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The Social Security Act, signed into law by President Franklin Roosevelt in 1934, specifies in the statute § 1902( a)( 25) of the law "... that the State or local agency administering such plan will take all reasonable measures to ascertain the legal liability of third parties ... to pay for care and services" delivered to Medicaid beneficiaries. Essentially, it implies that Medicaid becomes the payer of last resort (PLR), a term also known as third party liability (TPL), or the coordination of benefits (COB). In other words, Medicaid pays last, and if a member holds some other insurance coverage, such as insurance from his or her employer, that insurer pays first and then Medicaid pays the remaining costs.

As much as ten percent of Medicaid members around the nation possess additional insurance other than Medicaid, which is considered TPL. Types of TPL include employee insurance, Workers' Compensation, Medicare, COBRA insurance from former employment, casualty insurance, dental insurance, eye insurance and insurance to cover pharmaceutical costs.

The Deficit Reduction Act (DRA) passed by Congress in 2005 stipulates in Section 6035 that all states are required to pass laws that force health insurance companies to give health insurance premium information involving individuals who are eligible for Medicaid assistance to the state. Specifics of the DRA include:

Health insurance providers must hand enrollment data over to Medicaid, or its agent, so customer benefits can be coordinated.

This information is to be used to determine additional health insurance coverage, so that improper payments are not made and payments made in error are recovered.

Payments are required to be made as long as the claim is submitted within three years after the medical service was provided.

Claims can not be rejected as long as the state started action on the claim within six years after the state submitted the claim.

Specifications must be defined that health insurance consists of other entities that are by statute, agreement or contract, legally responsible for paying a claim of a healthcare service; pharmacy benefit managers (PBMs); managed care organizations (MCOs); group health plans; and self-insured plans.

IDENTIFYING PRIMARY HEALTH  INSURANCE COVERAGE OF MEDICAID RECIPIENTS

Determining primary health insurance coverage of Medicaid members can be achieved by a state through one of three various methods and still allow the state to comply with TPL guidelines, under federal law. The problem is that if only one methodology is implemented by the state, savings and recovery are not at their greatest possible amount. The highest level of savings consists of processing at all three of the following points in the process by the state. Here are those processes:

Individuals registering in the program are asked about other insurance coverage.

The issue is that some applicants assume they will be ineligible from Medicaid, so this information is withheld. And, since adding Medicaid coverage might also imply an employment change in which employer insurance coverage is lost, this disclosure might be immaterial soon after the applicant's enrollment.

The state checks for TPL coverage in order to avoid extra cost.

Medicaid eligibility names are cross-referenced with names enrolled in state and national health insurance companies to detect primary insurers prior to the submission of Medicaid claims. But, this practice becomes impossible unless state policies call for the timely delivery of insurance data when a state also requires the prompt payment of insurance claims. Plus, several medical services, like those dealing with a pregnancy, must be paid at the time that they are claimed, according to federal law. That means that pregnancy claims have to be paid immediately before recovery can be made from responsible insurers.

Improper payments are recovered.

The third part of a comprehensive TPL plan involves Medicaid's payment, which occurs one of two ways. Medicaid can offset the provider during the next payment issued for the amount that was overpaid. This is called "provider disallowances." Or, Medicaid receives the overpayment from the correct insurance carrier. This is called commercial insurance direct billings. Strong state laws are required for this third step in a TPL plan to work since, without it, the state can receive denials from insurance companies. The bottom line is that when payment errors are prevented, time is not wasted in pay and chase activities.

WHAT AN EFFICIENT THIRD PARTY LIABILITY PLAN NEEDS TO INCLUDE

So, in order to gain an efficient TPL plan, quick and effective discovery of additional coverage is needed at Medicaid enrollment. Also, cost avoidance discovery must take on immediacy when claims are made and past mistakes need to be fixed quickly. What works best is when the federal guidelines and state laws mesh to make up a truly thorough DRA policy that realizes additional health insurance coverage with quick recovery of each claim.

ProTPL offers a solution that provides this critical information in near real-time, at the point of sale.