01 Feb MEDICAID TPL REQUIREMENTS
The Social Security Act, signed into law by President Franklin Roosevelt in 1934, stipulates 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 recipients. In a nutshell, it means that Medicaid becomes the payer of last resort, a term also known as third party liability, or the Coordination of Benefits. In other words, Medicaid pays last, and if a member holds additional coverage, such as insurance from an employer, that insurer pays first and then Medicaid pays any remaining costs.
As much as 10 percent of the Medicaid members throughout the nation hold 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 passed by the U.S. Congress in 2005 states in Section 6035 that states are mandated to pass laws that force health insurance companies to provide the state health insurance premium information involving people who are eligible for Medicaid assistance to the state. Specifics of the DRA include:
- Health insurance companies must hand enrollment data over to Medicaid, or its agent, so member benefits can be coordinated.
- This information is to be used to determine 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 provided that the claim is submitted within three years after the medical service was provided.
- Claims can not be denied as long as the state began 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; managed care organizations ; group health plans; and self-insured plans.
Identifying OHI in the Medicaid Program
Identifying primary health insurance coverage of Medicaid beneficiaries can be achieved by a state through one of three various approaches and still allow the state to comply with TPL requirements, under federal law. The problem is that if only one method is implemented by the state, savings and recovery are not at their greatest possible amount. The highest level of savings involves processing at all three of the following points in the process by the state. Here are those processes:
Individuals registering in the Medicaid program are asked about other insurance coverage
The problem is that some enrollees believe 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 looks 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 before the submission of Medicaid claims. However, 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, some 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 element 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 policies are required for this third step in a TPL plan to function, since without it, the state can receive rejections 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 TPL Plan Needs to Include
So, in order to gain an effective 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 resolved quickly. What works best is when the federal directives 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 real-time, at the point of sale.