(Ahlborn Once Again Law of the Land)

Just this past February, Congress enacted and the President signed the Bipartisan Budget Act of 2018, which, without much fanfare, fully repealed the expanded Medicaid recovery rights previously enacted.

As background, parties resolving claims involving Medicaid had long looked toward two key decisions, the Supreme Court’s rulings in Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006) and Wos v. E.M.A.,  568 U.S., 133 S.Ct. 1391 (2013), which affirmed the basic principle of Ahlborn. These decisions limited Medicaid’s recovery in third-party liability settlements to the proportion of the underlying settlement attributable to medical damages.  For instance, if a claim settled for $1,000,000, and $600,000 was noted as attributable to pain and suffering, lost wages, non-medical, etc., and the remaining $400,000 allocated to medical damages, Medicaid would only have been entitled to recovery up to the $400,000 in medical damages.

Then, in 2013, the Bipartisan Budget Act, Section 202(b), was passed, which essentially overturned these two Supreme Court cases, providing Medicaid with significantly expanded rights of recovery.  States were provided with the ability to recover against the full settlement, rather than the limited medical recovery.  While enacted in 2013, the implementation of these rights were delayed until October 2017.

Between October 2017 and February 2018, just a few months of active recovery time, very few states actually utilized these expanded rights.  Perhaps with more time we would have seen more aggressive recovery against the greater settlement.  However, the Bipartisan Budget Act of 2018 returned us to the days of Ahlborn. Section 53102 fully repealed the 2013 Act in regards to Medicaid’s expanded rights and essentially affirmed the Ahlborn holding. In the Medicaid arena, recovery will again be limited to the medical portion of the claim.  Medicaid still has recovery rights, but those rights are limited.

It is critical to note that these changes impact Medicaid, not Medicare.  Medicare is not directly impacted.  Although many make the argument that Ahlborn should apply to Medicare, CMS has never agreed with this argument, nor implemented regulations in accordance with the same. Medicare may still potentially seek reimbursement up to the entire amount of the settlement for treatment covered, and is not limited by the terms of settlement.

Natalie Clark
Natalie Clark
Atlas Settlement Group, Inc.
Medicare Compliance Services

3565 Piedmont Road NE
Building 1, Suite 525
Atlanta, GA 30305
Office: 404-926-4160 x215
Fax: 404-926-4161
Email: Natalie Clark
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