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Payments Begin in Landmark $16 Million Medicaid Class Action

Washington, DC: In two cases that will have far-reaching implications for the way the Medicaid program is administered, Washington, DC and Maryland have begun to make comprehensive changes in the way they administer payments for nursing home residents-a major sector of the Medicaid program.

The two cases are Janigian v. District of Columbia (in the District) and E. Smith, et al. v. John Colmers, et al. (in Maryland). Both alleged violations of federal and state law by overcharging Medicaid recipients for co-payments for their nursing home care, and they were the first such lawsuits brought in the United States.

The agreements affect residents who are in debt to nursing homes when they qualify for Medicaid. Federal law requires that residents' Medicaid co-payments be reduced by the amount of that debt so that residents will have income available to pay their nursing home for pre-Medicaid services. Under their old rules, the District and Maryland ignored that law and set individual co-payments without regard to nursing home debt, leaving residents with no money to pay pre-Medicaid nursing home bills. Under the new agreements, the District and Maryland must comply with federal law and reduce the residents' co-payments so that they can use some of their income to pay the old debts. Medicaid will cover the entire cost of nursing home care until those old debts are paid off.

Maryland has also agreed to pay $16 million over three years in adjusted Medicaid reimbursement claims, half of which will be reimbursed by the federal government. In return for the payments, which began today, up to $64 million in unpaid nursing home charges owed by Medicaid recipients will be forgiven by nursing homes. In addition, both the Smith and Janigian cases have already resulted in modifications to the way the District and Maryland calculate recipients' co-payments on an ongoing basis. The agreements were approved by the Washington, DC and Maryland courts earlier this year.

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Last updated on Aug-18-10