Medicare and Medicaid Liens on an Alaska Injury Settlement

By the FigureMyTax Editorial Team · How we calculate

Alaska Medicaid may recover only the part of your settlement that is for medical expenses, reduced by a pro rata share of your attorney fees and costs. Medicare recovers under federal law.

Alaska Medicaid: limited by statute

AS 47.05.070(b) provides that when the department pays for medical assistance for an injury, it is subrogated to not more than the part of an insurance payment or other recovery that is for medical expenses it provided. It may bring an action in superior court against an alleged third-party payor to recover that amount.

Its lien, and how it is reduced

AS 47.05.075 gives the department a lien on any sum due to the recipient from a third-party payor. The lien attaches on filing with a recorder's office, but is not perfected unless the department serves notice of the filing on the third-party payor by personal service or registered, certified or insured mail. When the recipient settles, the lien is reduced by a pro rata share of attorney fees and litigation costs, calculated under the court rules on attorney fees in civil matters.

Priority

A perfected Medicaid lien has priority over all other liens except tax liens and a lien perfected for attorney fees and costs (AS 47.05.075(d)). That puts it ahead of a hospital's lien, which must also be copied to the Medicaid unit within 30 days when the patient is a Medicaid recipient (AS 34.35.460(b)). Compare it with how provider and insurer claims work.

A worked example

On a $100,000 settlement with $36,333 of fees and costs, the fee-and-cost ratio is 36.3%. If Medicaid paid $20,000 and $40,000 of the settlement compensates medical expenses, the cap does not bite, and the claim falls to $20,000 × (1 − 0.363) = $12,733. If Medicaid had paid $60,000, the statutory cap would hold its claim to $40,000 before the fee reduction. The Alaska medical lien calculator applies both steps.

The federal limit behind it

The statute tracks Arkansas Department of Health and Human Services v. Ahlborn (2006), where the U.S. Supreme Court held that federal Medicaid law did not let a state assert a lien on a settlement beyond the portion that represented medical costs.

Medicare

Under the Medicare Secondary Payer statute, 42 U.S.C. 1395y(b)(2), the United States may bring an action to recover conditional payments and may collect double damages from responsible entities; 42 CFR 411.24 governs recovery. When Medicare's payments are less than the settlement, 42 CFR 411.37(c) reduces its recovery by its share of the procurement costs. On the same settlement, $15,000 of Medicare payments would shrink to about $9,550.

Next steps

Medicare and Medicaid are two of the claims on a settlement. Read whether the made-whole doctrine helps with a private insurer in Alaska before you answer any lienholder.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how Alaska's rules apply to your specific case with a licensed Alaska attorney.