Medicaid Tort Recovery Program Summary

The Department of Health and Family Services (DHFS) is the social and health services agency in the state of Wisconsin. The DHFS includes EDS, which administers Wisconsin Medicaid. Medicaid was created by Title XIX of the federal Social Security Act of 1935 and provides funding for various services to eligible clients. Medicaid is the largest federal and state-funded program financing health care for individuals and families with low income and limited resources. Wisconsin Medicaid is, in most cases, the payer of last resort for any Medicaid-covered service. All other sources of payment for the recipient’s medical care must be exhausted before Medicaid assumes financial responsibility for those medical costs. 

If the DHFS paid any claim submitted by the provider for services to a Medicaid recipient, under federal and state law, the DHFS is mandated to seek reimbursement, as applicable, from any third party per ss. 49.89 and 102.27, Wis. Stats., and 42 USC 1396(a)(25)(A).

Duty of Medicaid Recipient 

As a condition of Medicaid eligibility, all applicants are required at the time of application to assign their rights to payment for medical care from any third party to the DHFS. In other words, if the client receives, has received, or has applied to receive Wisconsin Medicaid, his or her right of action against the third party is assigned to the DHFS per s. 49.89(3), Wis. Stats. This is a statutory assignment that arises from the payment of Medicaid funds on behalf of the recipient. 

Further, Medicaid recipients are required to cooperate and assist the DHFS in identifying and providing information concerning third parties who may be liable to pay for care and services under the plan.

Subrogation 

Pursuant to s. 49.89, Wis. Stats., the DHFS is subrogated or substituted for the recipient’s right against the person legally liable for the injury and treatment of the recipient. Under s. 49.89, Wis. Stats., the doctrine of equitable subrogation shall not apply to defeat, reduce, or prorate recovery by the DHFS as to its assignment, lien, or subrogation rights.

Duty of Attorneys to Notify Wisconsin Medicaid of Tort Action 

Prior to initiating any tort recovery action, the attorney or representative who represents a client that received Medicaid benefits shall notify the DHFS of the tort recovery action per ss. 49.89, 102.27, and 803.03, Wis. Stats., and SCR 20:1.15 and 20:8.4(f).

Provider Bills 

Providers (hospitals, physicians, etc.) who enroll in Wisconsin Medicaid agree to certain conditions of participation. One such condition is that the provider accepts Medicaid payment as “payment in full” for covered services. In addition, the provider shall not seek or accept any payment whatsoever for covered services from the recipient or other interested party after he or she has accepted Medicaid payment. Consequently, once a provider submits claims to Wisconsin Medicaid for medical services, the provider has no recourse against settlement proceeds concerning the liable third party. 

Enforcing the Medicaid Lien 

Pursuant to federal and state law, the DHFS must be fully reimbursed prior to the client receiving any proceeds from the settlement or award. Refer to the Social Security Act for more information. After the DHFS is notified, pursuant to s. 49.89, Wis. Stats., the Medicaid Coordination of Benefits (COB) Casualty Recovery Unit works closely with the party initiating the action and provides documentation concerning specific medical payments paid for by the DHFS for the client. The Casualty Recovery Unit will also determine the amount to be paid to satisfy the lien.

Eligibility Affected 

The Medicaid recipient’s current and future Medicaid eligibility may be affected if the recipient does not cooperate and assist the DHFS in pursuing third parties who may be liable to pay for the medical care furnished to the recipient. Receipt of settlement or judgment by the Medicaid recipient may affect his or her eligibility for assistance.