01 Feb TPL REQIUREMENTS IN THE MEDICAID PROGRAM
The Social Security Act, signed into law by President Franklin Roosevelt in 1934, specifies in the statute § 1902( a)( 25) of the legislation “… 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” provided to Medicaid beneficiaries. In a nutshell, it means that Medicaid becomes the payer of last resort, a term also referred to as third party liability (TPL), or the Coordination of Benefits (COB). Simply put, Medicaid pays last, and if a Medicaid member holds additional coverage, such as insurance from his or her employer, that insurer pays first and then Medicaid pays the remaining costs.
As much as 10 percent of the Medicaid members throughout the nation possess additional insurance other than Medicaid, which is viewed as TPL. Types of TPL include employee insurance, Workers’ Compensation, Medicare, COBRA health insurance from former employment, casualty insurance, dental insurance, eye insurance and insurance to cover pharmaceutical costs.
The Deficit Reduction Act (DRA) passed by the U.S. Congress in 2005 states in Section 6035 that states are required to pass laws that force health insurance companies to give the state health insurance premium data 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 identify supplementary health insurance coverage, so that improper payments are not made and Medicaid 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 denied as long as the state started action on the claim within six years after the state submitted the claim.
Specifications must be spelled out that health insurance consist of other entities that are by statute, agreement or contract, legally responsible for paying a claim of a healthcare service; pharmacy benefits 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 criteria, under federal law. The difficulty 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 enrolling in the program are asked about other insurance coverage
The issue is that some enrollees think they will be disqualified from the progam, so this information is withheld. And, since adding Medicaid coverage might also suggest 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 so as to detect primary insurers prior to the submission of Medicaid claims. But, this practice becomes impossible unless state statutes require the timely delivery of insurance data when a state also requires the prompt payment of insurance claims. Plus, many medical services, such as 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 necessary for this third step in a TPL plan to function, 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 Effective TPL Plan Needs to Incorporate
So, to gain an efficient TPL plan, immediate and effective discovery of other health insurance is needed at Medicaid enrollment. Also, cost avoidance discovery must take on immediacy when claims are made and past errors need to be fixed quickly. What works best is when the federal directives and state laws mesh to make up a truly thorough DRA policy that realizes other 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.