What Is Third Party Liability?

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What Is Third Party Liability?

The Third Party Liability (TPL) function of an MMIS helps ensure that the State's Medicaid program is the payer of last resort and collects third party insurance (or other) liabilities. Third-party reimbursements to the State lower its Medicaid costs. They proportionally lower the Federal Government's share of the State's Medicaid bill.

States are required to take all reasonable measures to ascertain the legal liability of third parties to pay for care and services available under the state plan. TPL uses two primary methods to meet these requirements:

Cost Avoidance method. This is the State’s preferred method to recover cost. If third party coverage is identified during claim adjudication, the claim is normally denied. If the coverage is identified retroactively, claim adjustments are initiated.
Post-payment recovery method. Claims paid by Medicaid are billed to third parties in the expectation of receiving a recovery payment. There are several types of recovery cases:
- Pay and Chase Recovery - After a member’s claim is paid, a billing is prepared to “chase” the liable third party for payment.
- Retroactive Recovery - Other insurance coverage is identified for a member after claims have been paid. A recovery case is established so the claims can be billed to liable third parties.
- Estate Recovery - Affidavits are sent to a decedent's asset holder, claims are filed against a deceased member's estate and estate of deceased member's deceased spouse, and estate proceedings are commenced by the Department of Human Services to recover the costs of paid Medicaid claims.

Third-party carrier and resource information is maintained for Medicaid members to support these TPL methods. This information is maintained using data matching processes. Carrier and resource data updates are received from a variety of outside sources, including Medical Services Questionnaires (MSQ) sent to members.

Adjudication Cycle Processing

During the claim adjudication cycle, the claims processing subsystem determines if a claim can be cost avoided. If a match is found on the TPL Matrix and a pay-and-chase exception code is set, the system inserts a record into the billing tables. Additionally, the system checks if a recovery case exists for the member of a claim which falls within recovery case dates. Finally, the system checks for claims with the accident or trauma exception code set and generates a Medical Service Questionnaire (MSQ) request.

Cost Avoidance and Pay-and-Chase

During claims adjudication, ND MMIS checks for TPL coverage. If a claim has TPL resources, it uses the TPL Matrix to decide how to process the claim, as follows:

ND MMIS can deny payment on the claim, returning it to the provider with the explanation that another insurer has been identified that, by law, the provider should bill for the claim first. This method is also called cost avoidance.
ND MMIS can pay the claim. By law, North Dakota pays on claims with certain predefined diagnosis or procedure codes (such as prenatal care). You can also set up coverage codes associated with TPL Matrix criteria to pay claims for other reasons. Then the claims are automatically associated with a billing record for that policy and turned over to the TPL function for re-billing to the third-party carrier on file. This type of billing is called pay-and-chase.

Recovery

After claims adjudication, certain circumstances may determine that Medicaid can invoice one or more claims to another third party or can expect repayment from a legal settlement or estate. In these cases, a recovery case is established. An example of such a situation is a car accident. Here, the accident could have resulted in several claims, which could be billable to the car insurance company. .

HIPP Determination and Processing

Health Insurance Premium Payments (HIPP) is another TPL function.

Federal law requires that the State identify and pay for third-party insurance coverage for a qualified Medicaid member where such coverage is both available and financially advisable. This means that the TPL function must assist the State in identifying a qualified member.

Carriers

Carriers are third-party entities that provide health and accident coverage. Before they can be billed by the State, they must be set up in ND MMIS using the Carrier function within Third Party Liability.

Policies

The capture and maintenance of TPL resources allows the State to pay-and-chase or cost-avoid payments that are the responsibility of other carriers. Before a billing record can be created by ND MMIS, a policy must be set up. You use the Policy function within Third Party Liability to maintain information on these third-party policies. (However, you can set up a recovery case even if you initially don't have policy information and add it to the case at a later date.)

Mass Changes of Carriers and Policies

On the rare occasions when you need to change multiple policies for a carrier (or a carrier's group) because it has merged with another carrier or will no longer be an active carrier, use the Mass Change Request function in TPL to make the appropriate changes.

Medical Services Questionnaires (MSQs)

A Medical Services Questionnaire (MSQ) is a way to collect information from individual members. They can be manually requested, using the Medical Services Questionnaire Maintenance function in TPL, or automatically generated based on business rules when an adjudicated claim indicates that an accident or trauma-related service was provided a member. The information received back from a member can be added to the MSQ for tracking purposes and, if appropriate, to ND MMIS.

TPL Medicare Beneficiary Identifier (MBI) History

MBI History spans are added and updated by incoming MMA file process. If you have correct security you may be able to void an existing row.