RCPA - Rehabilitation and Community Providers Association


CMS Issues Guidance on TPL
December 21, 2007

In December the Centers for Medicare and Medicaid Services (CMS) issued a background document on Medicaid (MA) Third Party Liability (TPL). This guidance was intended to clarify changes made in the Deficit Reduction Act of 2005 (DRA). MA is the payer of last resort. Any other insurance or program that is responsible for payment must pay in full or in part before MA can make any payment. Third party payers are not responsible for reimbursing MA for services that are not covered under the MA state plan. States must practice cost avoidance; that is, if a liable third party exists then that party must be billed before the claim can be submitted to MA. If a state pays a claim and later becomes aware that a liable third party exists, then the state must attempt to recover the funds from the liable third party or pay and chase. States are required to establish laws that require insurers to provide the state with eligibility and coverage information to identify potential third parties, to avoid payment for MA state plan services that a third party should cover, and to recover payments from liable third parties. Previously, insurers sometimes denied MA claims based upon procedural requirements such as format differences, not billed at point of sale, or not billed timely. The DRA requires states to establish laws to require third parties accept the state right of recovery and to process and to reimburse MA to the same extent that the third party would have been liable had it been properly billed at the point of sale. States must submit documentation when submitting claims to third parties to confirm that the covered service for which the third party is responsible was actually provided. The complete background document is available from this link.

Additional information is available on the CMS web site:

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