Spenddown Public Programs
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Spenddown Public Programs

Revised March 25, 2011


Medical expenses which are paid with public program funds (other than Medicaid) may be used to reduce a person's spenddown. They must be verified by the agency providing the services. Health and Recovery Services Administration (HRSA) has negotiated individual agreements with the Agencies identified below to recognize them as a Public Program.  This allows DSHS clients to use expenses that have been paid on their behalf by the agency towards meeting their spenddown liability.

Public Programs

The approved public programs in Washington are:

1)    Lifelong AIDS Alliance (Evergreen Insurance Program); 

2)    The state Department of Health AIDS/HIV Early Intervention Program (360-236-3426);

3)    Kidney Centers in various communities to administer the Kidney Disease Program;

4)    The King County Mental Health Division to insure continuity of mental health services;

5)   Kitsap Mental Health Services through the Peninsula Regional Support Network (PRSN);

6)   Indian Health Service.

To qualify as a public program, the Agency guarantees that no federal funds are used to pay for these client expenses.

In 2008, HRSA amended the Kidney Disease Program (KDP) contract. KDP is no longer permitted to anticipate costs for medical expenses for their clients.  Effective April 1, 2009, all Public Programs are no longer able to anticipate costs for medical expenses. Public programs must submit verification to the Department as the expenses are incurred by the client and paid by the program.  This verification may look different for each program depending upon the expense that is being verified. 

Expenses incurred by Public Programs prior to a medicaid application

Public Programs may now pay spenddown expenses incurred by clients during the three month retroactive base period.  Most public programs work with their clients to help them apply for Medicaid and help cover their clients’ medical expenses while the Medicaid application is pending. 

This enables clients to use expenses which are paid by the public program during the retroactive base period as qualifying expenses towards meeting spenddown liability in either the retroactive base period or the current base period.

Indian Health Service

HRSA has negotiated an agreement with the tribes to recognize tribal clinics as a public program.  Tribal clinics may use Indian Health Service (IHS) funds (as funding allows) to pay for medical expenses on behalf of their spenddown clients.   The clinic must verify IHS is responsible for the cost of the medical expense before the expense can be used towards spenddown.

Public Programs - What do I need to do?

Accept verification of the expense amount submitted by the Public Program unless questionable. Allow the usual and customary charge from the provider towards the client spenddown, even if the provider has reimbursement agreements with the public program which permit them to pay less for the expense. 

The Department of Health has developed a new form to verify prescription expenses paid on behalf of their clients in the Early Intervention Program.  An example of the EIP Prescription Spenddown Receipt form and instructions is provided here.  Workers may use the expense listed minus any third party liability payments identified by the pharmacy as allowable expenses towards a client's spenddown liability.

ACES system changes in April 2009 mean that ACES no longer tracks public program expenses using the "PP" expense type.  Workers need to enter the appropriate code based on the type of expense that has been paid by the public program and the date the expense was incurred by the client.


HIV/AIDS Early Intervention program verifies they paid $150 in prescription expenses on April 3 and  $30 transportation expenses to a medical appointment on April 7.  Code each individual prescription expense as ‘RX’ (prescription expense) and code the transportation expense as ‘MU’ (Not covered by Medicaid).  ACES computes the effective date of eligibility based upon the combination of date of service and expense type entered.

Some Public Programs use their funding to purchase private health insurance on behalf of their clients. When a Public Program verifies payment of a health insurance premium on behalf of a spenddown client, redetermine eligibility under the MN program using the expense as an income deduction and not a spenddown expense. Health Insurance premiums are coded on the MEDX screen in ACES and not entered as a spenddown expense in ACES online.  Do not allow payments for Part C Medicare premiums on the MEDX screen.

In some cases this results in clients becoming eligible for Medically Needy (MN) with no spenddown liability and these cases are approved for a 12 month certification.  In other situations, the spenddown liability is reduced by the health insurance premium amount.  Ensure a new letter is generated to the client to indicate this change.  See the Premium Payment section  for more information regarding health insurance premiums. 


Modification Date: March 25, 2011