Medicare and AHCCCS Liens on an Arizona Injury Settlement

By the FigureMyTax Editorial Team · How we calculate

AHCCCS, Arizona's Medicaid agency, has a lien on your claim with priority over provider liens, and Medicare recovers under federal law. Both must be resolved before the settlement money is released.

The AHCCCS lien

A.R.S. 36-2915(A) gives AHCCCS a lien for the charges for hospital or medical care and treatment it or a contractor is responsible for, on any claims for damages arising from the injuries that required the care. The member must give AHCCCS written notice within 20 calendar days after a civil action begins.

How it is perfected and where it ranks

The director records a verified statement with the county recorder within 60 days from notice of the hospital discharge or care, and mails copies within 5 days. Under subsection (F), the lien has priority over a lien of the Department of Economic Security, county liens, a provider lien under A.R.S. 33-931 and claims against a third-party payor. It may be amended to reflect current charges, but not after final settlement if AHCCCS received at least 15 working days' notice of the impending settlement.

It must be compromised if unfair

Subsections (H) and (I) require a public entity to compromise its claim if, after considering the nature and extent of the injury and the sufficiency of insurance or other indemnity, the compromise is fair and equitable. A release is not effective against the lien unless the director joins in it, and the director can sue within two years after the settlement (A.R.S. 36-2916).

The federal limit on Medicaid

In Arkansas Department of Health and Human Services v. Ahlborn (2006), 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. A subrogation chart summarizes Arizona practice as allowing recovery of no more than the portion of the settlement that represented payments AHCCCS made, less a deduction for legal expenses; we did not verify the underlying rule, so ask an attorney how AHCCCS calculates its claim in your case.

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 a $100,000 settlement with $36,333 of fees and costs, $15,000 of Medicare payments would shrink to about $9,550.

Next steps

Medicare and AHCCCS are two of the claims on a settlement. See how hospital liens and health insurer claims work and where Arizona stands on the made-whole doctrine, then enter every claim in the Arizona medical lien calculator.

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