Understanding Medicaid & Medicare Reimbursements in Minnesota Personal Injury Settlements

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.

Detailed Answer

When you receive medical benefits through Medicaid or Medicare and later pursue a personal injury claim in Minnesota, federal and state laws require that the government be reimbursed from any settlement or award. This protects public funds by ensuring the state and federal programs recover costs they paid on your behalf.

Medicaid Reimbursement (Minnesota Medical Assistance)

Under Minnesota Statute § 256B.0595, the Minnesota Department of Human Services (DHS) has a lien on any third-party recovery (settlement or judgment) for medical assistance paid. Key points include:

• The DHS lien arises when the state pays for medical services that relate to the injury or illness giving rise to your claim.
• The lien attaches to the entire amount recovered before attorney fees and costs are deducted. See Minnesota Statute § 256B.0595, subdivision 3 (revisor.mn.gov/statutes/cite/256B.0595).
• The state must be repaid out of your net recovery (after legal fees and costs). You can negotiate a reduction of the lien only if you prove that repayment of the full lien amount would leave you without funds to cover nonmedical damages (e.g., pain and suffering).

Medicare Reimbursement (Medicare Secondary Payer)

Medicare operates under the federal Medicare Secondary Payer (MSP) rules, set forth in 42 U.S.C. § 1395y(b). When Medicare pays for services related to your injury, it has the right to recover conditional payments from your settlement:

• CMS may issue a demand letter outlining the total conditional payments it made. You must verify and resolve that amount before settling.
• Failure to satisfy the Medicare demand can lead to penalties, interest, or legal action by the U.S. Department of Health and Human Services.
• You can coordinate with CMS to obtain a conditional payment report and then negotiate or contest specific charges if they’re inaccurate.

Practical Steps When Negotiating a Settlement

1. Request and review the DHS lien statement and CMS conditional payment report early in your case.
2. Work with your attorney to negotiate the lien balance. Minnesota law allows reducing the state lien if strict enforcement would leave you uncompensated for nonmedical damages. Minn. Stat. § 256B.0595, subd. 5.
3. Set aside funds in escrow to ensure Medicaid and Medicare are fully repaid at closing.
4. Confirm lien releases from the DHS and CMS before distributing any settlement funds.

Helpful Hints

• Start lien resolution early to avoid delays in closing your case.
• Keep detailed medical records to support negotiations over disputed charges.
• Consider hiring a lien resolution specialist if Medicaid or Medicare demands seem inflated.
• Maintain communication with both state and federal agencies in writing.
• Ensure your attorney factors lien repayment into settlement demands and client net recovery.