Medicaid efficiency is needed now, more than ever

In 2016, state tax revenues declined for the first time since the Great Depression. The decrease in this critical funding source, coupled with sharp increases in drug prices, and the addition of nearly 17 million new enrollees since 2013, has put enormous pressure on the nation’s largest healthcare program. There are currently 74.6 million people enrolled in Medicaid and CHIP (Children’s Health Insurance Program), the state-administered programs that provide healthcare to low-income individuals and families; and the downward revenue and upward cost trajectories have threatened the sustainability of these essential services. 

Debate over the best way to fix this problem—limiting enrollment, changes in benefits, recipient copayments—continues, but what is undisputable is the need for Medicaid to run efficiently and maximize current funding dollars.

{mosads}Right now there is a Medicaid bill in Congress that may help do just that. HR 938, the Medicaid Third Party Liability Act, was recently introduced by Rep. Michael Burgess (R-Texas), who is also a medical doctor. The bill strengthens the Medicaid program’s ability to assert its rights as the payer of last resort by removing loopholes to ensure that Medicaid is not paying claims when another healthcare program or party is liable.

The question is often asked why Medicaid pays claims that are the responsibility of another party. It is because certain Medicaid beneficiaries may be entitled to healthcare claims coverage from other sources. For example, the additional coverage could be from property and casualty or workers compensation insurance in instances of accidents or injuries; or it may be the result of employer coverage for low-income workers who also qualify for Medicaid. Medicaid, by law, is the payer of last resort, meaning if a Medicaid recipient has other coverage for healthcare claims, Medicaid should only pay after the other health program or liable party benefits have been exhausted. Billions of dollars are saved each year when Medicaid agencies correct these erroneous payments.

Unfortunately, some liable third parties have found loopholes in laws and regulations that shift costs to Medicaid. HR 938 aims to close these loopholes and ensure that the right party is paying the right claims. Among the key provisions in the Medicaid Third Party Liability Act that will result in Medicaid savings and efficiency are:

1. Prevents liable parties from denying claims due to a lack of prior authorization, thereby shifting these costs to Medicaid.
2. Gives Medicaid Managed Care Organizations (MCOs) the same rights as state Medicaid agencies to be the payer of last resort. This is important as nearly 70 percent of Medicaid recipients are currently enrolled in Medicaid managed care plans.
3. Replicates prompt payment standards routinely enforced in the commercial sector, but for Medicaid reclamation claims. These are claims for the recovery of payments made by Medicaid that are actually the responsibility of another healthcare program or liable insurer.

These and other provisions in the Medicaid Third Party Liability Act will result in billions saved annually for the Medicaid program. HR 938 is the type of legislation we need now to enable programs like Medicaid to continue to provide essential benefits while improving cost effectiveness and efficiencies. It’s hard to argue with a bill that just wants the law to be followed as intended.

Bill Lucia is Chairman and CEO of HMS Holdings (NASDAQ: HMSY), a healthcare technology company that provides services to more than 45 Medicaid agencies and over 200 Medicaid health plans.

The views expressed by this author are their own and are not the views of The Hill.