(a) provides, in part, that “[n]o settlement, judgment, or award in any action or claim by a beneficiary to recover damages for injuries, where [Medi-Cal] has an interest, shall be deemed final or satisfied without first giving [Medi-Cal] notice and a reasonable opportunity to perfect and to satisfy [Medi-Cal’s] lien.”[30]
Florida, by way of another example, has similar requirements. For instance, Fla. Stat. § 409.910(11)(a) requires, in part, that a Medicaid beneficiary (or his/her legal representative) report any action filed against a third-party “within 30 days after filing the action” as more specifically outlined in that statutory section. [31] Fla. Stat. § 409.910(11)(d) further provides that “[n]o judgment, award, or settlement in any action by a recipient or his or her legal representative to recover damages for injuries or other third-party benefits, when the agency has an interest, shall be satisfied without first giving the agency notice and a reasonable opportunity to file and satisfy its lien, and satisfy its assignment and subrogation rights or proceed with any action as permitted in this section.” In general, becoming familiar with the Medicaid statutes and any applicable regulations, administrative guidance, etc. in your jurisdiction is likely a great starting point in building (or improving) your current Medicaid compliance practices.
5. Building Medicaid compliance protocols – how Verisk can help you!
We offer several services to help you address Medicaid claims. For example, as part of our Medicaid secondary payer services we take the lead in identifying, disputing (if applicable), and resolving Medicaid recovery claims. For California claims, we also offer a proprietary data exchange with the State of California making it easy for you to properly identify Medi-Cal beneficiaries. In addition to these services, if your company is a member of ClaimSearch, you can participate in the Medicaid Recovery Network (MRN) formally, Medical Assistance Intercept System (MAIS), as an add-on matching service. ClaimSearch Medicaid Reporting Service helps your organization respond to the Medicaid reporting and verification requirements in Rhode Island. ClaimSearch can also assist with Texas Health and Human Services (HHSC) optional opt-in reporting which initiated in 2018. MRN functions to recover and intercept Medicaid payments that the agency issues on behalf of Medicaid recipients if an insurer pays on a claim. MRN is actively engaged with additional states seeking an online solution to identify claims wherein the state Medicaid system is not a primary payer.
Questions?
Please contact the authors if you have any questions or would like to learn more about Verisk’s Medicaid compliance services.
[1] Information obtained from: cms.gov
[2] Information obtained from: Medicaid.gov
[3] Information obtained from: Medicaid.gov
[4] Information obtained from: Medicaid.gov
[5] Kate Riordan, Medicaid Expansion Makes Recovery Efforts More Urgent (July, 2019)
[6] Information obtained from: Medicaid.gov
[7] Tamara E. Holmes, What are the ACA (Obamacare) Income Limits for Subsidies in 2023?, GoodRx Health (October 31, 2022)
[8] National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012).
[9] The Henry J. Kaiser Family Foundation, Status of State Medicaid Expansion Decisions Interactive Map (November 9, 2022)
[10] See,California Department of Health Care Services. This website states, in part, “[b]eginning January 1, 2020, a new law in California will give full scope Medi-Cal to young adults under the age of 26 and immigration status does not matter. All other Medi-Cal eligibility rules, including income limits, will still apply.”
[11] The Henry J. Kaiser Family Foundation, State Health Facts, Federal and State Share of Medicaid Spending FY 2021,
[12] Robin Rudowitz, Elizabeth Williams, Elizabeth Hinton, and Rachel Garfield, Medicaid Financing: The Basics, Henry J. Kaiser Family Foundation (May 7, 2021).
[13] The Henry J. Kaiser Family Foundation, State Health Facts, Federal and State Share of Medicaid Spending FY 2021.
[14] The Henry J. Kaiser Family Foundation, State Health Facts, Federal and State Share of Medicaid Spending FY 2021.
[15] Robin Rudowitz, Elizabeth Williams, Elizabeth Hinton, and Rachel Garfield, Medicaid Financing: The Basics, Henry J. Kaiser Family Foundation (May 7, 2021).
[16]Jenny Yang, U.S. states with the highest Medicaid expenditure 2020, Statista, Oct 25, 2021.
[17]Jenny Yang, Total Medicaid spending in the U.S. 2020, by state, Statista, Oct 25, 2021 and Medicaid.gov.
[18] Department of Health and Human Services, Agency Financial Report, Fiscal Year 2021
[19] See generally, 42 U.S.C. 1396a(a)(25) and 42 C.F.R. 433 (Subpart D).
[20]Information obtained from: Medicaid.gov:
[21] Gallardo v. Marstiller, 142 S.Ct. 1751 (U.S. June 6, 2022).
[22]New York Department of Health, Medicaid Program: Recovering Managed Care Overpayments for Pharmacy Services on Behalf of Recipients with Third-Party Health Insurance, Report 2020-S-39, Office of the New York State Comptroller, Thomas P. DiNapoli, State Comptroller (July 2022).
[23] 42 § U.S.C. 1395y(b)(8).
[24] See e.g., CMS’s Section 111 NGHP User Guide, Chapter I (Version 6.9, October 3, 2022), Chapter 4.
[25] This law is codified at R.I.G.L. Chapter 27-57.1, et. seq.
[26] See, Medicaid Recovery Network
[27] This information was obtained per the authors’ discussion with George French, President of Stellarware Corporation, and Kelsey Boothby, Project Manager, on December 16, 2022. By way of brief background, Stellarware is the company that develops and operates the Medicaid Recovery Network (MRN). A review of Stellarware’s website indicates that this group “aims to deliver innovative Internet solutions to business areas of project management and operations for, Medicaid and Child Support including: insurance intercept, financial institution data match (FIDM), real property data match, and new hire reporting.” For further information regarding MRN, please visit https://medicaidrecoverynetwork.com.
[28]See, Stellarware NASPO ValuePoint.
[29]See, California Department of Health Care Services, Personal Injury Program and California Department of Health Care Services, Workers’ Compensation Recovery Program
[30] See, Cal.Welf. & Inst.Code § 14124.76(a).
[31] On this point, Fla. Stat. § 409.910(11)(a) states in full as follows: “If either the recipient, or his or her legal representative, or the agency brings an action against a third party, the recipient, or the recipient's legal representative, or the agency, or their attorneys, shall, within 30 days after filing the action, provide to the other written notice, by personal delivery or registered mail, of the action, the name of the court in which the case is brought, the case number of such action, and a copy of the pleadings. If an action is brought by either the agency, or the recipient or the recipient's legal representative, the other may, at any time before trial on the merits, become a party to, or shall consolidate his or her action with the other if brought independently. Unless waived by the other, the recipient, or his or her legal representative, or the agency shall provide notice to the other of the intent to dismiss at least 21 days prior to voluntary dismissal of an action against a third party. Notice to the agency shall be sent to an address set forth by rule. Notice to the recipient or his or her legal representative, if represented by an attorney, shall be sent to the attorney, and, if not represented, then to the last known address of the recipient or his or her legal representative.”
