State Medicaid Agency Incentive Payments for Assigned Medical Support Collection
POLICY INTERPRETATION QUESTIONS
DATE: June 11, 2019
TO: State IV-D Agencies
FROM: Scott M. Lekan, Commissioner, Office of Child Support Enforcement
SUBJECT: State Medicaid Agency Incentive Payments for Assigned Medical Support Collection
OCSE received inquiries regarding incentive payments from a state Medicaid agency (SMA) to a political subdivision or legal entity of that subdivision that enforces and collects medical support payments for the SMA. In consultation with the Centers for Medicare and Medicaid Services (CMS), we provide the following guidance.
Question 1: What are the requirements under a state’s Medicaid plan for reimbursement from the SMA to a Title IV-D agency for services provided to recover Medicaid payments?
Answer 1: 42 CFR 433.152(b)(2) Visit disclaimer page requires that a cooperative agreement between a SMA and Title IV-D agency specify that the SMA will reimburse the Title IV-D agency “only for those child support services performed that are not reimbursable by OCSE under Title IV-D of the [Social Security] Act and that are necessary for the collection of amounts for the Medicaid program.” 42 CFR 433.152 Visit disclaimer page outlines the requirements for cooperative agreements for third party collections.
Question 2: What are the requirements for incentive payments from the SMA to states or political subdivisions?
Answer 2: 42 CFR 433.153(a) Visit disclaimer page requires the SMA to make an incentive payment to a political subdivision, a legal entity of the subdivision such as a prosecuting or district attorney or a friend of the court, or another state that enforces and collects medical support and payments for the agency. 42 CFR 433.153(b) Visit disclaimer page specifies that the incentive payment must equal 15% of the amount collected, and must be made from the federal share of that amount. These incentive payments are paid by a SMA to the specified governmental entities pursuant to the Medicaid state plan under 42 CFR 433.151(b) Visit disclaimer page for the collection of payment for Medicaid services.
Question 3: May a SMA make both reimbursement and incentive payments to Title IV-D agency?
Answer 3: Yes. CMS policy permits a SMA to make both reimbursement and incentive payments to the Title IV-D agency under 42 CFR 433.152 Visit disclaimer page and 42 CFR 433.153 Visit disclaimer page , respectively, for services provided to recover Medicaid payments from noncustodial parents.
With respect to reimbursement, CMS considers Title IV-D agencies to be a legal entity of the subdivision for which a SMA may enter into a cooperative agreement for collections from a liable third party related to Medicaid services provided to a recipient. SMAs must include in their agreements with a Title IV-D agency that reimbursement will only be for those child support services performed that are not reimbursable by OCSE under Title IV-D of the Act, and that are necessary for the collections of amounts for the Medicaid program. The SMA would then reimburse the Title IV-D agency accordingly, pursuant to 42 CFR 433.152(b)(2) Visit disclaimer page . Most medical support enforcement services performed by the Title IV-D agency, including Medicaid cost recovery, are eligible for reimbursement under Title IV-D and thus would not be eligible for reimbursement by a SMA. Title IV-D agencies are required to provide child support services to Medicaid beneficiaries, cooperate with the SMA, and enforce medical support, including Medicaid costs recovery (see 45 CFR §§ 302.33 Visit disclaimer page , 303.30 Visit disclaimer page , 303.31 Visit disclaimer page , and 303.32 Visit disclaimer page ). 45 CFR 302.51(c) Visit disclaimer page requires the Title IV-D agency to distribute recovered Medicaid payments to the SMA. The cost of providing such services is reimbursable under Title IV-D of the Act. See also 45 CFR 304.20(b)(11) Visit disclaimer page .
In CMS’ view, the incentive payments are allowed when the pursuit of medical support is against someone other than the Medicaid recipient, or the pursuit of medical support is against some source, including noncustodial parents, if that source has a legal obligation to pay for medical services for a Medicaid recipient. See also section 1903(p) of the Act Visit disclaimer page , 42 U.S.C. § 1396b(p).
Question 4: What are the financial reporting requirements for a Title IV-D agency that receives reimbursement or incentive payments from a SMA?
Answer 4: Under 45 CFR 304.50 Visit disclaimer page , any reimbursement or incentive payments paid by the SMA to the Title IV-D agency or to a political subdivision, including a legal entity providing Title IV-D services under the state plan, must be reported as program income on the OCSE-396 expenditure report. In accordance with 45 CFR 304.50 Visit disclaimer page , the Title IV-D agency “must exclude from its quarterly expenditure claims an amount equal to: (a) All fees which are collected during the quarter under the Title IV-D State plan; and (b) All interest and other income earned during the quarter resulting from services provided under the Title IV-D State plan.”
Since Medicaid cost recovery services are required to be provided and reimbursed under Title IV-D, if the state Title IV-D agency or any state entity also receives incentive payment income from the SMA for such services, 45 CFR 304.50 Visit disclaimer page requires the state to report the incentive payment as program income. See also the Uniform Administrative Rule at 45 CFR 75.307 Visit disclaimer page regarding treatment of program income, applicable to state IV-D grants pursuant to 45 CFR 304.10 Visit disclaimer page .
INQUIRIES: ACF OCSE Regional Program Managers