Medicaid Entitled to Full Recovery: Ahlborn Decision by United States Supreme Court No Longer Good Law

On December 26, 2013, the Bipartisan Budget Act (H.J. Res. 59) was enacted into law. Several provisions of the Budget Act modify the secondary payer rights of Medicaid.  According to a December 27, 2013, bulletin published by the Centers for Medicare and Medicaid Services, the Act changes third-party liability law to affirm that Medicaid is a payer of last resort.  The new law allows states to recover full Medicaid costs from the entire amount of a liability settlement.  Previously, states could only recover Medicaid costs from the portion of a settlement designated for medical expenses.  The new law will also allow states to place liens against the liability settlements of Medicaid beneficiaries.
The Budget Act negates the effect of the previous United States Supreme Court case of Arkansas Department of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006), which limited Medicaid’s recovery to the medical portion of a personal injury settlement.  The new law provides Medicaid with a similar right to recovery in liability cases as that held by Medicare and it takes effect as of October 1, 2014.
What this means is that, as of the effective date of the new law, whenever liability cases are settled with Medicaid beneficiaries, care should be taken to ensure that any Medicaid lien is satisfied.  We will continue to monitor this area of the law and keep you informed of any and all new developments.