If You Haven’t Started Already, Now is the Time for Auto, Liability, No-Fault, and Work Comp Payers to Prepare for Medicaid Third Party Liability Liens

Posted by Rafael Gonzalez on Mar 27, 2017 11:00:00 AM

Now is the Time for Auto, Liability, No-Fault, and Work Comp Payers to Prepare for Medicaid Third Party Liability LiensWith 73 million beneficiaries as of December 2016, Medicaid has become our country’s largest healthcare insurance program. With more beneficiaries in every age group, the likelihood of such beneficiaries becoming involved in an auto, liability, no-fault, or work comp claim has also grown exponentially. When this happens, just as with Medicare, Medicaid becomes a secondary payer. The corporate defendant, its insurer, or the beneficiary and his/her attorney, if the claim settles, becomes responsible for any payments related to such claims, including reimbursement of any expenditures made by the state Medicaid agency or the insurer/managed care organization that may have contracted with the state to provide such Medicaid benefits.

All Reasonable Measures to Ascertain Legal Liability and Seek Reimbursement

Federal law provides that “the state or local agency administering such Medicaid plan must take all reasonable measures to ascertain the legal liability of third parties to pay for care and services available under the plan.” Federal law also provides that “in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual, the state or local agency must seek reimbursement for such assistance to the extent of such legal liability.” 42 U.S.C. Section 1396a(a)(25).

The 2013 Strengthening Medicaid Third Party Liability Act

The 2013 Omnibus and Reconciliation Act, also known as the budget bill, which passed both houses of Congress and was signed into law by President Obama on December 26, 2013, contained provisions that significantly broadened states’ third party liability (TPL) recovery rights and therefore what states can recover from third parties when dealing with a Medicaid beneficiary. Effective October 1, 2017, the changes will make it more difficult to settle claims involving Medicaid beneficiaries, as state Medicaid agencies or the insurers/managed care organizations contracted with the state to provide benefits will be able to seek reimbursement from any “responsible third party” of all payments made from the entirety of the settlement funds, not just a portion thereof.

Section 202 (b) of the 2013 budget bill, “Strengthening Medicaid Third Party Liability,” modified Medicaid law in two ways. First, it removed the reference to “health care items and services” when describing the states right of recovery for benefits paid on behalf of a Medicaid beneficiary, replacing it with “any such payment by a third party”, the effect of which would be to remove any limitation on the states recovery to the portion of the settlement or verdict related to medical expenses. Second, the bill did away with language relating to the extent of the states right of assignment to any payment made by a third party. The language “to the extent of such legal liability” was stricken, aimed at extending the states right of recovery beyond medical items and services Medicaid may have paid for.

HR 938: The Medicaid Third Party Liability Act

In order to make it clear as to the state’s authority in seeking reimbursement from responsible third parties, on February 7, 2017, US Representative Burgess introduced HR 938, the Medicaid Third Party Liability Act. The bill, which amends title XIX of the Social Security Act, provides clarification with respect to the liability of third party payers for medical assistance paid under the Medicaid program. The bill was referred to the Committee on Energy and Commerce.

Effective October 1, 2017, HR 938 amends 42 USC Section 1396a(a)(25), by proposing to:

  • Define the term “responsible third party” as “any other party that is, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service.”

This of course includes an auto, liability, no-fault, or work comp entity, which settles its claim or has been found to be responsible for such medical expenditures.

  • In the case of a state that provides Medicaid benefits through a contract with a health insurer, “such contract shall specify whether the state is delegating to such insurer all or some of its right of recovery from a responsible third party and shall assure state laws confer to the health insurer the authority of the state to recoup such payments.”

Therefore, in addition to the states, and insurers, managed care organizations contracted by the states to provide enrollees Medicaid benefits may now have the authority to seek reimbursement from “responsible third parties.”

  • Reimbursements made by a “responsible third party to health insurers shall be treated in the same manner as reimbursements made to the state.”
  • Not later than January 1, 2018, “the Secretary of Health and Human Services shall, in consultation with the states, develop and make available to the states a model uniform reporting field that states may use for purposes of reporting to the Secretary information identifying responsible third parties and other relevant information for ascertaining the legal responsibility of such third parties to pay for care and services available under the state plan.”

If this looks, sounds, and feels like Medicare’s mandatory insurer reporting, that is because this is exactly what it is. Welcome to Medicaid’s version of mandatory reporting, allowing Medicaid to know who is the “responsible third party,” and if not reimbursed for any Medicaid payments made related to the auto, liability, no-fault, or work comp claim, allowing the state/insurer/managed care organization to legally seek reimbursement.

  • If state legislation is required in order for the plan to meet the additional requirements imposed by the amendments made under this section, “the state shall not be regarded as failing to comply with the requirements of this title solely on the basis of its failure to meet any of the additional requirements until after the state’s regular legislative session after the date of the enactment of this Act.”

Better Start Preparing Now

Whether this proposed legislative act passes or not during this session, one thing has become absolutely clear - if you haven’t already started, now is the time for auto, liability, no-fault, and work comp responsible third party payers to prepare for Medicaid third party liability liens. Given the envisioned Republican repeal of the Affordable Care Act’s Medicaid Expansion, the significant detrimental changes Speaker Ryan’s American Health Care Act has proposed to the Medicaid system, as well as the administrative downsizing of services and coverage announced by Secretary of HHS Price and CMS Administrator Verma, and the overwhelming financial cuts to Medicaid the Trump administration has indicated in its latest proposed budget, now more than ever, the states and its contracted insurers providing beneficiaries such Medicaid benefits will want their money back. They will be more vigilant than ever about identifying responsible third parties. They will be more aggressive about seeking reimbursement of every dollar they can identify. With less money from the federal government, and limited funds from the states, they will do all they can to get reimbursement from auto, liability, no-fault, and work comp responsible third parties like you. Better start preparing now.

To see the full text of the bill go here

https://www.congress.gov/bill/115th-congress/house-bill/938/text

About Flagship Services Group

Flagship Services Group is the premier Medicare compliance services provider to property & casualty insurers. Although Flagship provides Medicare compliance services for state, regional, and national workers comp employers and carriers, our primary focus and expertise has been the Medicare compliance needs of P&C self-insureds, insurance companies, and third party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, or no-fault claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our folks, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or info@flagshipsgi.com.

About Rafael Gonzalez

Rafael Gonzalez, Esq. is President of Flagship Services Group, the only national Medicare Secondary Payer services provider focusing on and offering comprehensive mandatory reporting, conditional payments, and set aside allocation compliance services to the property and casualty insurance industry. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, CMS approval, and MSA and SNT professional administration, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at www.flagshipservicesgroup.com/blog. He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at rgonzalez@flagshipsgi.com or 813.967.7598. 

: Info@flagshipsgi.com

Topics: medicare compliance