New Medicaid TPL Law: Improves Claims Payment

On March 11, President Joe Biden signed H.R. 2471, the Consolidated Appropriations Act, 2022 into law. Among other things, the bill contains provisions intended to improve Medicaid third party liability (TPL) savings and recoveries. It is designed to help ensure that Medicaid improves its position as the payer of last resort, with a Medicaid member’s other insurance — such as employer-sponsored coverage or Medicare — paying to the extent of its legal liability before Medicaid picks up the tab for the claim.

Today, Medicaid faces obstacles to successful TPL particularly due to third party prior authorization standards. Liable parties deny claims from Medicaid that were otherwise their responsibility merely because the member or provider failed to seek and receive prior authorization from the third party for services. Yet, until now, there was no way for Medicaid to get ahead of these costly and growing denials. Annually, $130M in TPL claims are denied by liable third parties due to a lack of prior authorization by the third party — a dollar amount that has grown by 23% since 2014.

At the same time, Medicaid recovers only a small percentage of what they billed to third parties due in part to the lack of timeliness standards for TPL claims payment. However, thanks to H.R. 2471 these two issues will be mitigated.

Liable parties will be required to approve or deny claims within 60 days, a practice commonplace in the commercial insurance world, and accept the state’s authorization for services rather than deny claims for a lack of prior authorization. This deadline for action and accepting the state’s authorization for receipt of service can and will improve TPL recoveries.

Although the effective date is January 1, 2024, states can take steps now to benefit from this new law. Gainwell is poised to assist clients through the implementation of these important and helpful changes, including operationalizing the changes, assessing and developing as needed state legislative and regulatory changes, and crafting and executing carrier communications. We congratulate Congress and the Administration on these changes and are eager to support Medicaid reaping the benefits of these changes — improved recoveries, greater cooperation, compliance and most importantly, contributing to the sustainability of this important program that touches approximately 79 million lives.

For more details on H.R. 2471: H.R.2471 – 117th Congress (2021-2022): Consolidated Appropriations Act, 2022 | Congress.gov | Library of Congress and Medicaid Third Party Liability Changes (gainwelltechnologies.com)