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Issue Alert - Medicare Part B

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Jul 15, 2009

Program Area:


Issue Summary:

PEM 257 states that applicants and recipients must pursue all potential resources they may be eligible for, including third party resources for health insurance coverage. Medicare Part B is not mandatory to pursue, but Medicaid will not pay for any Part B covered service.

Persons Affected:

Medicaid recipients who are also eligible for Medicare Part B.

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


As a condition of eligibility, cash assistance (FIP) and Medicaid recipients must identify all third-party resources unless he or she has good cause for not cooperating. Failure, without
good cause, to identify a third-party resource results in disqualification. A third-party resource is a person, entity or program that is, or might be, liable to pay all or part of a group member's medical expenses. Some recipients of Medicaid are also eligible for Medicare, if they receive Social Security benefits and have income low enough to qualify them for Medicaid. If their income level is below 135% of poverty, they qualify for the Medicare Savings Program and can "buy into" Medicare Part B. This means that Medicaid will pay for their Medicare premium. If their income is above this threshold, the person has the option of purchasing Medicare Part B and paying the premium (currently $96.40/month for 2009). Medicare Part B typically covers outpatient expenses, and these are expenses that are also typically covered by Medicaid. Medicaid is always secondary to other insurances, so if a patient is covered by both Medicare Part B and Medicaid, Medicare is the primary.

Federal Medicaid regulations allow the federal government to deny federal financial
participation (FFP) for some “expenditures that could have been paid for under Medicare Part B but were not because the person was not enrolled in Part B” (“Part B covered services”). 42 CFR 431.625(d)(3). However, they do not allow the state to deny coverage and payment for those services. Furthermore, the state can protect itself from part or all of the costs of these services because it can (a) enroll most Medicaid recipients into Part B and receive FFP for the cost of the Part B premiums, (b) receive FFP for the amount that the recipient would owe as their deductible or coinsurance, and (c) receive FFP for Part B covered services received during an individual’s retroactive eligibility period, 42 CFR 431.625(d)(3), in those situations
where the individual cannot be retroactively enrolled in Part B.

What's Happening?

Despite Federal law, the Department of Community Health (DCH) has stated that Medicaid will not pay for any services that Medicare Part B would have covered, if an eligible person has chosen not to enroll. This applies to all individuals, not just those that are above the 135% threshold.

The Center for Civil Justice (CCJ) has asked DCH to change its policies on not paying for Part B covered services and on allowing providers to bill for these services even when they have not alerted the recipients in advance that the care will not be paid by Medicaid, because it does not appear there is any legal authority for those policies.

What Should Advocates Do?

Advocates should contact CCJ if they have clients facing problems because Medicaid will not pay for a Part B covered service.

What Should Clients Do?

Contact their local legal aid program if they are being billed for a Medicaid covered service.

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.