Orlando Harmon
Medicaid is a federal-state program that provides comprehensive health insurance to low-income individuals, including adults, children, pregnant women, and people with disabilities. It is essential to disclose all sources of insurance coverage when enrolling in Medicaid, as the program interacts with other payers, such as private insurance, Medicare, and public programs. Failing to disclose other insurance coverage may result in issues with coordination of benefits and third-party liability, as Medicaid often acts as the payer of last resort. Therefore, it is crucial to keep Medicaid informed about any changes in your insurance coverage to ensure proper coordination and avoid potential issues with your healthcare expenses.
| Characteristics | Values |
|---|---|
| Medicaid beneficiaries with other insurance | Private insurance, Medicare, other public programs, workers' compensation, amounts received for injuries in liability cases |
| Medicaid as a payer | Medicaid acts as the payer of last resort for most services. It pays for services that might otherwise be financed by other public agencies or programs. |
| Medicaid beneficiaries' responsibility | As a condition of eligibility, Medicaid beneficiaries must identify potential third-party sources of coverage and assign the Medicaid agency the right to pursue third-party liability on their behalf. |
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What You'll Learn
Medicaid's role as the payer of last resort
Medicaid is the primary program providing comprehensive health and long-term care coverage to 83 million low-income people in the United States. It accounts for one-fifth of healthcare spending, more than half of spending on long-term care, and a large share of state budgets. Medicaid is jointly financed by states and the federal government but administered by states within broad federal rules.
Medicaid interacts with other payers when beneficiaries have other sources that are legally liable for the payment of their medical costs. These may include private insurance, Medicare, other public programs such as the Ryan White program, workers' compensation, and amounts received for injuries in liability cases. In most cases, Medicaid acts as the payer of last resort for most services. Under the program's third-party liability (TPL) rules, other legally responsible sources are generally required to pay for medical costs incurred by a beneficiary before the Medicaid program will do so. As a condition of eligibility, Medicaid enrollees must identify potential third-party sources of coverage and assign the Medicaid agency the right to pursue third-party liability on their behalf.
There are also cases where Medicaid may pay for services that might otherwise be financed by other public agencies or programs, either because they are statutorily designated as payers of last resort after Medicaid or are not considered to be legally liable third parties. In addition, there are circumstances in which state Medicaid programs arrange for another entity to pay providers for Medicaid-covered services, such as through managed care contracts or premium assistance programs. When Medicaid benefits supplement another coverage source, such as Medicare or private insurance, it is often referred to as wrap-around coverage.
States reported that they continue to experience several challenges in their efforts to meet TPL requirements, including difficulties obtaining complete, accurate, and up-to-date coverage information from Medicaid enrollees and providers, as well as difficulties coordinating TPL with out-of-state third parties and certain federal programs. To address these challenges, the Centers for Medicare and Medicaid Services have been recommended to provide updated guidance to states on effective practices for addressing these issues and to work with states to encourage better cooperation from third parties that routinely resist TPL identification and recovery efforts.
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Third-party liability (TPL) rules
Under TPL rules, other legally responsible sources are generally required to pay for medical costs incurred by a beneficiary before the Medicaid program will do so. This is because, by law, all other available third-party resources must meet their legal obligation to pay claims before the Medicaid program pays for the care of an eligible Medicaid enrollee. As a condition of eligibility, Medicaid enrollees must identify potential third-party sources of coverage and assign the Medicaid agency the right to pursue third-party liability on their behalf.
States are responsible for administering eligibility and claims processing functions, including TPL. They are required to take all reasonable measures to ascertain the legal liability of third parties to pay for care and services that are available under the Medicaid state plan. This includes identifying potentially liable third parties by gathering information about other sources of health coverage when individuals apply for medical assistance. States may enter into data matching agreements directly with third parties or use a contractor to complete the required matches.
The Centers for Medicare & Medicaid Services (CMS) oversees state compliance with federal Medicaid rules, including reviewing and approving state plans to implement TPL procedures and claims processing systems. CMS provides guidance and technical assistance to states to improve TPL avoidance and recovery activities and maintains a web page with resources on Medicaid third-party liability and coordination of benefits.
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Coordination of Benefits (COB)
The COB process is also important for insurance companies to identify the health benefits available to a beneficiary, coordinate the payment process, and ensure that the primary payer, whether Medicare or other insurance, pays first. It also helps to avoid billing headaches and prevents insurance companies from refusing to pay claims.
There are various scenarios in which an individual might have two health insurance plans, such as having continuation coverage and coverage from another plan, or having coverage under a government program and additional health or drug coverage. In such cases, determining the primary and secondary payers will depend on factors such as age, the size of the company providing employer coverage, and other considerations.
While having multiple insurance plans and using COB can be advantageous in certain situations, it also comes with administrative complexities, such as additional paperwork, coordination with multiple providers, and understanding the specifics of each plan's rules and coverage. Moreover, cost considerations come into play, as maintaining more than one plan may not be financially prudent if the combined premiums, deductible copayments, and coinsurance exceed the benefits received.
To set up coordination of benefits, individuals need to contact their insurance company and fill out a form disclosing any other health plans they have. It is important to keep the documentation for future reference.
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Interacting with other payers
Medicaid interacts with other payers when beneficiaries have other sources that are legally liable for the payment of their medical costs. These other sources may include private insurance, Medicare, other public programs such as the Ryan White program, workers' compensation, and amounts received for injuries in liability cases.
In most cases, Medicaid acts as the payer of last resort for most services. Under the program's third-party liability (TPL) rules, other legally responsible sources are generally required to pay for medical costs incurred by a beneficiary before the Medicaid program will do so. As a condition of eligibility, enrollees must identify potential third-party sources of coverage and assign the Medicaid agency the right to pursue third-party liability on their behalf. Exceptions include certain prenatal and pediatric services, for which Medicaid may pay and then seek reimbursement.
Coordination of Benefits (COB) refers to the activities involved in determining Medicaid benefits when an enrollee has coverage through an individual, entity, insurance, or program that is liable to pay for healthcare services. Individuals eligible for Medicaid assign their rights to third-party payments to the State Medicaid Agency. Examples of third parties that may be liable to pay for services include other sources of health coverage, which states gather information on when individuals apply for medical assistance. States conduct data matches to identify third-party resources and must have laws requiring health insurers to provide their plan eligibility and coverage information to Medicaid programs.
When Medicaid benefits supplement another coverage source, such as Medicare or private insurance, it is often referred to as wrap-around coverage. Providers who accept Medicaid payment for beneficiaries with another coverage source may, in some cases, charge cost-sharing for services covered by both sources.
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Wrap-around coverage
Medicaid is the primary program providing comprehensive health and long-term care coverage to 83 million low-income people in the United States. It is jointly financed by states and the federal government but administered by states within broad federal rules. Medicaid interacts with other payers when beneficiaries have other sources that are legally liable for the payment of their medical costs. These may include private insurance, Medicare, other public programs, workers' compensation, and amounts received for injuries in liability cases.
When Medicaid benefits supplement another coverage source, such as Medicare or private insurance, it is often referred to as wrap-around coverage. Wrap-around coverage is available to "dual-eligible individuals," who are covered by both Medicare and Medicaid. In 2021, 12.9 million people received health coverage through both programs. For these individuals, Medicare is the primary payer and covers medical acute and post-acute care, including skilled nursing facility services and home health care. Medicaid wraps around Medicare coverage by paying Medicare premiums and, in most cases, cost-sharing.
Most dual-eligible individuals are also eligible for Medicaid benefits that are not otherwise covered by Medicare, including long-term services and supports (LTSS), vision, and dental care. These services are referred to as Medicaid wraparound services. In 2019, 4.4 million dual-eligible individuals with full Medicaid benefits (around 61%) used at least one Medicaid wraparound service. The use of these services varies by state and demographic characteristics. For example, dual-eligible individuals who are ages 65 and older have higher rates of using institutional LTSS and vision services than younger individuals who qualify based on a disability.
Using Medicaid to wrap around private insurance is known as premium assistance and has been part of the Medicaid program for a long time. However, Medicaid premium assistance programs that pre-date the ACA expansion have generally seen low enrollment, primarily because relatively few Medicaid enrollees can access or afford private coverage. There have been reports of potential new funding being added to the BCRA to help states fill in gaps for private coverage obtained through tax credits for people who lose Medicaid coverage. However, it is unclear if this funding will equal the loss of federal Medicaid expansion funding.
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Frequently asked questions
It is important that you disclose all other insurance coverage to Medicaid, as they will interact with other payers when beneficiaries have other sources that are liable for payment of medical costs. Failure to disclose may result in issues with coverage and reimbursement.
Other payers that Medicaid interacts with include private insurance, Medicare, other public programs such as the Ryan White program, workers' compensation, and amounts received for injuries in liability cases.
TPL refers to the legal obligation of third parties, such as insurers or programs, to pay for medical assistance provided under a Medicaid state plan. By law, these third parties must meet their obligation to pay claims before the Medicaid program pays for the care of an eligible individual.
