Detailed Answer
Disclaimer: This article is for educational purposes only. It is not legal advice.
1. Overview of Third-Party Liability in Indiana Medicaid
Under Indiana law, Medicaid has a right to recover medical expenses paid on behalf of an injured person when a third party (for example, an at-fault driver or a negligent property owner) causes the injury. Indiana Code § 12-15.5-5-6 governs third-party liability and reimbursement. You can read the statute here: https://iga.in.gov/laws/2023/ic/titles/012#12-15.5-5-6.
When you settle a personal injury case, the settlement typically includes amounts allocated for past medical expenses, future medical care, pain and suffering, and lost wages. Medicaid’s recovery right applies only to the portion of the settlement designated for medical care. The state agency will file a lien against your settlement, and you must satisfy that lien before you receive your net proceeds.
2. Medicare’s Conditional Payment and Lien Rights
Medicare operates under the federal Medicare Secondary Payer (MSP) rules. If Medicare has paid for treatment related to your injury, it may require repayment from your settlement. Federal regulations at 42 C.F.R. § 411.24 explain this process. See the regulation here: https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-411/subpart-B/section-411.24.
Medicare issues a “conditional payment” letter identifying amounts it has paid or expects to pay. You must obtain this letter from the Centers for Medicare & Medicaid Services (CMS) and include the identified amount in your settlement. Your settlement agreement should reserve funds or set up an escrow to ensure Medicare’s repayment.
3. Impact on Settlement Negotiations
- Settlement Value: Knowing Medicaid and Medicare lien amounts helps you estimate your net recovery.
- Allocation of Funds: You and your attorney should allocate the settlement between medical expenses and other categories. Only the medical portion is subject to reimbursement.
- Escrow or Holdback: To protect against future lien claims, you might agree to hold back a specified amount for future medical care.
4. Steps to Comply with Reimbursement Requirements
- Request Medicaid’s lien statement from the Indiana Family and Social Services Administration (FSSA).
- Obtain Medicare’s conditional payment letter from CMS via the Medicare Secondary Payer Recovery Portal.
- Allocate your settlement to cover past medical costs and, if applicable, future care.
- Set aside or escrow the lien amounts before distributing funds.
- Submit proof of payment to Medicaid and Medicare to obtain releases of their liens.
Helpful Hints
- Begin lien resolution early—both Medicaid and Medicare require time to calculate their claims.
- Keep detailed medical bills and payment records to support your allocation.
- Work with an attorney familiar with Indiana Medicaid and federal MSP rules.
- Consider obtaining a structured settlement for future medical expenses to simplify lien management.
- Confirm releases of lien in writing before distributing settlement funds.