Recent Changes to New York’s Medicaid Third Party Recovery Process

7/15/2011

As part of our ongoing commitment to keep our clients informed of the latest developments concerning Medicaid lien resolution, the Garretson Resolution Group, Inc. (GRG) is issuing this Client Advisory to our New York state clientele.

1. The New York statute that allows for local public welfare districts to employ liens against personal injury claims in order to recapture expenditures for public assistance has been amended. Effective June 29, 2011, Social Services § 104-b now requires notice to be given to the public welfare district or the department of health when a recipient of public assistance shall have a right of action against a liable third party for personal injuries.

The new notification is required earlier in the settlement process than the existing duty placed upon the public welfare official to provide written notice of the lien to the recipient and file a copy with the county clerk in order to perfect. Still, as the remainder of § 104-b remains unaltered, recipients should expect public welfare districts to continue to file and provide notice in order to affix liens against injury claims.

Prior to this new statutory language, local districts consistently took the position that recipients and their personal injury attorneys have a duty to notify in accordance with public assistance application terms and under state bar ethics rules. The language now solidifies the districts’ position and creates an affirmative duty to notify when a claim arises. Although the statutory language of § 104-b is unclear onto whom the duty falls, the recipient or the recipient’s attorney, this new development leaves no doubt that the welfare district’s right of recovery must be confronted early in the settlement process.

2. New York third party liability recovery, under Social Services § 104-b, has been traditionally administered at the public welfare district level. However, GRG has learned that public welfare districts do currently have the option to relinquish efforts to the New York State Office of the Medicaid Inspector General’s (OMIG) recovery pilot program. A memo prepared and distributed by OMIG to all public welfare district offices in June, 2011 detailed the transition that is underway to centralize New York’s third party recovery efforts into a state-based process. The current alteration in administration was initiated after the acceptance of the Medicaid Redesign Team proposal 102 in February. Expect legislation in the coming year to fully integrate statutory and administrative language to support the centralization. Additionally, OMIG has contracted with HMS, Inc., a private third party, to perform subrogation and recovery on behalf of the state. GRG is aware of 7 of the 58 public welfare districts that have to date agreed to participate in the pilot program, and thus, pass recovery administration to the state.

GRG will continue to closely monitor how these changes may impact resolving New York Medicaid liens and will also communicate any future developments. Please check www.garretsongroup.com often for updates as well as new client advisories and practice tips.