23 Aug State Practice 1: Insurer Cooperation
For any state to gain an effective TPL plan, immediate 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 solved quickly. What works best is when the federal directives and state laws mesh to form a truly comprehensive DRA policy that recognizes additional health insurance coverage with quick recovery of each claim.
A thorough TPL state program contains:
- The active identification of other coverage at enrollment
- The quick avoidance of the cost of claims
- The ability to recover claims paid incorrectly
Developing better TPL plans requires that states learn from the mistakes of other states. The following is part 1 of a three part series which outlines practices that can be adopted by states to gain enhanced TPL recoveries and thereby increase savings.
Update the Definition of Who is an Insurer
The first area of correction would be the act of changing the description of the insurer to encompass all health insurance entities. Section 6035(a) of the DRA amended section 1902(a)(25)(A) of the Social Security Act to define third parties subject to provisions of 1902(a)(25) to include:
- self-insured plans
- pharmacy benefit managers (PBMs),
- “other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service.”
There are some insurance entities that decline to share eligibility date unless an insurance product is clearly stated in state DRA language. Such acts hinder the state’s ability to identify TPL. Examples include PBMs, third party administrators (TPAs), MCOs, administrative services only (ASO) plans and accountable care organizations (ACOs) that don’t share eligibility files except if they are explicitly listed by state statute.
State laws must be updated to include all types of health insurance coverage. Plus, due to the fact that types of health insurance evolve on a regular basis, it’s imperative that statutes be visited and updated as a scheduled event so that additional definitions can be added to state DRA legal verbiage.
A list of broadly defined insurers includes:
- Pharmacy Benefit Managers (PBMs)
- Third Party Administrators (TPAs)
- The Self-Insured
- Managed Care Organizations (MCOs)
- Administrative Services Only (ASO) plans
- Accountable Care Organizations (ACOs)
Give MCOs the Same Authority as States
Appropriate Power needs to go to Managed Care Organizations. MCOs handle more than two-thirds of all Medicaid recipients. The number continues to grow each and every year. Prior to the development of MCOs, federal and state lawmakers never anticipated how much MCOs would grow to the size that they are today. Consequently, with the old language in state and federal statutes, which fails to count the rights of MCOs, this means that some insurers refuse the sharing of eligibility information and don’t allow any MCO to recover claims that needed to first be paid by the primary insurer. Therefore, MCOs should be on the same footing as the state in regards to recovery rights and access to insurance data, as stated in statutes describing DRA compliance within that state.
The Centers for Medicare & Medicaid Services made changes on their www.cms.gov website in 2012 to explain the intent of DRA by stating that in cases where TPL concerns are thrust into the court of MCOs, third parties should treat MCOs as if they are the state Medicaid agency, including the following processes:
- Giving MCOs access to eligibility and claims data in order to recognize Medicaid claimants who have third party insurance coverage.
- Allowing MCOs to direct third party insurers to pay for services or items provided by a health care organization to a Medicaid recipient.
- Curtailing the practice of claiming a technicality in statute language as a reason for refusing to pay claims submitted by an MCO.
To make this valid within each state, the DRA stipulates that states need to draw up language in their own statutes directing a cooperative effort involving MCOs, which are in the business of ascertaining TPL concerns. Ohio is an example of a state that adopted such statutory language. Ohio Revised Code (ORS) §5101.573 gives MCOs the same TPL authority as states.
Penalize Carriers for Noncompliance
The only reliable way that all concerned will follow DRA intent is if states include language in their statues that impose penalties for third party insurers who do not follow state law. Such penalties are written into law in 10 states today. Kentucky and Utah are examples of two states that have adopted such vocabulary into their state statutes in an attempt to beef up compliance by insurance companies with TPL concerns. In the case of Kentucky, non-compliance is stated as an unfair or deceptive trade practice. Utah establishes a policy whereby fines can be assessed or a license revoked or suspended due to non-compliance.