A TIMELINE OF LEGISLATIVE EFFORTS TO ADDRESS MEDICAID THIRD PARTY LIABILITY

Medicaid Third Party Liability legislation

29 Oct A TIMELINE OF LEGISLATIVE EFFORTS TO ADDRESS MEDICAID THIRD PARTY LIABILITY

Since Medicaid’s inception in 1965, the program has expanded to become the largest provider of healthcare coverage in the country. As the member population size has grown, Medicaid third party liability (TPL) efforts and fiscal responsibility have been reoccurring issues. To protect Medicaid’s solvency, there have been a number of legislative efforts aimed at curbing fraud, waste, and abuse. Unfortunately, these measures have done little to protect program integrity and its improper payment rate has hovered at 10% for the last ten years.

Federal initiatives to combat improper payments fall into the following categories: assessing the risk of fraud; estimating the impact of TPL; requiring more reporting, which in turn creates administrative burden; and efforts to increase data-sharing. Here is a summary of legislation aimed towards improving TPL and reducing improper payments. 

EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

ERISA was directed towards self-insured companies and required that they abided by the same health insurance requirements as other large group plans. This was significant because self-insured plans were now subjected to Medicaid TPL stipulations.

IMPROPER PAYMENTS INFORMATION ACT OF 2002

The IPIA focused on assessing and reporting improper payments. It required that agencies, on an annual basis, identify programs and activities vulnerable to significant improper payments. Additionally, agencies needed to estimate the number of overpayments or underpayments and then report on steps taken to reduce them.

DEFICIT REDUCTION ACT OF 2005

In an effort to rein in costs, Congress signed the DRA into law in 2006. It included key Medicaid provisions and expanded the list of entities considered to be third parties. Similarly to ERISA, the DRA required all third parties to comply with Medicaid TPL processes and to supply beneficiary information to states so as to improve cooperation in data sharing.

MEDICAID INTEGRITY PROGRAM

The DRA also introduced the Medicaid Integrity Program (MIP) under section 1936 of the Social Security Act. The MIP was the first comprehensive Federal effort to combat fraud, waste, and abuse. It enabled contractors to review provider activities, audit claims, identify improper payments, and educate providers on integrity issues. It also provided support to states to address fraud and abuse.

QUALIFYING INDIVIDUAL PROGRAM SUPPLEMENTAL FUNDING ACT OF 2008

The QI changed state participation requirements for the Public Assistance Reporting Information System. Under the law, states were required to have in operation a Medicaid eligibility determination system for data matching through PARIS and medical assistance programs operated by other states.

EXECUTIVE ORDER 13520

In 2009, President Obama signed Executive Order 13520to reduce improper payments by intensifying efforts to eliminate payment error, waste, fraud, and abuse in the major programs administered by the Federal Government, while continuing to ensure that Federal programs serve and provide access to their intended beneficiaries.” Some of the order’s noteworthy policies included identifying Federal programs with the highest dollar value of improper payments, establishing reduction and recovery target rates for these programs, guidance for implementation of the order, and reporting on how agencies planned to meet the targeted rates.

IMPROPER PAYMENTS ELIMINATION AND RECOVERY ACT OF 2010

The Improper Payments Elimination and Recovery Act took several steps to further enhance data sharing, coordination between state agencies and third parties, and increase reporting requirements. These included:

  • Amendment of the IPIA to require the agency leaders, such as the Secretary of HHS, to review and identify susceptibilities in their programs that could lead to improper payments.
  • Revisions of the requirements for improper payment estimations.
  • Requirement of a statement from agencies as to whether it has “sufficient resources with respect to internal controls, human capital, and information systems and other infrastructure to prevent improper payments.”

FRAUD REDUCTION AND DATA ANALYTICS ACT OF 2015

The Fraud Reduction and Data Analytics Act required the Office of Management and Budget to develop new guidelines for Federal agencies. Under the act, agencies needed to “establish financial and administrative controls to identify and assess fraud risks,” and they were also required to submit annual reports to Congress regarding their progress on these efforts.

FEDERAL IMPROPER PAYMENTS COORDINATION ACT OF 2015

Following the Fraud Reduction and Data Act of 2015, Congress passed the Federal Improper Payments Coordination Act. This authorized the judicial branch, legislative branch, and also state government agencies managing Federal programs to utilize the U.S. Treasury Department’s Do Not Pay (DNP) Program. The DNP is a “no-cost robust analytics tool which helps federal agencies detect and prevent improper payments made to vendors, grantees, loan recipients, and beneficiaries.” Through the Fraud Reduction and Data Act and The Federal Improper Payments Coordination Act, Congress addressed administrative procedures, reporting requirements, and data-sharing; all of which were designed to improve cost-avoidance and address TPL.

CHIP REAUTHORIZATION ACT OF 2015

MACRA included several sections pertaining to Medicaid programs, including a section affecting TPL issues. Sec. 510 “requires the Secretary to study and specify incentives for states to work with the Secretary under the Medicare-Medicaid Data Match Program to coordinate appropriate actions to protect the federal and state share of expenditures under the Medicare and Medicaid programs.”

TECHNOLOGY SOLUTIONS FOR MEDICAID THIRD PARTY LIABILITY

The identification of Medicaid third party liability has become problematic for program administrators and is costing plans billions of dollars in improper payments. Medicaid plans agree that cost avoidance makes more sense than pay and chase, but until now the ability to execute it effectively has not been widely available. With the help of Syrtis Solutions and their proprietary ePrescribing data, payers of last resort are now able to cost avoid pharmacy and medical claims on the front end. EPrescribing data certainly was not originally intended for these purposes. However, its ability to mitigate the need for recovery and the associated expenses while cost avoiding payments is undeniable. Those involved in the process of Medicaid claims payments have been operating with the best tools they had available. Now, they have new and better tools through Syrtis.