Medicaid - Clarifications for Recoupment and Provider Obligations

CENTER LAWSUIT RESULTS IN CLARIFICATIONS FOR MEDICAID RECOUPMENT AND PROVIDER OBLIGATIONS

WILSON-COKER V. THOMPSON SETTLEMENT RESCINDS "WESTMORELAND LETTER"

On April 8, 2003, Dennis G. Smith, Director of the Center for Medicaid and State Operations issued a State Medicaid Directors Letter (SMDL) clarifying the right of state Medicaid programs to recover funds, and the obligations of healthcare providers in the appeals process (SMDL #03-004, April 8, 2003). This SMDL is a direct result of the settlement of the Wilson-Coker v. Thompson lawsuit filed by the Center for Medicare Advocacy July 14, 2000 in response to a memo from then-director of the Medicaid Bureau, Timothy Westmoreland.

The "Westmoreland Letter" asserted that providers were not obligated to file claims for Medicare coverage in cases involving dually eligible beneficiaries and that states were prohibited from recovering from providers which failed to submit claims. The memo issued April 8, 2003 completely reverses these assertions.

It is explicitly stated in this latest SMDL that Medicaid is the payer of last resort, and is required to "cost avoid" claims and reject those claims which may be billed to a third party. This includes instances where Medicaid learns of the existence of such a party after the claim has been paid, or a third party becomes available after the claim has been paid. Medicaid must seek recovery from the third party. Most importantly, the memo acknowledges that "when the third party is Medicare, neither the Medicare nor Medicaid statute, nor HHS's regulations or policies prohibit any state from recouping its Medicaid payment from providers" (emphasis added). This applies in situations where:

Medicare has determined it is liable for the services at issue.
a beneficiary, beneficiary representative, or the state as the beneficiary's subrogee timely requests the provider to file a claim with Medicare, and the provider fails to submit a timely or complete claim, or fails to submit complete documentation required for a coverage decision.

The SMDL further clarifies that in an instance where the state, as subrogee of the beneficiary, timely requests that the provider submit a claim for Medicare payment, the provider must honor that request. Any provider failing to file a timely claim in this situation "violates its provider agreement with Medicare if it charges the beneficiary (or the beneficiary's subrogee), or retains any charge already collected from the beneficiary or subrogee, for such services" (emphasis added).