In January 2020, nearly 71 million Americans were enrolled in Medicaid or the Children’s Health Insurance Program. In the aftermath of the COVID-19 crisis, that number is expected to rise considerably — and with it, the complexity of determining third-party liability (TPL).
TPL, the process of identifying other available coverage to ensure Medicaid remains the payer of last resort, has always been complex, due in large part to the high volume of Medicaid members with access to other coverage. For this same reason, TPL also has substantial financial implications. Approximately 10% of Medicaid members also have third-party insurance coverage that is primary to Medicaid. Capturing and effectively coordinating these other coverage sources with Medicaid saves billions of dollars annually.
In today’s healthcare and economic environment, having a robust and comprehensive TPL program is essential to maximize savings and recoveries, while protecting Medicaid as a healthcare safety net. It also provides choice and promotes healthcare consumerism. Here are five common TPL gaps that could be leaving state agencies and managed care organizations vulnerable to risk as well as best practices to address them.
- An Imbalance Between Prospective & Retrospective TPL
Although cost avoidance and recovery are generally regarded as separate TPL functions, they are equally integral and necessary parts of a comprehensive TPL program. Disproportionately relying on one function more than, or in lieu of, the other will leave gaps. Simply put, neither recovery nor cost avoidance efforts alone will identify all instances of TPL. They are symbiotic, compatible and must work in tandem. And in no way are they in conflict with one another.
Efforts to move TPL further upstream are key to avoiding improper payments and the administrative rework that ensues; however, that doesn’t negate the need for a robust recovery system to capture instances that may slip through the cracks, such as retroactive eligibility. When all TPL components are designed to work together, it creates an efficient, secure and cohesive system, ultimately driving greater value in savings and recoveries.
- Vendor Overload
Working with multiple TPL partners and managing disparate solutions can exacerbate an already complex process, creating inefficiencies that may negatively impact Medicaid’s bottom line and put highly sensitive health information at risk. Consolidating partners to those most qualified to handle the full scope of TPL in today’s healthcare ecosystem can help streamline processes and maximize Medicaid dollars. Integrating cost avoidance and recovery efforts using a single vendor ensures systems are compatible and working in tandem, but also minimizes abrasion among affected stakeholders.
- Stakeholder Abrasion
On the subject of stakeholders, an effective TPL program doesn’t occur in silos; rather, it requires widespread coordination, communication, data exchange and other operational cooperation among various stakeholders. At a minimum, those stakeholders include payers, providers, employers and members. Should TPL operations be burdensome to these individuals, it can compromise the backbone of Medicaid and our healthcare system as a whole. For these reasons, TPL partners must operate in a way that fosters productivity and mitigates abrasion.
This means understanding the many touchpoints involved in TPL and tailoring activities to be sensitive to the demands of each stakeholder without compromise to TPL results. For example, the weight of post-payment recovery efforts generally falls on either the third-party payer or, in the case of disallowance, on the provider. Understanding this distribution of responsibility and tailoring TPL processes to alleviate the burden as much as possible can help optimize efforts across the continuum.
- Unconventional & Non-Healthcare TPL Sources
Beyond identifying traditional health insurance coverage, TPL programs must be broad enough in scope to account for non-healthcare liable parties. These may include property and casualty insurance in the case of an auto accident or workers’ compensation claim, or the responsible party in a product liability lawsuit that resulted in Medicaid incurring claims. Medicaid should also maintain a balanced, yet robust, tort and estate program to ensure the appropriate recovery of funds back to the Medicaid program while exercising discretion around these sensitive and complex matters. While different from traditional health insurance, synergies exist between the processes, relationships and communication patterns, which should be harnessed in order to maximize TPL.
- Premium Assistance (Especially Amid COVID-19)
With millions of Americans unemployed or furloughed as a result of COVID-19, many are suddenly without employer-sponsored health coverage. This comes at a time when the ability to access healthcare is of major concern due to the virus’ potentially severe health risks.
As Medicaid enrollment is slated to increase substantially amid the current health crisis, premium assistance is an especially critical component of the TPL process. Medicaid programs can help facilitate access to COBRA or other alternative health plan options following loss of coverage. Additionally, states and health plans should have adequate measures in place to capture employer-sponsored coverage for individuals who temporarily qualify for Medicaid and ultimately return to work. Doing so helps to contain costs and maintain other, primary coverage, while still offering a safety net to those who need it, when they need it.