State Medicaid systems are expected to become much more aggressive in trying to collect money they’re owed from workers’ comp settlements, as the result of a federal law that takes effect on Oct. 1.

Currently, Medicaid can go after only a portion of a settlement, following a 2006 U.S. Supreme Court case, Arkansas Department of Human Services v. Ahlborn.

The court ruled unanimously that states could claim only the portion of a settlement that represented payment for past medical expenses. The court said a federal statutory prohibition against liens on personal property to recover Medicaid expenditures applied to settlements.

But a provision in the federal Bipartisan Budget Act of 2013 negated the Supreme Court decision and gives states the ability to recover Medicaid costs from the full amount of a settlement. It was originally scheduled to take effect on Oct. 1, 2014, but the effective date was delayed until Oct. 1 of this year.

“Just like Medicare, Medicaid recovers (up to) 100% with no reductions,” said Roy Franco, chief client officer of Franco Signor. “In cases where the Medicaid lien is greater than the settlement value, then Medicaid — just like Medicare — gets all of it, less attorneys’ fees.”

But whether the change will take effect on Oct. 1 or again be delayed remains to be seen. The Medicare Advocacy Recovery Coalition, or MARC, is working with lawmakers to further postpone the provision. The current extension is included in Section 220 of MACRA, the Medicare Access and CHIP Reauthorization Act.

“We’re optimistic that we’ll be able to get an additional extension,” said attorney David Farber, counsel for the coalition.

Even if the extension isn’t approved by the end of this month, the idea would be to make it retroactive to Oct. 1, Farber said.

Jennifer Jordan, chief legal officer for MedVal, said there hasn’t been much information from the state systems regarding the impending changes.

“We haven’t seen anything concrete,” Jordan said. “We’re still playing wait-and-see.”

Like federal Medicare, state Medicaid systems are cash-strapped and don’t want to pay for medical treatment for which another is responsible. But Medicaid systems thus far haven’t seemed that focused on going after other payers, Jordan said.

Rafael Gonzalez, president of Flagship Services Group, said that could now change if Medicaid is allowed to pursue full settlement amounts.

“We’re going to start seeing some really aggressive behavior from state Medicaid systems,” Gonzalez said. “It is definitely going to have an effect on workers’ compensation claims.”

Some states are preparing to go after the larger potential recoveries from settlements. Rhode Island has implemented an “Intercept” program that requires parties to report settlements to the state for secondary payer collection purposes, according to MARC.

Gonzalez said Kentucky recently began putting Medicaid beneficiaries on notice about recovery efforts.

In years past, not many workers’ compensation claimants were also Medicaid beneficiaries, due to the low income limits set by the state systems. But under the Affordable Care Act, 31 states and the District of Columbia have expanded Medicaid so that the medical coverage is available to those with higher incomes, up to 138% of the federal poverty level.

This year, the federal poverty level is $24,600 for a family of four; 138% of that is $33,948.

As of last year, 76 million people were enrolled in Medicaid nationwide.

Gonzalez noted that a family of four where the only income is an injured worker’s $500 per week indemnity benefit would qualify for Medicaid in the expansion states.

Further complicating the situation is that Medicaid systems are different in each state.

“Every state has a different Medicaid law,” Gonzalez said. “That’s one of the big headaches.”