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SJC-12828

ATLANTICARE MEDICAL CENTER & others1 vs. DIVISION OF MEDICAL 

ASSISTANCE.

Suffolk. February 10, 2020. - July 21, 2020.

Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, & 

Kafker, JJ.

Medicaid. Division of Medical Assistance. Public Welfare, 

Medical assistance benefits. Regulation. Hospital, 

Medicaid reimbursement. Medicare. Judgment, Relief from 

judgment. Practice, Civil, Relief from judgment.

Civil action commenced in the Superior Court Department on 

April 6, 2000.

Following review by this court, 439 Mass. 1 (2003), a 

motion for relief from judgment, filed on September 28, 2018, 

was heard by Debra A. Squires-Lee, J.

The Supreme Judicial Court granted an application for 

direct appellate review.

Douglas S. Martland, Assistant Attorney General, for the 

defendant.

Charlene E. Kent for the plaintiffs.

 

1 Salem Hospital; Lawrence General Hospital; Hale Hospital; 

Beverly Hospital; and Deaconess Waltham Hospital.
2

KAFKER, J. In the instant case we are asked to revisit a 

decision issued by this court in 2003 involving State Medicaid 

reimbursements, in light of subsequent developments to the 

relevant Federal law. At issue is the State's Medicaid program, 

MassHealth, which provides insurance for indigent residents of 

the Commonwealth.2 In Atlanticare Med. Ctr. v. Commissioner of

the Div. of Med. Assistance, 439 Mass. 1, 3, 5 (2003) 

(Atlanticare I), this court affirmed a judgment declaring that 

part of a State Medicaid regulation, 130 Code Mass. Regs. 

§ 450.316(E) (1998),3 was inconsistent with the Federal Medicaid 

scheme. The regulatory provision required health care providers 

to return payments to MassHealth where a third-party insurer was 

later identified as liable for the payment that MassHealth had 

already paid out. Id. at 2. We concluded that the Federal 

Medicaid scheme tasked the State Medicaid agency, not individual 

providers, with seeking reimbursement from liable third-party 

 

2 At the time the original complaint was filed, the Division 

of Medical Assistance was designated as the "single State 

agency" responsible for administering the State Medicaid plan. 

See 42 U.S.C. § 1396a(a)(5) (State Medicaid plans must designate 

single State agency to administer plan). In 2003, however, the 

Executive Office of Health and Human Services was deemed to be 

the single State agency responsible for administration of the 

program. See G. L. c. 118E, § 1, inserted by St. 2003, c. 26, 

§ 308. For simplicity, we will refer to the defendant as 

"MassHealth" throughout this opinion.

3 The provision at issue in this regulation has since been 

moved from subsection (E) to subsection (F) of 130 Code Mass. 

Regs. § 450.316 (2019).
3

insurers, including Medicare. Id. at 6-7. We thus held that 

the State regulation impermissibly shifted the burden for 

seeking reimbursement onto health care providers, in violation 

of the Federal statutory scheme. Id. at 14. In so holding, we 

rejected the argument that MassHealth would be unable to 

directly seek reimbursement where the liable third party at 

issue was Medicare. Id. at 11.

Pursuant to our ruling in Atlanticare I, MassHealth began 

seeking reimbursements directly from Medicare, rather than from 

providers, where Medicare was identified as a liable third-party 

insurer. The Center for Medicare & Medicaid Services (CMS), a 

division of the Department of Health and Human Services (HHS) 

that oversees the administration of Medicaid and Medicare at the 

Federal level, refused to issue reimbursements from Medicare to 

MassHealth, however. See Daley v. Secretary of the Executive 

Office of Health & Humans Servs., 477 Mass. 188, 190 (2017); 

Massachusetts v. Sebelius, 638 F.3d 24, 25 (1st Cir. 2011)

(Sebelius). CMS maintained that Medicare funds could only be 

paid out to providers, not MassHealth, and that MassHealth could 

only obtain Medicare reimbursements by going through providers. 

Sebelius, supra. MassHealth brought suit against CMS in Federal 

court, challenging this position. Id. at 29. In a 2011 ruling, 

the United States Court of Appeals for the First Circuit agreed

with CMS's position, and held that the Federal Medicare scheme 
4

prohibited State Medicaid agencies, including MassHealth, from 

receiving funds from Medicare. See id. at 36. At around the 

same time, a Federal Medicare regulation was amended to 

acknowledge the practice of State Medicaid agencies obtaining 

Medicare reimbursements through providers, rather than seeking 

such reimbursements directly from Medicare. See 42 C.F.R. 

§ 424.44(b)(3) (2019).

In light of the First Circuit's holding and the amendment 

to 42 C.F.R. § 424.44(b), MassHealth sought to modify the 

declaratory judgment and restore MassHealth's ability to obtain 

reimbursements from providers, rather than liable third parties. 

For the reasons discussed infra, we conclude that MassHealth has 

demonstrated a sufficient change in circumstances to warrant 

modification of the judgment. We further conclude, however, 

that only a narrow modification of the judgment is necessary to 

allow MassHealth to seek reimbursement where the liable third 

party is Medicare. Accordingly, we order that this case be 

remanded to the Superior Court for modification of the judgment 

in accordance with this opinion.

1. Background. a. Overview of Medicaid and Medicare. 

Medicare is a Federal program that provides health care benefits 

to the elderly and disabled. See Briggs v. Commonwealth, 428 

Mass. 241, 243 (1999); 42 U.S.C. §§ 1395 et seq. Medicare is 

supported entirely by Federal funds and is administered by the 
5

Federal government. See Briggs, supra. Medicaid, by contrast, 

is a health care program designed to assist the needy and 

indigent. See id.; 42 U.S.C. § 1396 et seq. Unlike Medicare, 

Medicaid follows a model of "cooperative federalism" between the 

State and Federal governments (citation omitted). See Harris v. 

McRae, 448 U.S. 297, 308 (1980) (McRae). State participation in 

Medicaid is voluntary, but those States that choose to 

participate must develop a State plan in compliance with Federal 

requirements. See Massachusetts Eye & Ear Infirmary v. 

Commissioner of the Div. of Med. Assistance, 428 Mass. 805, 812 

(1999). State Medicaid plans must comply with requirements set 

forth in the Federal statutory scheme, as well as Federal 

regulations promulgated by HHS. See id. In exchange, "the 

Federal Government agrees to pay a specified percentage of 'the 

total amount expended . . . as medical assistance under the 

State plan . . . ." McRae, supra, quoting 42 U.S.C. 

§ 1396b(a)(1). Although States must comply with Federal 

requirements, Medicaid is designed to provide some flexibility 

to the States to formulate a plan tailored to each State's 

individual needs. See Danvers Pathology Assocs., Inc. v. 

Atkins, 757 F.2d 427, 428 (1st Cir. 1985).

Eligibility for Medicaid and Medicare are not mutually 

exclusive. An individual who is both elderly and indigent may 

be "dual eligible[]" for both programs. See Briggs, 429 Mass. 
6

at 244. See also Connecticut Dep't of Social Servs. v. Leavitt, 

428 F.3d 138, 141 (2d Cir. 2005) (Leavitt) ("Because elderly 

Americans are covered by Medicare, and poor Americans are 

covered by Medicaid, the elderly poor are covered by both 

programs. These beneficiaries are known as 'dual eligibles'"). 

Where an individual is dual eligible, and receives a health care 

service that could be covered by either Medicare or Medicaid, 

Medicare is to pay in the first instance. See Leavitt, supra; 

42 U.S.C. § 1396a(a)(25)(A). This is because Medicaid is 

designed to be a "payer of last resort." Arkansas Dep't of 

Health & Human Servs. v. Ahlborn, 547 U.S. 268, 291 (2006). 

Under this principle, Medicaid is not to be used to fund a 

health care expense where another funding resource is available. 

Shweiri v. Commonwealth, 416 Mass. 385, 388–389 (1993). The 

Federal statutory and regulatory scheme outlines two methods for 

ensuring that Medicaid remain the payer of last resort where 

another funding resource is identified: "cost avoidance" and 

"pay and chase." See Miller v. Gorski Wladyslaw Estate, 547 

F.3d 273, 278 (5th Cir. 2008).

i. Cost avoidance. Cost avoidance is the primary method 

of ensuring that Medicaid funds are not used where another

funding resource is available. See id. States are required to 

"take all reasonable measures to ascertain the legal liability 

of third parties . . . to pay for care and services available 
7

under the plan" before paying out Medicaid funds. See 42 U.S.C. 

§ 1396a(a)(25)(A). A third party is defined as "any individual, 

entity or program that is or may be liable to pay all or part of 

the expenditures for medical assistance furnished under a State 

plan." 42 C.F.R. § 433.136 (2010). Reasonable measures include 

the submission of a plan to the Secretary of HHS "for pursuing 

claims against such third parties." 42 U.S.C. 

§ 1396(a)(25)(A)(ii). In accordance with these requirements, 

Massachusetts has promulgated a regulation mandating that 

providers make "diligent efforts to obtain payment first from 

other resources . . . so that the MassHealth agency will be the 

payer of last resort." 130 Code Mass. Regs. § 450.316 (2019).

Where a State is able to establish the "probable existence"

of third-party liability at the time when a claim is filed, "the 

agency must reject the claim and return it to the provider for a 

determination of the amount of liability." 42 C.F.R. 

§ 433.139(b)(1) (2019). Once such a liability determination is 

made, "the agency must then pay the claim to the extent that 

payment allowed under the agency's payment schedule exceeds the 

amount of the third party's payment." 42 C.F.R. 

§ 433.139(b)(1). Where probable third-party liability cannot be 

established, or where benefits are not available at the time the 

claim is filed, the State Medicaid agency is responsible for

paying the claim. See 42 C.F.R. § 433.139(c).
8

ii. Pay and chase. In the regular course, the 

Commonwealth's "diligent efforts" requirement ensures that 

MassHealth does not pay for health care services that could have 

been paid for by a third-party insurer. See 130 Code Mass. 

Regs. § 450.316. Instances arise, however, where a liable third 

party is identified after Medicaid has already paid the 

provider. For example, individuals who are eligible for 

Medicaid may become retroactively eligible for Medicare as well. 

See, e.g., 42 C.F.R. § 406.6(d)(4) (2019) (individual who signs 

up for Medicare Part A coverage at some point after he or she 

first becomes eligible is entitled to retroactive benefits). 

Such individuals are referred to as "retroactive dual 

eligibles." In such instances, Medicaid employs the secondary 

"pay and chase" method of handling third-party liability, which 

consists of the following:

"in any case where such a [third-party] legal liability is 

found to exist after medical assistance has been made 

available on behalf of the individual and where the amount 

of reimbursement the State can reasonably expect to recover 

exceeds the costs of such recovery, the State or local 

agency will seek reimbursement for such assistance to the 

extent of such legal liability."

42 U.S.C. § 1396a(a)(25)(B).

Federal regulations further mandate that

"if [a State Medicaid] agency learns of the existence of a 

liable third party after a claim is paid, or benefits 

become available from a third party after a claim is paid, 

the agency must seek recovery of reimbursement within 

[sixty] days after the end of the month it learns of the 
9

existence of the liable third party or benefits become 

available."

42 C.F.R. § 433.139(d)(2).4 Reimbursement is to be sought 

"unless the agency determines that recovery would not be cost

effective in accordance with" 42 C.F.R. § 433.139 (f). 42 

C.F.R. § 433.139(d)(3). Recovery is considered cost effective

under 42 C.F.R. § 433.139(f) where "the amount [the State

Medicaid agency] reasonably expects to recover will be greater 

than the cost of recovery." 42 C.F.R. § 433.139(f)(1). A 

State's Medicaid "plan must specify the threshold amount or 

other guideline that the agency uses in determining whether to 

seek recovery of reimbursement from a liable third party, or 

describe the process by which the agency determines that seeking 

recovery of reimbursement would not be cost effective." 42 

C.F.R. § 433.139(f)(2).

iii. Approaches to pay and chase. To address the 

implementation of pay and chase for instances of post-payment

 

4 A State agency may request a waiver of the sixty-day 

deadline for seeking reimbursement. See 42 C.F.R. 

§ 433.139(e)(1). In order to obtain a waiver of this 

requirement, however, a State agency must demonstrate that 

imposing the sixty-day requirement is not cost effective. See 

42 C.F.R. § 433.139(e)(1). In order to do so, the agency must 

provide "adequate documentation" to the Center for Medicare & 

Medicaid Services (CMS) as to the lack of cost effectiveness, 

examples of which include "costs associated with billing, claims 

recovery data, and a State analysis documenting a cost-effective 

alternative that accomplishes the same task." 42 C.F.R. 

§ 433.139(e)(1)(ii).
10

third-party liability, Massachusetts promulgated the following 

regulation: "[i]f a third-party resource is identified after 

the provider has already billed and received payment from the 

MassHealth agency, the provider must promptly return any payment 

it received from the MassHealth agency. The provider must bill 

all third-party resources before resubmitting a claim to the 

MassHealth agency." 130 Code Mass. Regs. § 450.316(F). In 

other words, this regulation implements pay and chase by 

allowing MassHealth to void a provider's claim and recoup the 

money from the provider. The provider is then left to seek 

payment from the third party itself, whether the third party is 

a private insurer or Medicare. The instant litigation arose out 

of a challenge to the legality of this regulation.

An alternative method for implementing pay and chase, and 

the one that MassHealth presently relies on, is known as demand 

billing. Under this method of recovery, MassHealth requests 

that the provider submit a bill to Medicare and repay MassHealth 

once Medicare has paid the provider. MassHealth contends that 

demand billing results in significant delays in recovery, and 

cannot be utilized where a Medicaid recipient becomes 

retroactively eligible for Medicare more than twelve months 

after the date of service, due to Medicare filing deadlines.

b. Procedural history. i. Initiation of suit and 

Atlanticare I. In 1998, MassHealth brought enforcement actions 
11

against the plaintiff hospitals, seeking reimbursement for 

Medicaid funds that had been paid out to the providers. 

Atlanticare I, 439 Mass. at 4-5. As this court explained:

"In the three years prior to [MassHealth]'s enforcement 

action, each hospital had provided medical services to 

individuals deemed eligible for Medicaid benefits. It is 

undisputed that, in all but two instances not at issue 

here, the hospitals made diligent efforts to identify 

liable third-party insurers, in conformity with 

[MassHealth]'s due diligence regulation. When the 

hospitals were unable to identify liable third-party 

insurers, they sought and received payment from 

[MassHealth]. Subsequently, in 1998, [MassHealth] informed 

the hospitals that it had identified third parties 

responsible for the claims, and, pursuant to the 

reimbursement regulation, ordered the hospitals to return 

the Medicaid payments to [MassHealth] and to rebill the 

liable third parties. In some instances, Medicare was the 

newly discovered third party; the patients serviced by the 

hospitals in those instances had become retroactively 

eligible for Medicare benefits. In those instances, no 

amount of 'diligent efforts' by the healthcare providers 

would have identified a liable third-party insurer --

Medicare -- as Medicare provided the insurance coverage 

retroactively, i.e., only after the healthcare services had 

been provided. The remaining instances involved private 

insurers."

Id. MassHealth prevailed in the administrative decisions that 

ensued. See id. at 5. The hospitals sought review in Superior 

Court, arguing that Federal law mandated that the State Medicaid 

agency, rather than the health care provider, seek reimbursement 

from liable third parties. Id. at 3, 5. A judge in the 

Superior Court ruled in favor of the hospitals. Id. at 3. In 

so ruling, the judge "declared the regulation unlawful to the 

extent that it required the hospitals to return payments to 
12

[MassHealth] and rebill liable third parties." Id. at 5. 

MassHealth appealed, and this court transferred the case from 

the Appeals Court on its own motion. Id. at 3.

In March 2003, we issued a decision affirming the Superior 

Court's ruling and concluding that Federal law required 

MassHealth to seek reimbursements directly from liable third 

parties, including Medicare. See id. at 5. We held that "[t]he 

natural reading of the text of [42 U.S.C.] § 1396a(a)(25)(B) is 

that the State or local agency must seek reimbursement from a 

liable third party, provided it is cost effective to do so."

Id. at 6. We also based our holding on the legislative history, 

the corresponding Federal regulation, and the then-current 1990 

State Medicaid manual issued by the Health Care Financing 

Administration (HCFA).5 Id. at 8-10. More specifically, we 

observed that 42 U.S.C. § 1396a(a)(25)(B) made numerous 

references to liable third parties, but made no mention of 

providers. Atlanticare I, supra at 6-7. The statute's 

legislative history also indicated that Congress contemplated 

seeking reimbursement from "liable third parties" (emphasis 

omitted). Id. at 8. The cost-benefit analysis mandated by the 

statute further implied that agencies would seek recovery from 

 

5 The Health Care Financing Administration was the 

predecessor to CMS. Massachusetts v. Sebelius, 638 F.3d 24, 28 

n.6 (1st Cir. 2011).
13

third parties, as the cost of seeking recovery from a provider 

would generally be de minimis. Id. at 7. Additionally, the

corresponding Federal regulations made explicit reference to 

seeking reimbursement "from a liable third party" and similarly 

contained cost-benefit analysis provisions (emphasis omitted). 

Id. at 9. Finally, the 1990 HCFA manual set forth a pay and 

chase method of reimbursement that required the State Medicaid 

agency to "seek recovery of reimbursement from the third party"

(emphasis omitted). Id. at 10.

On this basis, we concluded that 42 U.S.C. 

§ 1396a(a)(25)(B) required State Medicaid agencies to seek

reimbursement directly from the liable third party, not the 

health care provider. Atlanticare I, 439 Mass. at 6-7. We 

further stated that this interpretation of the statute "would be 

entirely unremarkable were it not for [MassHealth's] view, 

agreed to by the hospitals, that it cannot recover costs from 

the liable third party when that party is Medicare." Id. at 11. 

This court explicitly rejected that view, as we were "not 

persuaded that it is impossible for [MassHealth] to obtain 

reimbursement from Medicare." Id.

ii. Post-Atlanticare I developments. A few weeks after 

this court released its decision in Atlanticare I, CMS issued a 

letter from the State Medicaid director clarifying CMS's policy 

as to the recovery of Medicaid payments for individuals who 
14

become retroactive dual eligibles. The letter indicated that, 

as a general matter, where Medicaid learns of a liable third 

party after a claim is paid, or where retroactive benefits 

become available after a claim is paid, State Medicaid agencies 

"must seek recovery from that third party." The letter went on 

to explain, however, that where the liable third party is 

Medicare, neither the Federal statutory scheme nor Federal 

regulations prohibit a State Medicaid agency from recovering its 

payment directly from the provider. The defendant promptly 

filed a petition for rehearing with this court in May 2003, 

citing to the April 2003 letter from CMS. The petition was 

denied without further comment.

CMS sent a letter dated December 30, 2003, to MassHealth in 

response to questions that MassHealth had posed to the agency. 

The letter explained CMS's position that the statute does 

require the State to seek recovery from the liable third party, 

but that where the liable third party is Medicare "there is no 

statutory authority under Medicare to allow a [S]tate to seek 

recovery and be paid directly from Medicare." In such 

instances, CMS wrote, "the [S]tate may timely request the 

provider to submit a bill timely to Medicare."

MassHealth filed an emergency motion to modify the 

declaratory judgment, in light of the April 2003 and December 

2003 letters from CMS, arguing that they constituted changed 
15

circumstances warranting a modification of the declaratory 

judgment, pursuant to Mass. R. Civ. P. 60 (b) (5), 365 Mass. 828 

(1974).6 The Superior Court judge denied the motion, concluding

that none of the arguments advanced by the defendant 

"establishes to this [c]ourt's satisfaction that there is no 

possible way for [MassHealth] to recover from Medicare." The 

judge also concluded that MassHealth's proposed modification to 

the declaratory judgment was not suitably tailored to the 

changed circumstance, because it "does not resolve the problem,"

but simply shifts the administrative costs from MassHealth onto 

the providers.

In July 2004, a declaratory judgment was entered in the 

Superior Court after rescript which provided in relevant part:

"It is further DECLARED that [MassHealth] lacks the 

authority to implement 130 Code Mass. Regs. § 450.316(E)

[now renumbered § 450.316(F)] to the extent that the 

regulation, by requiring hospitals to refund Medicaid 

payments to [MassHealth] after the hospitals have complied 

 

6 Rule 60 provides in relevant part:

"On motion and upon such terms as are just, the court may 

relieve a party or his legal representative from a final 

judgment, order, or proceeding for the following reasons: 

. . . (5) the judgment has been satisfied, released, or 

discharged, or a prior judgment upon which it is based has 

been reversed or otherwise vacated, or it is no longer 

equitable that the judgment should have prospective 

application . . . . The motion shall be made within a 

reasonable time . . . . A motion under this subdivision 

(b) does not affect the finality of a judgment or suspend 

its operation."

Mass. R. Civ. P. 60 (b), 365 Mass. 828 (1974).
16

with [MassHealth]'s due diligence regulation (130 Code 

Mass. Regs. § 450.316) and received payment for their 

services from [MassHealth] and [MassHealth] subsequently 

learns that a third-party insurer (including Medicare) is 

responsible for payment for all or part of the hospital's 

services, is inconsistent with the Supreme Judicial Court's 

interpretation of 42 U.S.C. § 1396a(a)(25)(B)."

iii. First Circuit decision. Subsequent to these 

proceedings, MassHealth attempted to recover reimbursements for 

retroactive dual eligibles directly from Medicare. See 

Sebelius, 638 F.3d at 25. CMS refused to reimburse MassHealth,

however, maintaining its position that MassHealth must seek such 

reimbursements from providers, not Medicare. Id. The 

Commonwealth brought suit in Federal court. See id. A judge in 

the Federal District Court for the District of Massachusetts

ruled that the Medicare statute prohibited MassHealth from 

recovering reimbursements directly from CMS. Id.

On appeal, the First Circuit affirmed the District Court's 

ruling. In so doing, it emphasized that the Medicare statute 

required that a Medicare "payment for services furnished an 

individual may be made only to providers of services." Id. at 

31, quoting 42 U.S.C. § 1395f(a). Although recognizing that the 

statute was not explicit on "whether the Commonwealth, which is 

not a provider, may recover reimbursement directly from Medicare 

in cases of retroactive dual eligibility," the First Circuit 

concluded that "[i]n this statutory context, it is most natural 

to read reimbursement as a particular type of payment." 
17

Sebelius, 638 F.3d at 31, 32. As "[t]he Medicare statute 

equates reimbursement and payment and does not allow nonproviders to receive payments from Medicare," the Commonwealth 

could not recover directly from Medicare. Id. at 31. The First 

Circuit further noted that the Commonwealth "is not included 

among any of the express allowances in the Medicare statute for 

non-providers to receive payments." Id.

The First Circuit also provided an "alternative holding"

that CMS's interpretation of its regulations as prohibiting 

direct reimbursement to State Medicaid agencies was entitled to 

deference. Sebelius, 638 F.3d at 33. In this regard, the First 

Circuit had a much more expansive record of the agency's

interpretation than was presented to this court, including the 

letter dated December 2003, which stated that "there is no 

statutory authority under Medicare to allow a State to seek 

recovery and be paid directly from Medicare," as well as a

letter from CMS to the Commonwealth dated June 2005 that 

reiterated that "there is no statutory authority for reimbursing 

Medicaid directly for services rendered to Medicare 

beneficiaries." Id. at 34.

Given the statutory language and CMS's regulatory guidance, 

the First Circuit determined that the Commonwealth could not 

seek direct reimbursement from Medicare but would instead need

to utilize another means of recovery. The First Circuit 
18

determined that the Commonwealth could nonetheless recover 

reimbursements "by asking providers to return [S]tate Medicaid 

funds," as the Federal statutory scheme did not preclude 

MassHealth from doing so. Id. at 32. This procedure, known as 

demand billing, was apparently raised by CMS as a viable 

alternative to direct reimbursement from Medicare. See id. at 

34. The First Circuit also considered "CMS bound by its 

representation as to the mechanisms available for the 

Commonwealth to seek and recover reimbursement." Id. at 36.

In the wake of the First Circuit's decision, MassHealth 

began using demand billing to address the issue of retroactive 

dual eligibles. As discussed, under this method of recovery, 

MassHealth requests that the provider submit a bill to Medicare 

and repay MassHealth once Medicare has paid the provider. 

According to MassHealth, this solution works, but only to a 

point. Because Medicare requires that providers submit claims 

within twelve months of the date of service, MassHealth asserts

that it cannot rely on demand billing where a Medicaid recipient 

becomes retroactively eligible for Medicare more than twelve

months after the day of service, unless the State first voids 

the Medicaid payment.

iv. Amendment of Medicare regulation. A few months before

the First Circuit issued its decision, a Federal Medicare

regulation pertaining to the deadline for filing certain
19

Medicare claims was amended, effective January 1, 2011.7 The

amendment followed the passage of the Affordable Care Act, which 

had altered Medicare filing deadlines.8 See Pub. L. No. 111-148, 

 

7 The regulation applies to both services furnished under 

Part A of Medicare as well as services furnished under Part B, 

where applicable. See 75 Fed. Reg. 73170, 73450 (Nov. 29, 

2010). See Briggs v. Commonwealth, 429 Mass. 241, 243 (1999) 

("Medicare Part A essentially covers hospital, post-hospital, 

and other inpatient services, and coverage is automatic. . . .

Medicare Part B is a supplemental, voluntary insurance program 

providing coverage for physician and outpatient services" 

[citation and footnote omitted]).

8 In their entirety, the two filing exceptions under 42 

C.F.R. § 424.44(b)(2)-(b)(3) (2019) provide:

"(2) The time for filing a claim will be extended if CMS or 

one of its contractors determines that a failure to meet 

the deadline in paragraph (a) of this section is caused by 

all of the following conditions:

"(i) At the time the service was furnished the beneficiary 

was not entitled to Medicare.

"(ii) The beneficiary subsequently received notification of 

Medicare entitlement effective retroactively to or before 

the date of the furnished service.

"(3) The time for filing a claim will be extended if CMS or 

one of its contractors determines that a failure to meet 

the deadline in paragraph (a) of this section is caused by 

all of the following conditions:

"(i) At the time the service was furnished the beneficiary 

was not entitled to Medicare.

"(ii) The beneficiary subsequently received notification of 

Medicare entitlement effective retroactively to or before 

the date of the furnished service.
20

§ 6404(a)(1), 124 Stat. 767 (2010). The regulatory amendments 

allowed for new exceptions to the Medicare filing deadline in 

light of these statutory changes.

The first exception provides that the filing deadline will 

be extended if the failure to meet the deadline is due to the 

fact that: "(i) [a]t the time the service was furnished the 

beneficiary was not entitled to Medicare;" and "(ii) [t]he 

beneficiary subsequently received notification of Medicare 

entitlement effective retroactively to or before the date of the 

furnished service." 42 C.F.R. § 424.44(b)(2). In such 

 

"(iii) A State Medicaid agency recovered the Medicaid 

payment for the furnished service from a provider or 

supplier 6 months or more after the service was furnished."

The extensions afforded to each exception are as follows:

"(ii) If CMS or one of its contractors determines that both 

of the conditions are met in paragraph (b)(2) of this 

section but that all of the conditions in paragraph (b)(3) 

are not satisfied, the time to file a claim will be 

extended through the last day of the sixth calendar month 

following the month in which either the beneficiary or the 

provider or supplier received notification of Medicare 

entitlement effective retroactively to or before the date 

of the furnished service.

"(iii) If CMS or one of its contractors determines that all 

of the conditions are met in paragraph (b)(3) of this 

section, the time to file a claim will be extended through 

the last day of the sixth calendar month following the 

month in which the State Medicaid agency recovered the 

Medicaid payment for the furnished service from the 

provider or supplier."

42 C.F.R. § 424.44(b)(5).
21

instances, the filing deadline will be extended six months from 

the date that the beneficiary or provider is notified of 

retroactive Medicare entitlement. 42 C.F.R. § 424.44(b)(5)(ii).

The second exception provides that the filing deadline will 

be extended if the failure to meet the deadline is due to the 

above two conditions, along with a third condition: that the 

"State Medicaid agency recovered the Medicaid payment for the 

furnished service from a provider or supplier [six] months or 

more after the service was furnished" (emphasis added). 42 

C.F.R. § 424.44(b)(3). In such instances, the filing deadline 

will be extended six months from the date "in which the State 

Medicaid agency recovered the Medicaid payment for the furnished 

service from the provider or supplier" (emphasis added). 42 

C.F.R. § 424.44(b)(5)(iii). The reference to providers in 42 

C.F.R. § 424.44(b)(3) explicitly contemplates that State 

Medicaid agencies will recover a payment from a health care 

provider where an individual becomes retroactively dual eligible 

for Medicaid and Medicare. This particular exception to the 

filing deadline is designed to allow for providers to recover 

from Medicare in such instances, where their claim would 

otherwise be barred by the passage of time. The Commonwealth 

contends that our ruling in Atlanticare I, which requires 

MassHealth to seek reimbursement directly from Medicare, not the 

provider, precludes the use of this procedure.
22

v. Proceedings leading to the instant appeal. On 

September 28, 2018, the defendant filed a motion for relief from 

the judgment in light of the First Circuit's decision and the 

regulatory amendment to 42 C.F.R. § 424.44. The motion was 

denied. The defendant appealed, and we granted the defendant's 

application for direct appellate review.

MassHealth seeks a modification of the declaratory judgment 

such that it may seek reimbursements from providers, rather than 

continuing to seek reimbursements directly from Medicare and 

other liable third parties.9 The agency estimates that it is 

unable to recover approximately $5.3 million per year in claims 

that should have been paid out by Medicare once a recipient's 

retroactive dual eligibility became known. MassHealth also has 

indicated that it is unaware of any State that faces the same 

prohibition on recovering Medicaid payments directly from 

providers.10

 

9 Although MassHealth requests the ability to seek 

reimbursement from providers as a general matter, MassHealth 

contends that such a modification of the judgment would have 

"little, if any" impact on providers where the third-party 

insurer is not Medicare. This is because MassHealth already has 

a direct right of recovery against non-Medicare insurers under 

G. L. c. 118E, § 22, and MassHealth contends that it has a 

general practice of seeking payment directly from the private 

insurers themselves, rather than from providers.

10 CMS apparently represented to the First Circuit that the 

"standard procedure across the country" for recovering 

reimbursements from Medicare is to employ demand billing. 
23

The agency contends that, in light of the First Circuit's 

ruling, it has been placed in an untenable position of 

attempting to follow two contradictory holdings: this court's 

ruling in Atlanticare I that MassHealth must seek reimbursements 

directly from liable third parties, and the First Circuit's 

ruling that MassHealth is prohibited from seeking reimbursements 

directly from Medicare.

2. Discussion. a. Standard of review. The defendant 

seeks a modification of the declaratory judgment pursuant to 

Mass. R. Civ. P. 60 (b) (5). Rule 60 (b) (5) allows the court 

to relieve a party from a final judgment where "a prior judgment 

upon which it is based has been reversed or otherwise vacated, 

or it is no longer equitable that the judgment should have 

 

Sebelius, 638 F.3d at 36 n.13. By contrast, MassHealth asserts 

that it is aware of nine other States that seek reimbursement 

directly from the provider where Medicare is the retroactively 

liable third party: Maine, Vermont, California, Ohio, 

Pennsylvania, Alabama, Wyoming, Michigan, and Minnesota. 

MassHealth has further indicated that it is unaware of any State 

that requires its State Medicaid agency to seek reimbursements 

from Medicare directly.

It would appear, however, that a few States do in fact 

require their State Medicaid agency to pursue Medicare directly. 

See Tex. Government Code § 531.0392 (b) (2020) ("The commission

shall obtain Medicaid reimbursement from each fiscal 

intermediary who makes a payment to a service provider on behalf 

of the Medicare program"). See also South Dakota Admin. Rules

§ 22:02:02:10 (2020) ("[A] county must pursue the availability 

of a third-party payment source . . . such as Medicare"). 

Exactly how that is done is not clear from the record or the 

regulatory language.
24

prospective application." As the 1973 Reporter's Notes 

indicate, Rule 60 (b) (5) is designed to allow "relief from a 

judgment which was valid and equitable when rendered but whose 

prospective application has, because of changed conditions, 

become inequitable." Reporters' Notes (1973) to Rule 60, Mass. 

Ann. Laws Court Rules, Rules of Civil Procedure (LexisNexis 

2019). The rule "derives from the traditional power of a court 

of equity to modify its decree in light of changed 

circumstances." Mitchell v. Mitchell, 62 Mass. App. Ct. 769, 

778 (2005). The moving party thus bears the burden of 

demonstrating a "significant change in circumstances warranting 

revision" of the judgment (quotations and citation omitted). 

Great Woods, Inc. v. Clemmey, 89 Mass. App. Ct. 788, 795 (2016). 

See MacDonald v. Caruso, 467 Mass. 382, 388-389 (2014). One 

example of such changed circumstances would be a "later change 

in the law[,] such as when a statute is amended." Clean Harbors 

of Braintree, Inc. v. Board of Health of Braintree, 415 Mass. 

876, 884–885 (1993). See Horne v. Flores, 557 U.S. 433, 447-448 

(2009) (under Federal analog, changed circumstances, such as 

"changes in governing law or its interpretation by the courts,"

may "warrant reexamination of the original judgment").

The resolution of motions for relief from judgment "rests 

in the discretion of the trial judge." Wojcicki v. Caragher, 

447 Mass. 200, 209 (2006). Accordingly, the "denial of a motion 
25

under Rule 60 (b) will be set aside only on a clear showing of 

an abuse of discretion." Murphy v. Administrator of the Div. of 

Personnel Admin., 377 Mass. 217, 227 (1979).

b. Timing of motion. As a threshold matter, the 

plaintiffs contend that the defendant's motion is untimely. The 

plaintiffs note that both changed circumstances cited by 

MassHealth -- the amendment to 42 C.F.R. § 424.44 and the First 

Circuit's ruling -- occurred in 2011, seven years before 

MassHealth sought modification of the judgment. The motion 

judge observed that MassHealth "has offered no reason for having 

waited seven plus years to bring the instant [m]otion," but did 

not go so far as to conclude that the motion was untimely.

A motion under Mass. R. Civ. P. 60 (b) (4)-(6) must be made 

"within a reasonable time," which is to be determined in light 

of all of the circumstances of the case. Such determinations, 

however, are "addressed solely to the judge's discretion." 

Chavoor v. Lewis, 383 Mass. 801, 805 n.4 (1981). "In 

determining whether a motion was filed within a reasonable time, 

a judge may consider the reasons for delay; the ability of the 

movant to learn of the grounds earlier; prejudice to the 

parties, if any; and the important interest of finality." Owens

v. Mukendi, 448 Mass. 66, 74 (2006).

There is no set formula for determining what constitutes a 

"reasonable time" for the purposes of Mass. R. Civ. P. 60 (b)
26

(4)-(6). It is indisputable that a significant period of time 

elapsed between the First Circuit's ruling and the filing of the 

Rule 60 motion in this case -- indeed a much longer span of time

than we have deemed unreasonable in other cases. See Owens, 448 

Mass. at 76-77 and cases cited (delays of two or three years 

found to be unreasonable). We consider this delay troubling to 

say the least, particularly given that MassHealth's

justification for its failure to promptly seek modification of 

the judgment is somewhat murky. At oral arguments, MassHealth 

suggested that the passage of the Affordable Care Act in 2010

prompted a sea change in health care that required MassHealth to 

focus on more fundamental Medicaid issues, such as changes to 

eligibility requirements, and that this contributed to the

lengthy delay in addressing the reimbursement issue. We 

understand that the delay also may be due in part to 

MassHealth's concern that it would be asking this court to 

reconsider one of its own decisions -- indeed a decision that 

was unanimous, and in which the court summarily denied a 

petition for reconsideration, even after further regulatory 

guidance from CMS.

More importantly, however, we recognize that clear 

resolution of this issue is critical, given the substantial 

amount of public funds at stake and the need to avoid 

conflicting interpretations by this court and the First Circuit
27

that would lead to confusion and administrative deadlock. Cf. 

United States v. 119.67 Acres of Land, More or Less, Situated in 

Plaquemines Parish, State of La., 663 F.2d 1328, 1331 (5th Cir. 

1981) (motion filed under Fed. R. Civ. P. 60(b)(6) should not be 

dismissed as untimely "[g]iven the significant governmental and 

public rights involved in this controversy"). Moreover, the 

risk of prejudice to the plaintiffs of delay is diminished by 

the fact that MassHealth is only seeking a prospective 

modification of the declaratory judgment. In light of the 

important interests at stake, the need for clarity, and the 

diminished risk of prejudice to the plaintiffs, we conclude that 

the motion is not untimely in the highly unusual circumstances 

of this case.

c. Existence of changed circumstances. The judge below 

found that MassHealth had failed to demonstrate changed

circumstances warranting modification of the declaratory 

judgment. The judge observed that the relevant statutory 

provision at issue in Atlanticare I, 42 U.S.C. 

§ 1396a(a)(25)(B), had not been amended since this court's 

ruling. Additionally, the motion judge noted that this court 

was at least aware of the possibility that MassHealth might be 

unable to recover reimbursements directly from Medicare, but 

issued the Atlanticare I decision nonetheless. Finally, the 

motion judge concluded that the reference to provider-based 
28

reimbursement in 42 C.F.R. § 424.44 was too vague to constitute 

explicit recognition of a State Medicaid's agency ability to 

pursue reimbursement from a provider where the third-party 

insurer is Medicare.

To determine whether MassHealth has demonstrated a change 

in circumstances warranting a modification of the declaratory 

judgment, we first look to the circumstances as they existed at 

the time of our ruling in Atlanticare I. As discussed, in 

Atlanticare I, 439 Mass. at 11, this court rejected MassHealth's 

argument that it was not possible to seek reimbursements 

directly from Medicare. A number of reasons motivated this 

conclusion. First, we observed that neither party had 

identified a Federal regulation specifically applicable to 

instances "in which Medicare has acknowledged a mistake in 

denying liability for a claim or has agreed to pay a claim 

retroactively." Id. Second, we identified two Federal cases, 

New York State Dep't of Social Servs. v. Bowen, 846 F.2d 129 (2d 

Cir. 1988), and Michigan Dep't of Social Servs. v. Shalala, 859 

F. Supp. 1113 (W.D. Mich. 1994), that "rejected the rationale 

underlying [MassHealth's] position." Atlanticare I, supra at 

11-12. At the same time, MassHealth had "cited no case that 

supports the proposition that it cannot pursue reimbursement 

from Medicare in the circumstances of this case." Id. at 13. 

Third, we stated that while the HCFA had issued a letter in 1991 
29

reflecting a "general position" that State Medicaid agencies 

could not recover from Medicare, we considered it "of no 

consequence that HCFA has not yet adopted the reasoning of 

another court to the contrary." Id. Fourth, we observed that 

"nothing in the record . . . suggest[s] that [MassHealth] has 

ever attempted to recover reimbursement from Medicare, or that 

it has been rebuffed in any attempts to do so." Id. And 

finally, both parties had conceded at oral arguments that "it 

might be possible for [MassHealth] to recover from Medicare." 

Id. at 11 n.14.

Although our reasoning was understandable at the time, 

postjudgment legal developments have altered the basis for each 

of the rationales cited. First, while the parties were unable 

to identify a Federal regulation that specifically addressed 

retroactive Medicare liability in the context of retroactive 

dual eligibles, the amended version of 42 C.F.R. § 424.44 now 

does so, albeit obliquely.11 While § 424.44 pertains to the 

filing deadline for Medicare claims, rather than the ability to 

pay out funds to State Medicaid agencies, it explicitly 

 

11 The oblique nature of the reference is unsurprising, 

given that Medicare, much like Medicaid, is an incredibly 

complicated statutory scheme. See Schweiker v. Gray Panthers, 

453 U.S. 34, 43 (1981). The law that established both programs 

is known for its "Byzantine construction," id., which makes it 

"almost unintelligible to the uninitiated." Id., quoting 

Friedman v. Berger, 547 F.2d 724, 727 n.7 (2d Cir. 1976), cert. 

denied, 430 U.S. 984 (1977).
30

contemplates that State Medicaid agencies will seek

reimbursement from providers, and providers will seek payment 

from Medicare. See Tarin v. Commissioner of the Div. of Med. 

Assistance, 424 Mass. 743, 751 (1997) (Federal Medicaid 

regulations entitled to substantial deference). CMS's Medicare 

claims processing manual, dated January 21, 2011, similarly 

makes reference to a State Medicaid agency "recoup[ing] the 

money it paid the provider or supplier." The April 2003 letter 

issued by CMS less than a month after our holding in Atlanticare 

I further reiterates that neither the Federal statutory scheme 

nor Federal regulations prohibit a State Medicaid agency from 

recovering its payment directly from the provider where the 

liable third party is Medicare. Even more explicit, however, is 

CMS's December 2003 letter to MassHealth, which states that 

"there is no statutory authority under Medicare to allow a 

[S]tate to seek recovery and be paid directly from Medicare." 

In such instances, CMS stated, "the [S]tate may timely request 

the provider to submit a bill timely to Medicare." A June 2005 

letter further confirmed that "there is no statutory authority 

for reimbursing Medicaid directly for services rendered to 

Medicare beneficiaries." Sebelius, 638 F.3d at 34.

As to the two cases we cited in support of MassHealth's 

ability to directly seek reimbursement from Medicare, subsequent 

developments in the case law constitute a clear change in 
31

circumstances from Atlanticare I. In New York State Dep't of 

Social Servs., 846 F.2d at 130, upon which this court relied in 

Atlanticare I, the United States Court of Appeals for the Second 

Circuit held that the State Medicaid agency had standing to 

appeal from the denial of nursing home patients' Medicare 

claims. We cited that case as suggestive of a State Medicaid 

agency's authority to seek reimbursement directly from Medicare. 

Atlanticare I, 439 Mass. at 11. More recently, however, in the 

context of Medicare claims for home health care services, the 

Second Circuit deferred to CMS's position that such claims must 

be filed by providers, not Medicare beneficiaries or State 

Medicaid agencies. Leavitt, 428 F.3d at 146. See also

Charlotte-Mecklenburg Hosp. Auth. v. North Carolina Dep't of 

Health & Human Servs., 201 N.C. App. 70, 77 (2009) ("only 

providers of services can submit Medicare reimbursement claims 

on behalf of Medicaid recipients later determined to be eligible 

for Medicare"). In so holding, the Second Circuit concluded

that State Medicaid agencies could obtain reimbursements from 

providers using demand billing. See Leavitt, supra at 149.

Of course, the most obvious, significant change in the case 

law since Atlanticare I is that the First Circuit has now

definitively stated that MassHealth may not seek reimbursement 

directly from Medicare. Notably, although CMS's predecessor, 

HCFA, was not a party to Atlanticare I and did not submit an 
32

amicus brief to the court, CMS was a party to the First Circuit 

litigation and was able to outline the agency's position

unequivocally. It is clear from the Sebelius litigation that 

CMS takes the position that State Medicaid agencies may not 

pursue reimbursement directly from Medicare.

Finally, the record before us is now clear that MassHealth 

has attempted to recover from Medicare directly and has been 

unable to do so. Initially, this was only because CMS took a 

stance that Medicare could not pay out funds to MassHealth, but 

CMS's view has now also been endorsed by the First Circuit. In 

sum, post-Atlanticare I changes to the Federal law have made 

clear what remained ambiguous at the time of our prior decision 

-- that it is not possible for MassHealth to recover from 

Medicare directly.

Despite these significant developments in the years since 

Atlanticare I, the plaintiffs reiterate that the language of 42 

U.S.C. § 1396a(a)(25)(B) has not changed, and the Federal 

Medicaid regulations in place at the time were adequate to 

indicate that direct recovery was not going to be possible. For 

the reasons discussed supra, however, we consider the law to 

have changed significantly, or at least to have been 

significantly clarified, since our original decision.

The plaintiffs also rely on our previous discussion of the 

cost-benefit analysis requirement in Atlanticare I, arguing that
33

this requirement would serve little purpose if State Medicaid 

agencies were allowed to seek reimbursement from providers, 

rather than from liable third parties. The statute premises 

reimbursement on a finding that "the amount of reimbursement the 

State can reasonably expect to recover exceeds the costs of such 

recovery." 42 U.S.C. § 1396a(a)(25)(B). As we observed in 

passing in Atlanticare I, if a State Medicaid agency is able to 

seek reimbursement from a provider, "realistically, there are 

few instances in which the cost of such recovery would exceed 

the amount of the recovery." Atlanticare I, 439 Mass. at 7. 

Thus, we reasoned, if Congress intended to allow State Medicaid 

agencies to seek reimbursement from providers, this provision 

would be rendered "largely superfluous," as the cost-benefit 

analysis would reliably weigh in favor of seeking reimbursement. 

Id.

Although the regulations are less than clear about which 

party's costs need to be considered, we recognize that 

MassHealth would be unlikely to consider reimbursement not cost

effective if it could simply shift the costs of recovery to the 

providers. With that consideration in mind, however, and after 

reviewing the regulations, we conclude that the costs to

providers may and should be given consideration.

The regulations indicate that seeking reimbursement is 

considered cost effective where "the amount [the State Medicaid 
34

agency] reasonably expects to recover will be greater than the 

cost of recovery." 42 C.F.R. § 433.139(f)(1). The regulations 

do not, however, define the scope of what fairly may be 

considered in calculating the "cost of recovery." Further, 

where a State requests a waiver of the sixty-day deadline for 

seeking reimbursement due to lack of cost effectiveness, see 

note 4, supra, the regulation explains that providing adequate 

documentation of such would include "costs associated with 

billing, claims recovery data, and a State analysis documenting 

a cost-effective alternative." 42 C.F.R. § 433.139(e)(1)(ii). 

Albeit that these examples are in reference to requesting a 

waiver of the sixty-day deadline, we find these examples also to

be illustrative of the kinds of information that may be 

considered in conducting a cost-benefit analysis for the purpose 

of seeking reimbursement; and two of the three examples provided 

easily could pertain to the costs associated with providers. 

Thus, we conclude that when MassHealth seeks to recover payments 

made to providers and require them to seek reimbursement from 

Medicare, any associated costs to providers of doing so may be 

properly considered.

That being said, this factor does not change our analysis 

in this case. In the original administrative proceedings from 

which this case originates, testimony was heard as to the nature 

of the burden placed on providers who had been tasked with
35

chasing after third parties for payment. No evidence has been 

included in the record presently before this court as to the

administrative cost that would be placed on providers of 

pursuing Medicare, or the extent to which such costs would be 

offset by the increased compensation rate from Medicare.

Moreover, it is unclear to what extent the costs of recovery may 

be substantially alleviated by the use of computerized 

recordkeeping and data storage, something that is much more 

widespread now than at the time of our original decision.

In sum, given subsequent developments in the Federal law –-

primarily, the additional administrative guidance from CMS, the

First Circuit's ruling in Sebelius, and the amendments to 42 

C.F.R. § 424.44 -- we conclude that it was an abuse of 

discretion to find that MassHealth had failed to show a change 

in circumstances since Atlanticare I. Medicaid is designed to

be a payer of last resort, and it would be "illogical to suggest 

. . . that the statutory and regulatory scheme of Medicare 

abrogates" this principle. New York Dep't of Social Servs., 846 

F.2d at 134. Because MassHealth cannot recover reimbursements 

directly from Medicare, the best way to harmonize these 

statutory schemes is to conclude that while State Medicaid 

agencies are generally expected to seek reimbursements directly 

from liable third parties, the State agency may instead seek 

reimbursement from the provider if the liable third party is 
36

Medicare. Cf. Leavitt, 428 F.3d at 146 (deference to agency 

interpretation particularly warranted where it provides 

"reasonable resolution of an apparent conflict" between two 

Federal regulations).

d. Modification of judgment. Separate and apart from the 

issue of changed circumstances, the motion judge also concluded

that the agency's proposed modification of the judgment was not 

"suitably tailored" to any such change in circumstances.12 The 

judge observed that while MassHealth relied on Medicare-related

developments to justify its request for modification, MassHealth

nonetheless sought a wholesale reversal of Atlanticare I as it 

pertained to all liable third parties.

We agree that MassHealth's proposed modification sweeps too 

broadly. In its motion, MassHealth requests modification of the 

judgment "so that MassHealth may resume enforcing a regulation 

(now codified at 130 [Code Mass. Regs.] § 450.316(F)) in order 

 

12 The motion judge's reference to "suitable tailoring" 

derives from jurisprudence concerning the Federal analog to 

Mass. R. Civ. P. 60. See Rufo v. Inmates of Suffolk County 

Jail, 502 U.S. 367, 391 (1992). The parties adopt this standard 

in their briefing as well. Under Fed. R. Civ. P. 60, once a 

moving party has satisfied its burden of demonstrating changed 

circumstances, the court must "determine whether the proposed 

modification is suitably tailored to the changed circumstance." 

Rufo, supra at 391. We have cited to Rufo in the context of 

discussing Mass. R. Civ. P. 60, but we have never explicitly 

adopted a "suitable tailoring" requirement. See MacDonald v. 

Caruso, 467 Mass. 382, 388 (2014). For the purposes of this 

decision, we assume, without deciding, that suitable tailoring 

is required under our rule as well.
37

to pursue reimbursement from a previously-paid provider when a 

third party entity becomes retroactively liable." Yet 

enforcement of the regulation as written would apply to all 

post-payment third-party reimbursements, not just those sought 

from Medicare. As discussed supra, the changed circumstances 

that warrant a modification of the judgment pertain specifically 

to retroactive Medicare liability, not all third-party 

liability. MassHealth has further failed to provide a rationale 

for modifying the judgment beyond its applicability to Medicare 

reimbursements. Indeed, in its reply brief, MassHealth 

indicates that this is a nonissue for other third parties

because MassHealth already has a direct right of recovery 

against non-Medicare insurers under G. L. c. 118E, § 22, and 

MassHealth has a general practice of seeking payment of 

liabilities due to third-party insurance coverage directly from 

the insurers themselves, rather than from providers.

To determine the appropriate scope of modification of the 

judgment, we therefore examine the practical impact of the 

changed circumstances on the administrability of the final 

judgment. In the wake of the First Circuit's ruling, MassHealth 

cannot recover reimbursements directly from Medicare for

services provided to retroactive dual eligibles. MassHealth 

currently utilizes demand billing instead –- a process by which 

MassHealth requests that the provider submit a bill to Medicare 
38

and repay MassHealth once Medicare has paid the provider. 

MassHealth asserts that this solution does not permit MassHealth 

to pursue reimbursements where retroactive Medicare eligibility 

is discovered more than twelve months after the service was 

performed, in light of Medicare's twelve-month filing deadline. 

MassHealth notes that the Medicare filing deadline exception

outlined in 42 C.F.R. § 424.44(b)(3), which is designed to 

address reimbursements to State Medicaid agencies, is contingent 

upon the State first voiding the Medicaid payment.13

 

13 Neither party addresses the Medicare filing deadline 

exception contained within 42 C.F.R. § 424.44(b)(2). This 

exception is not contingent upon the voiding of the Medicaid 

payment, unlike the exception provided by 42 C.F.R. 

§ 424.44(b)(3), and triggers a six-month extension of the filing 

deadline from the date that the beneficiary or provider was 

notified of Medicare entitlement. Indeed, CMS explicitly 

declined to "create an additional exception [to the regulation] 

to permit providers and suppliers to submit claims for services 

at the request of a Medicaid State Agency prior to the State 

Medicaid Agency actually recovering the payment," because CMS 

believed the exception under 42 C.F.R. § 424.44(b)(2) was 

sufficient to account for such instances. 75 Fed. Reg. 73448-

73449 (Nov. 29, 2010). Title 42 C.F.R. § 424.44(b)(2) does not, 

however, provide as favorable of a filing deadline extension as 

42 C.F.R. § 424.44(b)(3). This is because the six-month 

extension provided by 42 C.F.R. § 424.44(b)(2) commences as soon 

as the provider or beneficiary is notified of Medicare 

eligibility, while the six-month extension provided by 42 C.F.R. 

§ 424.44(b)(3) does not commence until MassHealth recovers the 

payment.

We also note that neither party addressed the relevance of 

a Federal regulatory provision that appears to have contemplated 

that State Medicaid agencies would pursue a waiver of the sixtyday deadline for seeking reimbursement where the liable third 

party is Medicare:
39

We conclude that changed circumstances justify the 

elimination of the restrictions imposed by Atlanticare I that

declared that MassHealth does not have the authority to require 

that health care providers return payment to MassHealth in the 

event that Medicare is later identified as a liable third party.

Those restrictions were imposed based on the incorrect

assumption that MassHealth could and should pursue reimbursement 

directly from Medicare. Given that MassHealth cannot pursue 

Medicare directly, and the permissible length of time for 

seeking reimbursements may be conditioned on whether MassHealth 

sought and received reimbursement from providers, see 42 C.F.R. 

§ 433.139(d)(2), we conclude that it is appropriate to modify 

the declaratory judgment to allow MassHealth to require

reimbursement from providers where a health care service was 

rendered to an individual who retroactively became eligible for 

Medicare.

As mentioned previously, the original declaratory judgment 

entered in this case provided as follows:

 

"An agency requesting a waiver of the requirements 

specifically concerning either the [sixty]–day limit in 

paragraph (d)(1) or (d)(2) of this section must submit 

documentation of written agreement between the agency and 

the third party, including Medicare fiscal intermediaries 

and carriers, that extension of the billing requirement is 

agreeable to all parties."

42 C.F.R. § 433.139(e)(4).
40

"It is further DECLARED that [MassHealth] lacks the 

authority to implement 130 Code Mass. Regs. § 450.316(E)

[now renumbered § 450.316(F)] to the extent that the 

regulation, by requiring hospitals to refund Medicaid 

payments to [MassHealth] after the hospitals have complied 

with [MassHealth]'s due diligence regulation (130 Code 

Mass. Regs. § 450.316) and received payment for their 

services from [MassHealth] and [MassHealth] subsequently 

learns that a third-party insurer (including Medicare) is 

responsible for payment for all or part of the hospital's 

services, is inconsistent with the Supreme Judicial Court's 

interpretation of 42 U.S.C. § 1396a(a)(25)(B)."

The declaratory judgment is to be modified so as to excise the 

parenthetical "(including Medicare)" and to append the following 

statement to the end of the declaration: "Notwithstanding the 

above, MassHealth retains the authority to implement 130 Code 

Mass. Regs. § 450.316(E) [now renumbered § 450.316(F)] if the 

third-party insurer is identified as Medicare. In accordance 

with § 450.316(F), MassHealth may require a provider to 

reimburse MassHealth where a health care service was rendered to 

an individual who later became retroactively eligible for 

Medicare. The provider must then bill Medicare before 

resubmitting a claim to MassHealth." This modification shall be 

prospective only, applicable to reimbursements sought for

services performed subsequent to the date of this decision.

3. Conclusion. For the foregoing reasons, we conclude 

that changed circumstances require modification of the 

declaratory judgment entered pursuant to our holding in 

Atlanticare I. Accordingly, we order that this case be remanded 
41

to the Superior Court for modification of the judgment in 

accordance with this opinion.

So ordered.