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Issue Alert - 08-11-02

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Nov 19, 2008

Program Area:


Issue Summary:

DHS has issued an interim policy bulletin regarding Medicaid reimbursement to recipients for bills they incur (and pay) before they win Medicaid, which partially implements a federal court decision

Persons Affected:

Medicaid recipients who pay for medical care and are awarded Medicaid following a hearing request

For More Information:

Center for Civil Justice 320 S. Washington, 2nd Floor Saginaw, MI 48607 (989) 755-3120, (800)724-7441 Fax: (989) 755-3558 E-mail:

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


Michigan policy on direct reimbursement to Medicaid recipients for medicals bills they paid before their Medicaid eligibility was established has been evolving for several years as the result of litigation in the case of Schott v. Olszewski.   Two previous issue alerts – Alert 04-03-03 issued 03/09/04 and Alert “Reimbursement of Medical Expenses” issued 07/10/06 – discuss earlier developments in the case.  The case has now been concluded with the entry of an Amended Judgment and the Department of Human Services (DHS) has issued an Interim Program Policy Bulletin effective November 1, 2008, PPB 2008-014, which makes changes to Program Administrative Manual (PAM) 600 p. 15.  Program Policy Bulletins are available online at  The DHS PAM is available online at 

What's Happening?

Although DHS policy has provided for direct reimbursement to recipients since 2004, there are indications that few caseworkers are giving required notices about reimbursement to recipients who request (and win) hearings about Medicaid eligibility and few recipients are obtaining reimbursement to which they are entitled.

This Issue Alert summarizes the current DHS policy and procedures that should be followed; requests that advocates monitor and report on DHS compliance with their policies and the Court’s Order; and outlines areas where the policy is not fully implementing the Court decision.

Current Policy on Medicaid reimbursement to recipients

 I.      Notices clients should receive:

What DHS Does                                     What Client Should Receive

DHS receives Hearing                         Clients should receive a  Request  regarding MA Denial           DHS 333
                                                                Period/Corrective                                                                     Action Eligibility                                                                      Notice

A denial of MA is revised by                Clients should receive
local office review SHRT                      a DHS 334        
review or ALJ decision                         Reimbursement 
SHRT review or ALJ decision          Notice

Note:  PAM 600 p. 30 directs caseworkers to send a copy of the DHS 334, along with a DHS 45 “DHS to DCH/MIChild/FTW Transmittal” to DCH, when they send the DHS 334 to the client.   DCH received only 6 such transmittals in fiscal year 2008 and only 2 such transmittals in the first 9 months of 2008.  Thus, it appears that many clients are not receiving notices as required by the DHS policy.

In addition, under the current DHS policy, clients who win Medicaid by applying for SSI and appealing an initial SSI denial are not given notice about their right to reimbursement for bills incurred during the retroactive eligibility period.  The District Court rejected the State’s argument that reimbursement was required only if the Medicaid initially was denied by DHS, not the Social Security Administration.  Therefore, SSI recipients who win on appeal should be notified about their right to reimbursement.

Individuals who have paid for bills and do not receive the required notices should seek legal advice (see “Finding Legal help” below).   Advocates who are working with clients who have not received the required notices should contact the Center for Civil Justice (see contact information, above).

II. What is reimbursable:

Bills must meet all the criteria in column A or all the criteria in Column B:




Type of medical care

Medicaid-covered care or services

Medicaid-covered care or services

Date of service (bill incurred)

After application date

Retroactive coverage period (up to 3 months prior to application date)

Date bill paid

After the date a hearing was requested and

before the 10th day after Medicaid eligibility notice sent

Before the 10th day after Medicaid eligibility notice sent

The amount that is reimbursed equals:

Amount paid out of pocket by the recipient or others on their behalf

-- (minus)    Amount refunded by medical provider

-- (minus)     (Unmet) Medicaid deductible or patient pay amount for the month or

                      Medicaid co-payment for the service

-- (minus)    Amounts paid by private insurance or third party payor (see 42 CFR 433.135)

-- (minus)    Amounts paid to reduce assets in order to qualify for Medicaid

III. Procedure for Reimbursement


Required documents

1.       Bills showing:  

·           Recipient’s name

·           Date of service (date medical care provided)

·           Amount you were charged for the service

For prescriptions:

·           Drug name

·           Quantity dispensed

·           Name of prescribing physician

2.         Receipt, cancelled check, statement from provider, or other document showing:

·           Amount paid

·           Date paid

3.      Papers showing amounts paid by insurance or third party payer

Submit to

Department of Community Health

Medical Services Administration

Eligibility Quality Assurance Section /Reimbursement

400 S. Pine St., 5th floor

Lansing, MI 48913

Deadline for submission

90 days after the DHS-334 is sent

Assistance should be provided by

DHS caseworker, upon request by the recipient

Questions also may be addressed to the Medicaid Helpline at  1-(800) 642-3195 or

Reimbursement will come from DCH


Enforcing the Amended Judgment and reimbursement in other situations

The Schott case was not certified as a class action because the court found that class certification was not necessary, given the state’s assertion that it would apply any injunctive or declaratory relief to all putative class members.  Under Rule 71 of the Federal Rules of Civil Procedures, individuals who benefit from the order may intervene to enforce the order.  Advocates who have questions concerning the Amended Judgment or enforcement of the order should contact the Center for Civil Justice (CCJ), which represented the Plaintiffs in the Schott case.

Recipients may also be entitled to direct reimbursement of money spent on Medicaid-eligible services in other situations that were not addressed directly by the courts in the Schott case (see the Sixth Circuit’s Opinion at 401 F.3d 682).   The Medicaid statute’s comparability requirement applies to all Medicaid recipients and may entitle individuals to reimbursement in situations not specifically addressed by the DHS policy described above. 

Individuals who are approved for Medicaid, but have paid for medical care they received during their Medicaid eligibility period and are unable to get the medical care provider to refund the payment and bill Medicaid should seek legal advice (see “Finding Legal Help” below).

What Should Advocates Do?

Monitor whether clients receive  DHS 333 and 334 notices when they appeal Medicaid denials.

Educate clients about keeping copies of bills, receipts, and statements when they are appealing a Medicaid or SSI denial.

Enforce clients’ right to reimbursement under the DHS policy and the Schott decision.  Help clients request reimbursement for bills incurred during their retroactive eligibility period when they win Medicaid through an SSI appeal.

Assist clients in enforcing their right to comparable coverage and direct reimbursement in other situations not addressed in the Schott case.

Assist clients in requesting retroactive Medicaid coverage if they are not entitled to automatic retroactive coverage under a healthy Kids Medicaid category.  

Contact the CCJ if you have questions about any the issues or strategies discussed in this Alert.

What Should Clients Do?

Seek legal help right away if you are denied Medicaid or your Medicaid is terminated, or if you have trouble getting reimbursed for medical bills incurred during a Medicaid eligibility period. Keep copies of any papers (forms. bills, receipts, etc.) you give or send to DHS or DCH.

Request a hearing before the termination date to maintain Medicaid coverage while you appeal.  (Read your notice carefully for an explanation of your hearing right.)

If you are applying for Medicaid or appealing a Medicaid denial, delay, or termination, keep copies of all bills, receipts, and statements from your medical providers – including those from the 3 calendar months before you applied for Medicaid. 

If you are applying for SSI and do not have Medicaid, keep copies of all bills, receipts, and statements from your medical providers – including those from the 3 calendar months before you applied for SSI. 

When you win Medicaid, ask your medical providers to bill Medicaid for all services you received during your Medicaid eligibility period.    Seek reimbursement for any paid medical bills for which the provider will not refund your money.

Finding Help

Most legal aid and legal services offices handle these types of cases, and they do not charge a fee.

You can locate various sources of legal and related services, including the free legal aid office that serves your county, at

You can also look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738.