CMS Issues State Medicaid Directors Letter on Free CareImage Banner

CMS Issues State Medicaid Directors Letter on Free Care

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CMS Issues State Medicaid Directors Letter on Free Care

December 19, 2014
In a letter dated December 15, the Centers for Medicare and Medicaid Services (CMS) addresses Medicaid payment for services covered under a state's Medicaid plan to an eligible Medicaid beneficiary that are available without charge to the beneficiary. The purpose of the letter, according to CMS, is to ensure that Medicaid payment is allowed for any covered services for Medicaid-eligible beneficiaries when delivered by qualified providers. The new guidance comes in response to a Department Appeals Board (DAB) ruling that determined that aspects of current policy were not in line with the Medicaid statute or existing regulations. Specifically, the DAB indicated that the "free care" policy as previously applied effectively prevented the use of Medicaid funds to pay for covered services for Medicaid beneficiaries when the provider did not bill the beneficiary or another individual for the services. To address this issue, the new guidance clarifies that Medicaid reimbursement is available for covered services under the approved state plan, regardless of whether there is any charge for the service to the beneficiary or to the community at large. All other Medicaid requirements must still be met in order for Federal Financial Participation (FFP) to apply. 
 
The guidance also addresses third party liability provisions. The letter says, "We clarify here that CMS does not view public agencies or programs that are carrying out general responsibilities to ensure access to needed health care, such as schools, public health
agencies, and child protective services agencies, as legally liable third parties at the federal level for purposes of Medicaid reimbursement, except to the extent of liability that is more specific in nature, such as a tort claim or employer responsibility for employee health benefits, or when legal liability is specified by state law." The clarification is intended to show consistency with the way CMS has historically viewed the role of public agencies. CMS notes that because state laws vary, states should review their own legal framework to determine when agencies or programs are required to pay for services when there are other available payers.
 
The guidance concludes by noting that the Medicaid statute requires Medicaid to serve as the primary payer to schools and providers of services in an Individualized Education Program (IEP) or Individualized Family Service Plan (IFSP) even if schools or services providers are generally determined to be legally liable third parties.