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Revised April 29, 2013

Spenddown Codes and Examples

Purpose: This section provides additional clarification regarding ACES coding for medical expense types.







  • Medicare premiums under Part A, Part B, Part C or Part D. 
  • Co-payments including Part D prescription copayments (not covered by the Department).
  • Coinsurance charges not covered under the QMB Medicare Savings program.
  • Medicare deductibles.


Allow premiums that the client is or has been responsible to pay.  If S03, S05 or S06 is being approved to cover Part B premiums, allow the first two months premiums in the current base period.  Allow any premiums paid by the client within the 3 month retroactive period if an MSP is not approved to cover this period.  (S05 or S06 can and should be approved for the retroactive period if requested – remember to notify the HRSA buy-in unit that you need retro coverage for Part B premiums).  Otherwise allow premiums as the expense is incurred.


Medicare Part D pays for prescription drugs for Medicare clients.  Clients are charged a Part D co-payment which varies depending on the drug and the Part D plan.  These charges are allowed towards spenddown when the client is responsible to pay for it.  Medicaid only covers prescription drug costs for Medicare clients if the drug is not covered by Medicare under any Part D plan and it is covered by Medicaid. 


Coinsurance charges are generally 20% of the Medicare allowed charge.  This is all we can allow towards spenddown if the client has Medicare and ONLY if the client is not also eligible for S03 coverage. 


For example:  Dr Jones bill is $425.  The Medicare allowed amount is $370 for this charge.  Medicare pays 80% or $296 towards the bill and the client is legally obligated for the 20% coinsurance amount of $74.   The Doctor must write off $55 (the difference between $425 and the $370 that Medicare allowed) and cannot bill the client for this amount.  $74 is what can be used towards spenddown.


Medicare charges a deductible for Part A inpatient hospital insurance and a Part B deductible.  The amounts are listed on the Medical income and resource standards chart.




  • Private health insurance co-payments.
  • Private health insurance co-insurance charges.
  • Private health insurance deductibles. 


For example:  Client has Regence Health insurance and pays $15 copayment for each doctor’s visit and has a $250 yearly deductible to meet before coverage begins.  The $15 copayment would be coded “CO” in ACES.  He brings you an insurance statement showing that he had a hospital visit in January and he is responsible for the first $250 of the bill.  This would also be coded as “CO” in ACES.


Note:  Do not code Private Health insurance premiums as ‘CO’.  Code insurance premiums on the MEDX screen to reduce the total spenddown amount.





  • Transportation to medical appointments or to pick up prescriptions
  • Items prescribed by an allowable provider but not covered by medicaid such as hearing aids.
  • Prior unpaid charges that were denied by HRSA as an uncovered expense.
  • Prescribed vitamins, supplements or over the counter medications such as pre-natal vitamins.
  • Orthodontic or chiropractic treatments
  • Laser eye surgery etc


It is not necessary to code the expenses of a non-applying spouse or other household members as ‘MU’ in order for ACES to treat their expenses as ‘uncovered’.  Code expenses for non-members the same as if the non-member were applying for coverage based upon the expense type. 




Inpatient or outpatient services provided in a hospital setting.  This includes emergency room visits, physician charges for services provided in the hospital, lab fees, x-rays etc.


Note:  Always code hospital expense with the date the client first entered the hospital.   When reviewing hospital statements, use the initial date of service and not the statement date.




Any charges that are potentially  payable by Medicaid to include:


  • Doctor’s visits
  • Physical, speech or occupational therapy
  • Specialist appointments
  • Laboratory fees or X-rays
  • Mental health services etc


See Scope of Care section of the EAZ manual for more information about services covered under the MN program.  http://www.dshs.wa.gov/manuals/eaz/sections/MedicalAssistance/ScopeOfCare.shtml







Prescription pharmacy expenses for non Medicare eligible clients.


Note:   When entering an RX expense, it is a required field to enter the name of the prescription drug. 

Enter each prescription separately – do not lump prescription drugs into one expense even if paid for together.

Ensure the client has provided a receipt showing payment and is not just providing a list of prescriptions they are waiting to fill.


DO NOT allow the following as prescription expenses:


  • A Medicare eligible client CANNOT choose to self-pay for a Medicare covered drug and then use the expense towards meeting a spenddown. 
  • A prescription drug that is not on the client’s Medicare Part D plan’s formulary cannot be allowed towards spenddown unless the client has requested an exception from their plan and has received a written denial. 
  • Prescribed items that are not pharmaceuticals.  
Modification Date: April 29, 2013