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Issue Alert - 04-03-03

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Mar 29, 2004

Issue Summary:

Medicaid recipients who win a Medicaid appeal are entitled to direct reimbursement for medical bills they paid between the time they filed their hearing request and the time they were awarded Medicaid eligibility, if the bills were for Medicaid covered services and were incurred during a period for which they are determined to be Medicaid eligible.

Persons Affected:

Individuals whose Medicaid denials are reversed after they request a hearing.

For More Information:

Michigan Poverty Law Program 611 Church Street, Suite 4A Ann Arbor, MI 48104-3000(734) 998-6100(734) 998-9125 Fax


Medicaid - PAM 600

What's Happening?

FIA has issued policy to comply with the federal court order. Under the new policy, FIA will provide direct reimbursement for bills paid during the “corrective action period,” which begins on the date the hearing request is received by FIA and ends the date the eligibility decision is issued by FIA See PAM 600, p. 16 and PRG (Glossary), p. 8. The individual’s eligibility is not actually established until the caseworker enters the appropriate information on the computer. Therefore, the date of the hearing decision usually will be earlier than the date that the corrective action period ends. See the example in PAM 600 p. 16. In other cases, there may not even be a hearing decision. The agency must have found, after the individual requested a hearing, that the Medicaid denial was incorrect. This may occur before a hearing is held or before a hearing decision is issued. According to policy in PAM 600, the client must be given an FIA 333 Corrective Action Eligibility Notice when the client requests a hearing. At this time, it is not known what the FIA 333 says, because it is not posted online and a hard copy was not provided with the April 1, 2004 hard copy updates to the Reference Forms Manual.FIA and DCH will only reimburse bills for services received after February 2, 2004 (the deadline for complying with the court order). Under the federal court order, FIA and DCH must promptly provide direct reimbursement to the recipient “or person legally responsible for the recipient’s bills.” Reimbursement is available “for covered Medicaid services incurred in a month in which the recipient was Medicaid eligible.” The bills must have been “paid by the recipient or, in the case of a minor recipient, the minor recipient’s parent or legal guardian.” The District Court’s decision that the bills must have been paid by the recipient or the parent/legal guardian of a minor recipient is on appeal in the Sixth Circuit, based on caselaw from other parts of the country that establishes the right to corrective payments for any amounts paid on the recipient’s behalf, except those paid by a third party payor as defined by Medicaid law (e.g. private health insurance or Medicare, worker’s compensation, a personal injury defendant, etc.). The court order requires FIA and DCH to reimburse the recipient for the actual out-of-pocket expense, not just the Medicaid rate. However, the judgment requires deductions for:1. any Medicaid-required co-payments, spend-down amounts, or patient pay amounts,2. “assets reduced by the payment of medical expenses by the recipient and/or Medicaid group member in order to establish asset-eligibility,”3. health insurance payments for the services, and 4. “any third party payment made on behalf of the recipient.” The provisions of the order that require deductions for amounts paid out of the recipient’s assets, as well as the provision that deducts amount paid by any third party, are on appeal in the 6th Circuit. Program Policy Bulletin 2004-005 (eff 4/1/04)

What Should Advocates Do?

1. Find out if your clients who request hearings on Medicaid denials are given the FIA 333 form (contact FIA and the Center for Civil Justice if they are not).2. Advise your clients to keep bills and receipts in connection with any bills that they pay while their appeal is pending, to ensure that they will be able to receive direct reimbursement.3. Contact the Center for Civil Justice if your clients experience any problems in getting direct reimbursement under the new policy.

What Should Clients Do?

1. Look for the FIA 333 form when they file a request for hearing and follow any instructions on the form.2. Keep bills and receipts to document any bills you pay while you are appealing a Medicaid denial.3. Get legal advice if you have difficulty getting direct reimbursement under the new policy.

Finding Help

Most legal aid and legal services offices handle these types of cases, and they do not charge a fee. You can locate the "free" legal services or legal aid office that serves your county on the Michigan LawHelp web site ( or look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738.