Overcoming Programmatic & Operational Barriers to Medicaid Cost Containment

August 14, 2020 HMS

Maximizing healthcare dollars has become an ever more urgent priority as the greatest public health and economic crises of our generation collide. It would be overly optimistic to suggest that adopting best practices could in itself curb the economic impact of COVID-19 on the nation’s public health sector. However, there are a number of immediate actions Medicaid programs can take that may help to stave off more extreme measures, such as cutting benefits and services at a time when vulnerable Americans need them most.

Third-party liability (TPL), the function that requires all third parties to pay for medical services primary to Medicaid, is one key area of focus for healthcare cost containment amid COVID-19. There are several barriers to TPL that collectively contribute to the billions of dollars in improper Medicaid payments made each year. Here, we’re highlighting some of these common barriers and offering practical solutions for overcoming them to maintain program integrity during this critical period.

Lift or Ease Arbitrary Cost Avoidance Restrictions

One of the best ways to contain healthcare costs is by moving TPL activities further upstream — ideally, at the point of enrollment and during the prior authorization process. Capturing TPL prior to the point of service helps to facilitate right-first-time billing, reduce burdensome pay and chase activities and prevent delays in care.

Despite the effectiveness of cost avoidance measures in preventing improper payments, even as noted by the Department of Health and Human Services Office of Inspector General, some Medicaid programs have arbitrary volume limitations in place. These restrictions are largely meant to save upfront TPL contractor costs; however, they often result in Medicaid paying claims for which it is not liable. In a time of health and economic crisis, lifting these restrictions is essential to keeping funds within the Medicaid program.

Increase the Frequency of Carrier Data Sharing

Effective coordination of benefits hinges on the availability of current, comprehensive coverage information. Data use agreements (DUAs) with commercial and other government payers are vital to the effort, as these provide the basis for matching individuals to all available coverage sources and identifying liable third-party payers.

Time lags between when a DUA is signed and the first data set is transferred — as well as infrequent data sharing thereafter — can inhibit cost avoidance and recovery efforts. In establishing a DUA, states should outline specific time parameters around the execution of the agreement, transmission of the first data set and the frequency of all subsequent data transfers, which should occur no less frequently than monthly. This consistency is key to facilitating an upstream TPL program model, in which accurate and complete coverage information is needed at the point of enrollment and at various points throughout the claim lifecycle.

Incentivize and Mandate Electronic Billing and Claims Processing

In the digital age, it is almost hard to believe that paper-driven processes are still prominent in healthcare — especially in health information management. Given the sheer volume of claims processed on a daily basis, it is even more confounding that some liable payers still coordinate benefits by paper. Naturally, this opens the door to widespread inefficiencies, inevitably resulting in payment delays and other failures along the eligibility and claims payment continuums.

Not only are electronic billing practices substantially more efficient than sorting through large batches of paper claims, but they are also much more accurate and secure. And with the coronavirus spreading rapidly throughout the nation, the less paper being passed between parties, the better.

Transitioning from paper to electronic billing doesn’t necessarily need to be a time and labor-intensive endeavor. Simple measures, such as prohibiting paper billing, incentivizing third-party payers to go paperless or imposing disincentives to discourage paper processes can accelerate the effort.

Bolster Your TPL Program by Adopting Best Practices

Many of the common barriers to TPL may be exacerbated by the COVID-19 crisis, as widespread unemployment drives soaring Medicaid enrollment, state budgets are increasingly strained and the nation’s healthcare infrastructure is under extreme pressure.

HMS is committed to supporting states and healthcare organizations in mitigating the effects of the current health and economic crisis. As part of the effort, we are sharing a number of strategies that healthcare stakeholders can implement today to strengthen the Medicaid safety net during this critical period. Our most recent blog, 7 TPL Policy Considerations to Prioritize Amid COVID-19, explores several recommendations for states to contain healthcare costs and maximize scarce resources. For more strategies on maintaining program integrity during and post-pandemic, follow us here and on our social channels. 

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