Cooper & Elliott Blog

How Subrogation Works with Medicare and Medicaid

Posted on Tue, Nov 15, 2016 @ 4:52 PM

In our last post, we outlined the basics of subrogation. Briefly, subrogation is the right of someone besides an injured person to recover something out of a personal injury case.  Subrogation works differently depending on the type of insurance involved. Medicare and Medicaid have different sets of rules from private insurers. In this post, part two of the series, we’ll discuss subrogation as it relates to Medicare and Medicaid.

How subrogation works with taxpayer-funded insurance

Medicare and Medicaid are government run programs, funded by taxpayer dollars. The intent of subrogation in these programs is to offset taxpayer responsibility for the related healthcare costs.

Subrogation rules are written into the statutes that govern Medicare and Medicaid. Virtually always, if Medicare or Medicaid paid medical expenses incurred because of a personal injury, there will be at least some subrogation payment from a personal injury judgment or settlement. But the good news is that—unlike the subrogation rules for private insurance—the Medicare and Medicaid subrogation rules take the plaintiff’s costs and other circumstances into account.

Medicare

In a case involving Medicare, the subrogation payout is set by a formula. The amount paid is reduced in proportion to the plaintiff’s attorney fees and expenses.  This is an attempt to account for the fact that the plaintiff incurs costs and attorney fees from pursuing a settlement or judgment.

Recent changes in Ohio Medicaid subrogation law

The rules for Medicaid can vary from state to state because unlike Medicare, which is a federal program, Medicaid is run by individual states. Some recent federal rulings have led to changes in Ohio law about Medicaid subrogation.

In personal injury cases where Medicaid had paid for medical expenses and the expenses exceeded the plaintiff’s settlement or judgment, Ohio law used to provide that 50% of the plaintiff’s recovery represented medical expenses applicable to medical bills. But in many cases, a smaller percentage of the plaintiff’s recovery represents medical expenses, and the larger percentage compensates for pain and suffering, or other costs. That meant that it wasn’t especially fair for a Medicaid subrogation claim to be based on 50% of the plaintiff’s recovery when only a fraction of that was intended to compensate for medical bills.

The U.S. Supreme Court recently ruled that states can no longer require that a fixed percent of any recovery is subject to Medicaid subrogation. Subrogation payouts are applicable only to the part of a settlement that represents compensation for medical bills paid by Medicaid and not compensation for pain and suffering or other costs. The ruling is logical, given that subrogation is supposed to help offset the cost of medical care paid for by the government.

Also, this court ruling means that the subrogation amount must be in the proper proportion to the judgment, based on the facts of the plaintiff’s case. Attorneys can work to protect portions of the judgment from subrogation, and they can make sure there’s an administrative hearing if the proportions are disputed.

Getting the percentage right

Ultimately, our goal with Medicare and Medicaid cases is to make sure that when the subrogation formula is applied, it’s applied for the correct medical costs (not for unrelated expenses or ones incurred before or after the events for which the plaintiff recovers), and that it applies only to the appropriate portions of the recovery.

Subrogation involving private insurers can be very different, because the rules are part of each individual insurance contract and not set specifically by law. We’ll discuss that in a future post. But whether your case involves subrogation or not, give the Ohio civil litigation attorneys at Cooper & Elliott a call. We’re here to help.

The outcome of any client’s case will depend on the particular legal and factual circumstances of the case.

Topics: , , , ,

Connect with us

All posts