DHHS outlines small, volatile recoveries program; Medicaid estate recovery is largest component

Health and Human Services officials told the Ways and Means committee that the department’s recoveries and other non‑appropriation revenues are modest in scale, fluctuate substantially year to year, and are often driven by external events such as probate outcomes or criminal prosecutions.

Nathan White, DHHS chief financial officer, said the agency recorded about $3.5 million in recoveries in state fiscal 2024 but currently projects roughly $2.16 million for the present year; the budget for FY2026–27 carries a planning figure of about $3.12 million as directed during budget preparation. White stressed that single large settlements or probate recoveries can materially change annual results and that many recovery streams are therefore unpredictable.

Janelle Lelejian, general counsel and manager of DHHS’s Medicaid Estate Recovery Unit, described the estate‑recovery operation as small but steady: roughly 2,000 open cases at any time, with a 17‑year average recovery of about $4,000. Recoveries range widely—from pennies to more than $1 million—depending on estate size, probate timing and applicable law. She noted that a substantial portion of estate recoveries goes to the federal government and to counties for long‑term care services, not solely to the state.

DHHS laid out multiple recovery categories: Medicaid estate recovery (the largest), child‑support medical collections, hospital cost‑settlement recoveries audited by Myers & Stauffer for outpatient claims, rebate recoveries for diabetic supplies, prior‑year adjustments, fraud prosecutions handled by the Attorney General’s Medicaid Fraud Control Unit, program‑integrity overpayment recoveries, individual client overpayment collections, third‑party liability (TPL) recoveries and recoveries from other insurers when Medicaid was payer of last resort.

White and program staff emphasized that the agency’s recoveries concern the fee‑for‑service Medicaid population (fewer than 10,000 beneficiaries at a given time); most Medicaid enrollees are in managed care and the managed‑care organizations do their own recovery work for their populations. As a result, many recovery totals reported by DHHS apply only to the fee‑for‑service population and are not reflective of total Medicaid program recoveries statewide.

Key numbers DHHS gave the committee include a projected $1.5 million in Medicaid estate recovery for the current year and the historical context that the unit’s annual recoveries rose from about $4.6 million when the manager began to $6.7 million currently (noting the program is near capacity). Other categories the department listed have smaller projected dollar values (for example, Attorney General fraud recoveries projected around $75,000 for the current year; Medicaid program integrity recoveries about $100,000 projected for the current year).

Committee members sought clarifications about the split between fee‑for‑service and managed care populations and the scale of recoveries; DHHS reiterated that the bulk of the Medicaid population is in managed care and that those entities pursue recoveries for their enrollees, with DHHS incorporating recoveries into later rate setting.