I hear this rule misquoted all of the time. In fact, this is the most misquoted rule in Medicaid today. Prior to February 2006, Medicaid contained a review or scope rule.

The rule provided if an individual applied for Medicaid, the Medicaid agency would review all of the individual’s transactions occurring during the 3-year period (and in some cases 5 year period) prior to the individual filing his or her Medicaid application.

In other words, the rules defined which transaction would be reviewed in a Medicaid application. In February 2006, the Deficit Reduction Act of 2005 changed this review period from being 3-years in some cases and 5 years in some cases, to 5 years in all cases.