States Face Ongoing Challenges in Meeting Third-Party Liability Requirements for Ensuring That Medicaid Functions as the Payer of Last Resort
Learn how the AI-generated research projects were createdOverall Conclusion
OIG concludes that States continue to face persistent and wide-ranging challenges in meeting third-party liability requirements for Medicaid, even after the Deficit Reduction Act provisions and CMS guidance. The report notes substantial reporting errors by numerous States, limited CMS analysis on TPL reporting detail, and ongoing resistance by some third parties. CMS concurred with the recommendations and outlined steps to provide updated guidance and actions to address these challenges.
Source Document
Audit Scope
This audit examined the States and the District of Columbia collectively referred to as “States” for their implementation of Medicaid third-party liability (TPL) requirements, including identification of enrollees’ third-party coverage, determination of TPL for services, cost avoidance, and cost recovery across the Medicaid program. It evaluated actions taken by all 50 States and the District of Columbia (DC) to identify liable third parties and recover Medicaid payments, and assessed whether TPL amounts were reported on the CMS-64 and CMS-64.9A according to Federal requirements. The audit covered data and reporting for Federal FYs 2019 and 2020 (October 1, 2018, through September 30, 2020) and included cross-cutting considerations involving out-of-state third parties, TRICARE, and Medicare coordination. The audit drew on State questionnaires, CMS-64 submissions, and related guidance and statutory provisions such as the Deficit Reduction Act (DRA) provisions amended in 2005.
Key Findings Summary
Difficulties Coordinating Third-Party Liability With Medicare.
Difficulties obtaining timely and reliable coverage information from third parties.
States continue to experience difficulties obtaining complete, accurate, and up-to-date coverage information from Medicaid enrollees and providers.
View the Findings tab to see all 15 findings
AI-Assisted
AI Scope Summary
Assess the ongoing challenges States face in meeting Medicaid TPL requirements as payer of last resort, actions States have taken to address those challenges, and the accuracy of States’ CMS-64 reporting of TPL amounts for FYs 2019–2020.
AI-Generated Insight
This report underscores enduring gaps in data quality, inter-agency coordination, and stakeholder cooperation that hinder Medicaid’s operation as payer of last resort. It highlights a need for stronger federal action, standardized data exchanges, clearer reporting instructions, and enforcement mechanisms to ensure that third parties contribute timely and accurate information and reimbursements, ultimately protecting federal and state Medicaid funds.
Audit Objectives
Identify challenges States have experienced in their efforts to meet third-party liability requirements and actions they have taken to address those challenges.
Determine whether States reported Medicaid third-party liability amounts on the CMS-64 statement according to Federal requirements.
Audit Findings (15)
Difficulties Coordinating Third-Party Liability With Medicare.
Difficulties obtaining timely and reliable coverage information from third parties.
States continue to experience difficulties obtaining complete, accurate, and up-to-date coverage information from Medicaid enrollees and providers.
Difficulties coordinating TPL with out-of-State third parties.
Technical issues related to third-party coverage information received and electronic billing of Medicaid claims with third parties.
Lack of Federal prompt payment requirements and penalties for third parties that do not cooperate with States’ efforts to meet TPL requirements.
Difficulties with third parties that deny Medicaid claims for procedural reasons.
Difficulties Coordinating Third-Party Liability With TRICARE.
Some States did not have in effect laws addressing all Deficit Reduction Act provisions intended to assist States in meeting their third-party liability responsibilities.
Twenty-Seven States Did Not Accurately Report Medicaid Third-Party Liability Amounts.
Twenty-Seven States did not report Medicaid TPL amounts on CMS-64.9A according to Federal requirements.
Twelve States Did Not Report Third-Party Liability Collection Amounts, Cost Avoidance Amounts, or Both.
Twenty-One States Did Not Correctly Report Third-Party Liability Amounts.
Limitations in CMS’s Analysis of Third-Party Liability Reporting and a Lack of Communication About Reporting Requirements Likely Contributed to Inaccurate State Reporting of Medicaid Third-Party Liability.
Financial and Program Integrity Consequences of Undetected Medicaid Third-Party Liability Reporting Errors.
Recommendations (8)
Develop an action plan for helping States more easily identify liable third parties and recover Medicaid payments.
Work with States to encourage better cooperation from third parties that resist TPL identification and recovery efforts.
For the four States identified as not fully compliant with the DRA’s TPL provisions: verify compliance and pursue corrective actions for noncompliance.
Verify whether Virginia has refunded the $1.25 million Federal share of the Medicaid TPL collections underreported during two fiscal quarters and, if not, require refund of any remaining amount.
Provide guidance to States to assist them with developing processes that improve the reporting of Medicaid TPL amounts on the CMS-64.9A.
Ensure that States have current instructions on completing the CMS-64.9A.
Ensure that States correctly report TPL amounts on the CMS-64.9A.
Remove or disable lines from the CMS-64.9A that States use for reporting TPL amounts (notes on form adjustments).