Section 202(b) of the Bipartisan Budget Act of 2013, enacted by Congress on December 18, 2013, modifies the federal Medicaid Secondary Payer statute and permits recovery for “any payments by such third party.” Under the Medicaid Secondary Payer statute, Medicaid is generally a payer of last resort and proceeds from a settlement or judgment are considered "a primary payer".
In two prior cases, Arkansas v. Ahlborn and Wos v. E.M.A., the United States Supreme Court limited recovery claims by state Medicaid programs in tort actions to amounts allocated for medical costs. Section 202(b) of the Bipartisan Budget Act of 2013 effectively overturns those decisions. The amendments take effect October 1, 2014.
The new rules "will significantly complicate settlements involving Medicaid beneficiaries .... by making them more expensive to settle or by disrupting settlements altogether", according to an analysis published by the King & Spalding law firm. "Medicaid can now recover 100% of its payment 'off the top' of any settlement proceeds, which unfairly reduces the beneficiaries’ recoveries for non-medical expenses and creates barriers to settling cases in the first instance."
For a summary of other significant 2013 personal injury settlement planning developments, see this prior S2KM blog post.