461-5 Spenddown with Medical Bills

Effective Date: June 1, 2020

(Sections in 415 have been rewritten into 461 sections as of June 1, 2020)

Introduction and Definitions

Members may be able to meet their spenddown with medical bills they owe to medical providers. Apply the amount of a bill the member owes toward the spenddown after health insurance premiums are deducted. This then reduces, or in some cases, meets the remaining amount of the member's spenddown.

Knowing the definitions of "incurred medical bills" and "medical deductions" is essential to applying medical bills correctly. Refer to definitions in 461.

Understanding the rules that apply to all medical bills is also necessary to be able to correctly use medical bills to reduce or meet a spenddown.

Example of incurred medical bills: An individual applies in June and is determined eligible to receive medically needy Medicaid in June. He provides proof of an unpaid doctor visit bill from June, and pharmacy bills for medications prescribed to him that he paid in June. The bills are incurred bills that can be used to meet the June spenddown. None of these bills can be used in a future month. Any unpaid portion will be paid by Medicaid.

Example of medical deductions: An applicant is determined eligible to receive medically needy Medicaid in June. She provides proof of a $5000 unpaid hospital bill for her husband for services received in March. Her husband is not eligible for Medicaid. The bill is a deduction that can be used to reduce or meet the applicant's June spenddown. If the member makes a $200 payment on the bill in June, be sure to apply at least $200 (if needed) toward June's spenddown. That $200 paid amount cannot be used in July or any other future month, even if the whole $200 is not needed to meet the June spenddown. The remaining unpaid portion, $4800, is available to use to meet spenddowns for future months. Verify the unpaid portion each month.

A. Basic Rules For All Medical Bills

The following rules apply to all medical bills that may be used to meet spenddown or a cost-of-care contribution.

1. Services received by member or family member.

· To meet a nursing home or HCB waiver member's cost-of-care or spenddown, you cannot use bills for services received by the member's family members. (463)

2. Services must be medically necessary or otherwise approved by DHHS. (See 461-6)

3. Someone other than the member has not and is not responsible to pay the bill, such as a health insurance plan or Medicare.

· When a third party will pay some of the bill, we can use the part of the bill the member is responsible for paying (such as co-pays, deductibles)

· Use medical bills the member is responsible to pay. This is true even if someone like a friend or charitable organization later pays the bill.

4. Not already used to meet spenddown.

5. Cannot be a pre-paid bill for services the individual has not received.

Some additional rules apply for nursing home and HCB waiver recipients.

B. Expanded Medical Bill Rules

1. The member or the member’s family member must have received the medical services. It does not matter if the family member is now deceased. The family member does not have to live with the member. There must be a legal responsibility for payment. Family members include:

a. a dependent child's parent or stepparent;

b. dependent siblings, step-siblings, or half-siblings of the eligible child

· For Family-related programs, see Sec 345-1 for the definition of dependent child, and

· For Aged, Blind or Disabled Medicaid, a dependent child is a child eligible for an allocation under deeming rules. (Sec 427)

c. a member's spouse and dependent children or stepchildren of the member or spouse.

2. The medical bill must be for medically necessary services. (461-6)

3. The medical services cannot be one that a third party will pay. (461-7) Third parties include someone other than the member, such as:

a. Medicare and QMB (SLMB and QI are not third party payers) (Sec 320)

b. Insurance Coverage (TPL) (Sec 225)

c. Expenses CHIP will pay cannot be used as a bill to meet another family member's spenddown.

d. Bills that Medicaid would pay for an eligible recipient may be used as incurred bills. See definition above, and 461-8 for how to apply incurred bills. Do not allow the balance of an incurred bill for any future month once the member has become Medicaid eligible for the month the service was received.

Allow the portion of bills the member is financially obligated to pay that a third party will not pay. This applies even if someone later pays the bill for the member, like a charitable organization.

4. Only use a bill once to meet a spenddown.

a. Once the full, member obligation for an expense has been used to meet a spenddown, do not allow the same bill again. Do not allow it later when the member makes a payment on the bill. Also, do not allow it again simply because it remains unpaid.

b. When a member reapplies and available bills from a prior period of Medicaid are in the record, verify whether the member still owes anything on those bills.

· Use only the portion that has not been used to meet spenddown before, and

· is still owed to the provider, and

· meets the definition of a medical deduction. (See exception for bills in the retroactive period.) (461-8)

5. Future or anticipated medical bills are not expenses yet. Do not allow them as a medical bill to reduce or meet a spenddown.

a. Do not use a bill to meet spenddown in a month before the services are actually received.

b. When meeting spenddown for a retroactive month, do not use medical bills with service dates after the end of that month.

· For example, member brings in proof of bills from August, September and October. The member wants Medicaid in September. You could use bills with service dates in August or September to meet the September spenddown. Do not use bills with October service dates in September.

C. Additional Considerations for medical bills

1. State Paid

Allow a deduction for a medical bill paid by a state or local government program, which is not a Medicaid or other federally funded program.

· This includes bills paid by Vocational Rehabilitation. It does not include bills paid by General Assistance or by Hill-Burton funds because these programs receive federal funds.

· Treat the bill as a paid bill in the month the service is received and only use the medical bill in that month.

2. Prepaid Medical Packages

A pre-paid medical package exists when a person pays for medical services before actually receiving the services.

a. If a member has made advance payments for medical services (such as orthodontic or prenatal), only allow as a medical expense the cost of services actually received in that month. If the member receives services from that provider in a later month, allow only the unpaid cost of services actually received, or the cost of services the member receives and pays for in that month.

b. Do not allow as a medical expense the payment amount in excess of the cost of medical services received in that month.

c. Do not allow as a medical expense the cost of services received in later months if those services were paid before the month they were received.

3. Collections

a. If the medical provider has sent the bill to an outside collection agency, find out if the medical provider has written off the bill. If the collection agency states that part of what they collect goes to the medical provider, allow that portion as an allowable medical bill.

b. If an in-house collection department is trying to collect the expense, consider the bill owed to the medical provider.

4. Finance Charges

Do not include any service charges or finance charges. If the provider bill includes such charges, subtract them from the total owed before posting the bill to the case. These charges are not medical expenses.

5. Bills from non-Medicaid months

a. If a member does not pay the Medicaid spenddown in one month, but received medical services that month, those medical bills can be used in a later month. The bills must meet all criteria for allowable medical bills.

b. Once the agency uses the bill in the later month, it is no longer available for the month the member received the service even if the member seeks retroactive coverage for that month.

· If the bill used meets criteria for incurred bills, do not use any portion of it to meet spenddown in the month of service if the member applies for retroactive coverage.

· Medicaid will not pay the portion of the bill used to meet spenddown if the member becomes eligible for that past month.

Example: member is an ongoing member and met spenddown in May, June and July with old medical bills. He does not meet the August spenddown, but requests to meet September's spenddown. He has bills for August services. These bills may be used for September if they meet the criteria for medical bills. In November, he asks about receiving retroactive coverage for August. Do not use any of the August bills used to meet the September spenddown to meet the August spenddown. Tell the member Medicaid will not pay those bills.

Refer to 463 for rules that apply to nursing home and HCB waiver members.