Medicaid: Additional Federal Action Needed to Further Improve Third-Party Liability Efforts
Published: 2015-01-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In fiscal year 2013, Medicaid—jointly financed by states and the federal government—provided health care coverage to over 70 million individuals at a total cost of about $460 billion. Congress generally established Medicaid as the health care payer of last resort, meaning that if enrollees have another source of health care coverage—such as private insurance—that source should pay, to the extent of its liability, before Medicaid does. This is referred to as third-party liability (TPL). There are known challenges to ensuring that Medicaid is the payer of last resort. GAO was asked to provide information on the prevalence of private insurance among Medicaid enrollees and on state and CMS efforts to ensure that Medicaid is the payer of last resort.
This report examines (1) the extent to which Medicaid enrollees have private insurance, and (2) state and CMS initiatives to improve TPL efforts. GAO analyzed the 2012 ACS; interviewed Medicaid officials from eight states with high program spending or enrollment that used managed care; interviewed CMS officials and stakeholders; and reviewed relevant laws, regulations, and CMS guidance.
section_title: What GAO Found
paragraphs: Based on responses to the 2012 U.S. Census Bureau's American Community Survey (ACS)—the most recent available at the time the work was conducted—GAO estimates that 7.6 million Medicaid enrollees (13.4 percent) had private health insurance in 2012. The estimated prevalence of private health insurance varied among Medicaid eligibility categories, which may differ with respect to Medicaid benefits and costs. The number of Medicaid enrollees with private health insurance is expected to increase with the expansion of Medicaid.
Selected states reported taking various steps to address challenges to ensuring that Medicaid is the payer of last resort and acknowledged recent Centers for Medicare & Medicaid Services (CMS) support, while also suggesting additional federal action. Four of the eight reviewed states reported various initiatives to improve coverage identification, such as arranging to participate in a data registry that allows participants to identify individuals with overlapping coverage. CMS has taken steps to issue TPL guidance and share some information on effective state practices, and such federal efforts should be ongoing to ensure that evolving approaches are captured and shared across states. In addition, officials in five states reported that enrollees with third-party coverage may be eligible to enroll in Medicaid managed care—in which states contract with health plans to provide services to enrollees and may delegate TPL activities such as payment recoveries to these plans. One of the five states had initiated a program to oversee plans' TPL recoveries, while other states did not report similar oversight. The National Association of Medicaid Directors reported that, in the absence of explicit CMS guidance in this area, it can be difficult for states to work with plans to improve TPL oversight and has recommended CMS provide such guidance.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of the Department of Health and Human Services (HHS) direct CMS to (1) routinely monitor and share across all states information regarding key TPL efforts and challenges, and (2) provide guidance on state oversight of TPL efforts conducted by Medicaid managed care plans. HHS concurred with GAO's recommendations and noted plans to address them.

section_title: Letter
paragraphs: In fiscal year 2013, Medicaid provided health care coverage to over   70 million individuals at a total cost of about $460 billion. Congress  generally established Medicaid as the health care payer of last resort,  meaning that if Medicaid enrollees have another source of health care  coverage, that source should pay, to the extent of its liability, before  Medicaid does. Federal regulation refers to this requirement as third-party  liability (TPL). In administering their Medicaid programs, states are  required to take certain steps to identify sources of third-party coverage  that Medicaid enrollees may have, and to ensure that these sources pay   When private third parties—such as health  to the extent of their liability.insurers—pay for health care services instead of Medicaid, savings  accrue not only to states, but also to the federal government, which  historically has financed over half of the overall Medicaid program costs.  In addition, federal financing of Medicaid is increasing with the  implementation of the Patient Protection and Affordable Care Act  (PPACA), under which states may expand Medicaid eligibility to certain  low-income individuals and which specified that the federal government  would pay 100 percent of costs for these individuals from 2014 through  2016, and a minimum of 90 percent of such costs thereafter.state efforts to ensure that health insurers pay to the extent of their  liability, particularly for Medicaid enrollees who are newly eligible for the  program, could lead to increased federal cost savings.
States have substantially improved their TPL identification and recovery  efforts (which we refer to hereafter as TPL efforts) in recent years,  generating significant savings for the federal government as well as for  themselves. A 2013 Department of Health and Human Services (HHS)  Office of Inspector General (OIG) report indicated that states identified  about $13.6 billion in combined federal-state cost savings from private  health insurers in 2011, compared to about $3.7 billion in 2001—with  states largely crediting increased cost savings to enhanced use of  available technology to identify Medicaid enrollees with other insurance.  However, the report also found that states commonly face challenges to  their TPL efforts, such as health insurers refusing to provide coverage  information to states or denying liability for procedural reasons, that pose  potential barriers to realizing cost savings. Furthermore, state Medicaid  agencies face administrative capacity constraints that may limit their  ability to go beyond basic program requirements to further improve cost  savings.
Given the PPACA Medicaid expansion and the importance of ensuring  that Medicaid appropriately pays only after other liable third parties have  done so, you asked us to examine the prevalence of private sources of  health insurance among Medicaid enrollees, and state and Centers for  Medicare & Medicaid Services (CMS) efforts to ensure that Medicaid is  the payer of last resort. In this report, we examine (1) the extent to which  Medicaid enrollees have private health insurance and (2) state and CMS  initiatives to improve TPL efforts.
To examine the extent to which Medicaid enrollees have private health  insurance, we analyzed 2012 data—the most recent data available at the  time we conducted the work—from the American Community Survey  (ACS), a nationally representative annual survey conducted by the U.S.  Census Bureau. The ACS collects self-reported information, such as each  individual’s type of health coverage (if any) as of the date of the survey,  disability status, age, and state of residence. For the ACS question  regarding each individual’s type of health coverage, Medicaid is grouped  with other types of means-tested public coverage as a single response  option. Therefore, for purposes of the report, we refer to these groups  collectively as Medicaid enrollees. We further divided Medicaid enrollees  into four broad Medicaid eligibility categories—children, adults, disabled,  and aged. For all Medicaid enrollees, and for each Medicaid eligibility  category, we estimated the number and percentage with private health  insurance and other sources of health coverage. We defined individuals  as having private health insurance if they reported health insurance  provided through an employer or union, or health insurance purchased  individually. Unless noted otherwise, estimates presented in this report  have a relative standard error of less than 15 percent. To determine the  reliability of the ACS data, we reviewed related documentation and  compared our results to other published estimates and determined that  the ACS data were sufficiently reliable for our purposes. (A more detailed  description of our methodology is provided in app. I.)
To examine CMS and state initiatives to improve TPL efforts, we  reviewed relevant federal laws, regulations, and related documents, and  interviewed officials from CMS and a sample of 8 states. To select the  sample of states, we began by identifying states that: (1) were among the  top 15 states with respect to either Medicaid enrollment or spending; and  (2) used capitated managed care—in which states pay health plans a  monthly fee per Medicaid enrollee in exchange for services provided— to  deliver services to some or all Medicaid enrollees. We then reviewed challenges states reported in the 2013 HHS OIG report and obtained  input from federal officials and stakeholders about related state legislation  or practices and selected 8 of these states to include in our review:  Georgia, Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio,  and Washington. In several cases, officials in these states asked the  contractor responsible for aspects of TPL work in their state to respond to  our questions or included contractor representatives in the interviews. To  supplement information from the selected states, we also interviewed or  reviewed information provided by representatives of HMS—a firm that  conducts various TPL services on behalf of over 30 states and about 160  Medicaid managed care plans—national associations representing  Medicaid directors and Medicaid managed care plans, and other  stakeholders.
We conducted this performance audit from December 2013 through  January 2015 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Medicaid enrollees across various eligibility categories may have access  to private health insurance for a number of reasons. For example, some  adults may be covered by employer-sponsored private health insurance  even though they also qualify for Medicaid. Children similarly may be  eligible for Medicaid while also being covered as a dependent on a  parent’s private health plan. Individuals age 65 and older may receive  private coverage from a former employer or purchase such coverage to  supplement their Medicare coverage. Medicaid benefits and costs may  vary depending on an enrollee’s eligibility category. CMS requires states  to provide for the identification of Medicaid enrollees’ other sources of  health coverage, verification of the extent of the other sources’ liability for  services, avoidance of payment for services in most circumstances where  the state believes a third party is liable, and recovery of reimbursement  from liable third parties after Medicaid payment, if the state can  reasonably expect to recover more than it spends in seeking   Specifically, states must provide that the following steps  1.  Coverage identification. To identify enrollees with third-party health  coverage, states are required to request coverage information from  potential Medicaid enrollees at the time of any determination or  redetermination of eligibility for Medicaid. States are also required to  obtain and use information pertaining to third-party liability, for  example by conducting data matches with state wage information  agencies, Social Security Administration wage and earning files, state  motor vehicle accident report files, or state workers compensation  files.  2.  Coverage verification. When other health coverage is identified,  states need to verify the information, including the services covered  through the other insurance and the dates of eligibility.  3.  Cost avoidance. Cost avoidance occurs when states do not pay  providers for services until any other coverage has paid to the extent  of its liability, rather than paying up front and recovering costs later.  After a state has verified other coverage, it must generally seek to  ensure that health care providers’ claims are directed to the  responsible party.of the cost savings associated with third-party liability.
The cost-avoidance process accounts for the bulk  4.  Payment recovery. When states have already paid providers for  submitted claims for which a third party is liable, they must seek  reimbursement from the third party, if it is cost effective to do so.
States have flexibility in determining specific approaches to achieve these  ends. For example, states are increasingly contracting with managed care  plans to deliver services to Medicaid enrollees (such plans are hereafter  referred to as Medicaid managed care plans), and may delegate TPL  responsibilities to such plans. Both states and Medicaid managed care  plans may obtain the services of a contractor to identify third-party  coverage by conducting electronic data matches and to conduct other  TPL responsibilities, such as payment recovery.
Ensuring compliance with Medicaid TPL requirements has long been  challenging for states. The McCarran-Ferguson Act affirms the authority  of states to regulate the business of insurance in the state, without  interference from federal regulation, unless federal law specifically  provides otherwise. Thus, states generally regulate private health  insurers operating in the state. However, states may not have authority  over private insurers that are not licensed to do business in the state but  still provide coverage to state residents. For example, some individuals  work and receive health insurance through employment in one state but  live in a neighboring state. In addition, states are preempted by the  Employee Retirement Income Security Act of 1974 (ERISA) from  regulating employer-sponsored health benefit plans that self-insure  coverage rather than purchase coverage from an insurer.
Due to the bifurcated nature of private health insurance regulation, both  federal and state legislation has been required to allow states to enforce  TPL requirements. For example, the Omnibus Budget Reconciliation Act  of 1993 required all states to enact laws prohibiting insurers from taking  Medicaid status into account in enrollment or payment for benefits and to  enact laws giving the state rights to payments by liable third parties. In addition, the Deficit Reduction Act of 2005 (DRA) contained provisions  affecting state authority to verify coverage and recoup payments from  liable health insurers. Under the DRA, states must attest that they have  laws in place to require health insurers to, among other requirements,  provide information necessary to identify Medicaid enrollees with third- party coverage and, within specified time limits, respond to inquiries from  the state regarding claims, as well as to agree not to deny claims solely  because of the date the claim was submitted, the form that was used, or  the failure to properly document coverage at the point of service.
The 2013 HHS OIG report on TPL cost savings and challenges  concluded that the DRA provisions likely had a positive effect on states’  ability to avoid costs and recover payments from private health insurers,  in part through improvements in states’ identification of enrollees with  insurance. States also credited process improvements, such as online  verification of coverage and electronic data matching agreements with  private insurers, as well as contractor assistance. However, the study  reported that states continue to face key challenges working with private  insurers, including the following:
96 percent of states reported challenges with insurers denying claims  for procedural reasons.
90 percent of states reported challenges with insurer willingness to  release coverage information to states.
86 percent of states reported challenges with insurers providing  incomplete or confusing information in response to attempts to verify  coverage.
84 percent of states reported problems with pharmacy benefit  managers—entities which administer pharmacy benefits on behalf of  insurers or employers—such as pharmacy benefit managers not  providing coverage information or claiming a lack of authority to pay  claims to Medicaid agencies.
section_title: An Estimated 7.6 Million Medicaid Enrollees Had Private Insurance in 2012 and This Number Is Expected to Increase with the Medicaid Expansion
paragraphs: Based on responses to the U.S. Census Bureau’s ACS, we estimate that  7.6 million Medicaid enrollees—13.4 percent—also had a private source  of health insurance in 2012. However, the prevalence of private health  insurance varied among four Medicaid eligibility categories that we  analyzed—children, adults, disabled, and aged. For example, according  to our estimates, 34.6 percent of aged Medicaid enrollees also had  private health insurance, compared to 12.4 percent of adult Medicaid  enrollees and 8.4 percent of children. (See fig. 1 and see app. II,   table 1, for more detailed estimates).
The number of Medicaid enrollees who also have private health insurance  is expected to increase beyond the estimated 7.6 million with the  expansion of Medicaid; however, the extent of the increase is uncertain.  The Congressional Budget Office projected that approximately 7 million  nonelderly individuals would enroll in Medicaid in 2014 as a result of the   While some newly  Medicaid expansion and other PPACA provisions.Medicaid eligible individuals can be expected to have access to private  sources of health insurance, the extent to which they will participate in  Medicaid, or maintain private insurance once enrolled in Medicaid, is  unknown. If these individuals’ rates of private insurance are similar to the  12.4 percent of adult Medicaid enrollees whom we estimated had private  insurance in 2012, about 868,000 of the projected 7 million new enrollees  in 2014 would be expected to have private insurance.
section_title: Selected States Reported Some Success Addressing Challenges to Their TPL Efforts and Additional CMS Action Could Improve Such Efforts Nationwide
paragraphs: States face multiple challenges in ensuring that Medicaid is the payer of  last resort for enrollees that have private health insurance. Selected  states and CMS have taken various steps to address some of these  challenges; however, selected states and stakeholders suggested that  further CMS guidance and efforts to facilitate information sharing among  states could improve TPL efforts nationwide.
subsections: section_title: Selected States Have Taken Various Actions to Address Challenges with Coverage Identification, Managed Care Plan TPL Activities, and Coverage Denials
subsections: section_title: State Actions to Address Challenges with and Improve Coverage Identification
paragraphs: As the identification of Medicaid enrollees with private health insurance is  a critical first step for achieving TPL cost savings, many states nationwide  conduct electronic data matches of Medicaid enrollment files with insurer  files themselves or through a contract with a vendor that conducts  matches on the state’s behalf. While not required, such state efforts to  independently identify enrollees with private insurance can lead to  significant cost savings. For example, Minnesota officials reported that  by contracting with a vendor for electronic data matching, the state nearly  doubled identified cases of TPL in a 5-year period, saving the state an   Despite such efforts, states we  estimated $50 million over this period.included in our review reported experiencing the following challenges to  their coverage identification efforts:
Challenges obtaining out-of-state coverage data. Medicaid  enrollees in one state may have coverage from a health insurer that is  licensed in a different state—for example, some enrollees work and  participate in employer-sponsored insurance in one state while living  and enrolling in Medicaid in a neighboring state. State laws requiring  insurers to provide coverage data may not apply if insurers are not  licensed in the state, and officials from two of the states we reviewed  noted that insurers sometimes refuse to provide coverage data to  Medicaid agencies outside the state in which they are licensed. HMS  representatives reported that, while HMS advocates that insurers  provide coverage data to Medicaid agencies outside the state in which  the insurers are licensed, many insurers refuse to do so. According to  CMS, there is a significant amount of third-party coverage derived  from insurers licensed in a different state from where the Medicaid  enrollee resides.
Challenges with insurers conducting data matches. State and  HMS representatives reported that, rather than providing coverage  data to the state (or its contractor, as applicable), some insurers  request the Medicaid data and perform the data match themselves.  HMS representatives reported that, in such cases, states only have  access to matches identified by the insurer, which may understate the  number of individuals with overlapping coverage. One state reported  estimating that insurers missed the identification of about 7 percent of  the individuals with private insurance when insurers conducted the  match instead of the state’s contractor.
Challenges with obtaining key data elements. Insurers may not  maintain or provide states or their contractors access to key data  elements, such as Social Security numbers, and not having access to  these data can reduce the efficiency or usefulness of data matches,  according to officials in several states we reviewed. For example,  officials from two selected states noted that data matches are more  difficult and error-prone when Social Security numbers are not  available. Similarly, officials from two other states we reviewed  reported that their ability to verify identified coverage would be  assisted if employer identification numbers were included in insurer  coverage data.
Challenges with timeliness of data matches. Most selected states  reported that there is a time lag, typically up to 15 to 30 days, between  an individual’s enrollment in Medicaid and when the individual is  included in a data match with private insurers. As a result, states may  not be able to identify other coverage until after enrollees have  already begun using services. States would generally then seek  reimbursement for paid claims.
States in our review reported taking various steps to address these and  other coverage identification challenges. Four of the eight selected states  reported initiatives underway or completed to improve data-matching  strategies to identify private coverage, some of which focused on  nationally coordinated approaches. For example, Minnesota officials  reported that Minnesota law allows the state Medicaid agency and  Medicaid managed care plans to participate in a national coverage data  registry, launched in late 2013 by CAQH, an association of health plans  and trade associations. The data registry allows participating insurers  and states to submit coverage data files for comparison with files of other  participants in order to identify individuals with overlapping coverage.  Minnesota officials commented that the registry was at an early stage but  expected that participation of private insurers would increase over time  because of benefits to private insurers of coordinating with one another.  Table 1 describes a variety of initiatives underway or completed to  improve coverage data in selected states.
In addition, at least two of the eight states had laws that addressed  challenges with obtaining private insurer compliance with TPL  requirements, including requirements to provide coverage data. For  example, Michigan law authorizes the state to collect coverage data from  insurers to determine TPL and to assess penalties on insurers for  noncompliance.in obtaining national coverage data from insurers. In addition, Minnesota   Michigan officials reported that the state was successful  law requires that all insurers that cover state Medicaid enrollees must  comply with TPL requirements irrespective of where they are licensed.
section_title: State Actions to Support and Oversee Medicaid Managed Care Plan TPL Activities
paragraphs: Selected states have taken various actions that support or increase  oversight of Medicaid managed care plan TPL activities, as applicable.  For example, in five of the eight states in our review, individuals with third- party coverage may be eligible to enroll in Medicaid managed care plans   The laws  and certain TPL responsibilities are delegated to these plans. of two selected states—Ohio and Minnesota—specifically authorize  Medicaid managed care plans to recover TPL payments on the state’s  behalf. Ohio officials in particular credited the legislation as effective in  improving insurer cooperation with the state’s Medicaid managed care  plans. While the DRA required states to have laws in effect compelling  insurers to provide states with access to data and recognize the states  right to recoup payments, it did not provide that those laws specifically  require insurers to similarly cooperate with Medicaid managed care plans  conducting such work on behalf of states. CMS provided guidance that,  when states delegate TPL responsibilities to a Medicaid managed care  plan, third-parties should treat the plan as if it were the state.representatives reported that this guidance has been effective in  garnering cooperation from insurers that previously refused to provide  coverage data or pay claims to Medicaid managed care plans in various  states without legislation specifically requiring them to do so. However, a  few insurers continue to refuse to cooperate with such plans despite this  guidance, according to information provided by representatives of HMS   HMS  and Medicaid Health Plans of America (MHPA)—an association of  Medicaid managed care plans.
In addition, Minnesota sought to improve its oversight of Medicaid  managed care TPL activities by initiating a program to allow the state to  review Medicaid managed care plan TPL payment recoveries and to  arrange for conducting supplemental recoveries when the plans had not  recouped payment within a set time. However, according to a  representative of the National Association of Medicaid Directors, it can be  difficult for states to work with Medicaid managed care plans and insurers  as needed to strengthen state oversight. The other states included in our  review that delegate TPL work to Medicaid managed care plans did not  report conducting this type of oversight, which is consistent with  information provided by MHPA in which plans indicated that some states  that contract with Medicaid managed care plans to perform TPL activities  do not specifically review these activities. We have previously found that  some Medicaid managed care plans may have a conflict of interest in  conducting payment recoveries. Specifically, Medicaid managed care  plans may not have appropriate incentives to identify and recover  improper payments—which include payments made for treatments or  services that were not covered by program rules, that were not medically  necessary, or that were billed for but never provided—because doing so  could reduce future capitation rates.
section_title: State Actions to Reduce Denials by Insurers for Procedural Reasons
paragraphs: Most selected states reported challenges with denials from private  insurers for procedural reasons, such as for not obtaining prior  authorization before receiving services or not using in-network  providers. HMS representatives estimated that in 2013, insurers had denied about $120 million in claims for failure to obtain prior authorization,  and about $30 million for failure to use an in-network provider, for states  and for Medicaid managed care plans with which HMS contracted.  Selected states reported various methods to reduce such denials:
Ohio and Missouri laws explicitly prohibit denials due solely to a lack  of prior authorization for services.
Massachusetts, Georgia, and New York officials reported that they  contest denials due solely to a lack of prior authorization for services  based on general state legislation passed in accordance with the  DRA, which requires states to prohibit insurers from denying claims  based solely on the date the claim was submitted, the form that was  used, or the failure to properly document coverage at the point of  service.
Michigan and Minnesota, through their Medicaid provider manuals,  require providers to check for third-party coverage and specify that  providers are not to be paid by Medicaid for services provided to  enrollees if rules of the third-party coverage were not followed.  For  example, Michigan’s Medicaid provider manual states that Medicaid  will not cover charges incurred when enrollees elect to go out of their  third-party insurer’s preferred provider network. Michigan and  Minnesota officials reported that these types of denials were generally  not problems for the state.
See Michigan Medicaid Provider Manual, Coordination of Benefits, §§ 1.3, 2.1 (October  2014) and Minnesota Medicaid Provider Manual, Billing Policy (Overview), Section on  Coordination of Services (September 2014) and Medicare and Other Insurance, Section  on Third-Party Liability (TPL) (December 2013).
section_title: While CMS Has Taken Action to Support State TPL Efforts, Additional Federal Action Could Benefit TPL Efforts Nationwide
paragraphs: CMS has taken steps, including issuing additional guidance, to address  certain challenges that states face in ensuring that Medicaid is the payer  of last resort. For example, CMS published a set of frequently asked  questions (FAQ) in September 2014 that clarified the parameters under  which health insurers are permitted to release coverage information to  states in light of Health Insurance Portability and Accountability Act of  1996 privacy restrictions, and emphasized the role of state legislation in  specifying the scope of information required to be submitted by health  insurers. The guidance also reiterated previously published information,  such as clarifying that when states delegate TPL responsibilities to a  Medicaid managed care plan, third parties are required to treat the plan  as if it were the state. CMS officials also noted that the agency is  available to provide technical assistance relating to TPL at the request of  states or other entities.
In addition, CMS has also taken steps to foster collaboration among  states. For example, CMS solicited effective TPL practices that had been  implemented as of 2013 from states and published the responses.  On a  related note, CMS officials highlighted the role of the Coordination of  Benefits (COB)-TPL Technical Advisory Group (TAG) in providing states  with opportunities to coordinate and share information on TPL challenges  and effective practices. Specifically, CMS officials said that COB-TPL  TAG representatives are responsible for canvassing states about  problems that may be occurring and reporting these back to CMS.  However, officials from one state suggested that COB-TPL TAG  representatives need to do more to proactively survey states and share  information about problems that states not directly represented on the  COB-TPL TAG are experiencing.
While acknowledging CMS’s efforts, stakeholders and officials from  selected states suggested a need for additional federal action,  commenting on how, for example, additional or clarified guidance could  facilitate state efforts to conduct certain TPL activities.
The National Association of Medicaid Directors recommended, given  the growth in states’ use of managed care, that CMS require states to  share available insurance coverage information with Medicaid  managed care plans and provide an approved approach for  conducting oversight of such plans’ TPL activities. According to a  representative of this association, several states indicated that explicit  CMS guidance in this area would provide states leverage to  strengthen their Medicaid managed care plan contracts and oversight  related to TPL.
HMS representatives recommended that CMS strengthen its  statements encouraging insurers to share coverage information with  out-of-state Medicaid agencies, and further clarify through regulations  existing CMS guidance regarding insurer cooperation with Medicaid  managed care plans that conduct TPL activities on behalf of states.
State officials suggested that CMS could provide information to  ensure all states are aware of promising available data-matching  strategies.
CMS, however, may have incomplete information to inform such guidance  as, according to CMS, the agency does not actively track all states’  coverage-identification strategies on an ongoing basis, and in some  cases, may not be aware of promising state initiatives. While the effective  state practices CMS solicited and shared with states included information  on initiatives implemented as of 2013, other state initiatives underway  were not included. For example, Minnesota officials said they had  submitted information about the CAQH data registry; however, the state’s  submission did not meet the criteria for inclusion in the effective practices  document because the state had not yet implemented the registry. In  addition, while CMS suggests that states should oversee Medicaid  managed care plan TPL activities, as applicable, the agency does not  track which states delegate TPL responsibilities to Medicaid managed  care plans, nor the problems with or oversight of related Medicaid  managed care plan TPL activities in states that do.
Officials from selected states also emphasized efficiencies and other  benefits that could be gained from state collaboration and information  sharing, which CMS could support. For example, Michigan officials noted  that the state wanted to explore sharing the national coverage data it  obtained from insurers, as well as the TPL tracking and billing system it  developed, with other states, noting the cost-effectiveness of states using  its system and data rather than each developing their own. In addition,  officials in multiple states noted the value of CMS-facilitated national TPL  conferences that provide states with opportunities to discuss emerging  problems and share expertise regarding solutions. CMS officials  indicated that the last conference occurred when there were significant  changes under the DRA and that CMS has no specific plans to facilitate  future TPL conferences, but officials noted that discussions were  underway regarding additional conferences or other training opportunities.
section_title: Conclusions
paragraphs: National survey data suggest that a substantial number of Medicaid  enrollees—7.6 million—had private health insurance in 2012 and that  many of these enrollees were in eligibility groups that incur, traditionally,  higher medical costs. Furthermore, this number is expected to increase  because of the Medicaid expansion. States have front-line responsibility  for ensuring that Medicaid is the payer of last resort and are required to  take steps to identify individuals with other health insurance and ensure  that other insurance pays to the extent of its liability. Substantial  increases in TPL cost savings in recent years highlight that improvements  to TPL efforts, such as heightened attention to coverage identification,  can substantially improve TPL cost avoidance and recoveries. The scale  of the cost savings to Medicaid at both federal and state levels through  the identification of coverage through, and payment of services by, private  health insurance—reportedly nearly $14 billion in 2011—underscores the  potentially significant return on investment that may be gained from  continued TPL improvement efforts and attention to resolving remaining  gaps in state access to available coverage data.
Selected states have taken a variety of steps to further improve TPL  efforts, and other states may also be implementing initiatives to address  persistent challenges states report in ensuring Medicaid pays after other  liable third parties. The various initiatives that selected states have  undertaken—such as initiatives to improve identification of enrollees with  private health insurance through data matches or to ensure that TPL  efforts are maintained in an increasingly managed care environment— highlight options that other states could consider to improve their  respective TPL savings. Other states may also have initiatives that could  be adopted more broadly. CMS has taken steps to support states and  publicize effective state practices. However, as new strategies emerge  over time, a robust ongoing effort to collect and share information about  state initiatives would ensure that states—particularly any states that may  not conduct data matches with private insurers— are aware of available  data matching strategies and solutions to challenges states or Medicaid  managed care plans may face in conducting TPL activities. Given the  significant federal Medicaid outlays, which are increasing as Medicaid  expands under PPACA, the federal government has a vested financial  interest in further increasing states’ TPL cost savings, and CMS should  play a more active leadership role in monitoring, understanding,  supporting and promoting state TPL efforts.
section_title: Recommendations
paragraphs: In light of the federal interest in ensuring that Medicaid should pay only  after other liable third parties; state initiatives to improve TPL efforts, such  as coverage identification strategies; and states’ increasing use of  managed care, we recommend that the Secretary of Health and Human  Services direct CMS to take the following two additional actions to  oversee and support state TPL efforts:
Routinely monitor and share across all states information regarding  key TPL efforts and challenges.
Provide guidance to states on their oversight of TPL efforts conducted  by Medicaid managed care plans.
section_title: Agency Comments
paragraphs: We provided a draft of this report to HHS for comment. In its written  comments—reproduced in appendix III—HHS concurred with our  recommendations. HHS stated that it will continue to look at ways to  provide guidance to states to allow for sharing of effective practices and  to increase awareness of initiatives under development in states. HHS  also stated that it will explore the need for additional guidance regarding  state oversight of TPL efforts conducted by Medicaid managed care  plans.
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section_title: Appendix I: Scope and Methodology of the American Community Survey (ACS) Analysis
paragraphs: To assess the extent to which Medicaid enrollees have private health  insurance, we utilized the ACS, an annual survey conducted by the U.S.  Census Bureau. The ACS includes representative samples of households  from each state and also includes individuals residing in institutions such  as nursing homes. The ACS collects self-reported information, such as  the type of health insurance coverage as of the date of the survey (if any),  disability status, age, and state of residence. We analyzed data from the  most recent ACS Public Use Microdata Sample (PUMS) that was  available at the time we conducted our work, which covered calendar  year 2012.
Medicare is a federal health insurance program for individuals aged 65 and older or with  certain disabilities and individuals with end-stage renal disease. TRICARE is a federal  health program generally for active-duty military personnel and their dependents, and  retirees and their dependents and survivors.
Medicaid coverage was assigned to foster children, certain individuals receiving  Supplementary Security Income or Public Assistance, and the spouses and children of  certain Medicaid beneficiaries. Medicare coverage was assigned to individuals aged 65  and older who received Social Security or Medicaid benefits. TRICARE was assigned to  active-duty military personnel and their spouses and children. that the ACS PUMS data were sufficiently reliable for the purposes of our  engagement.
subsections: section_title: Key Analysis Variables
paragraphs: From the available ACS PUMS data, we constructed the following  variables for our analysis:
Medicaid coverage and eligibility category. We defined individuals  as having Medicaid if they reported health coverage through  Medicaid, medical assistance, or any kind of government assistance  plan for individuals with low incomes or a disability. These sources of  coverage are combined in one question in the ACS PUMS. For  purposes of the report, we refer to these individuals collectively as  Medicaid enrollees.
We further categorized Medicaid enrollees into four broad Medicaid  eligibility categories—children, adults, disabled, and aged:
We defined the child eligibility category as individuals aged 0  through 18 who did not report a disability.
We defined adult eligibility category as individuals aged 19  through 64 who did not report a disability.
We defined the disabled eligibility category as individuals aged 0  through 64 who reported one or more of the 6 disability indicators  included in the ACS data.
We defined the aged eligibility category as individuals aged 65  and older.
Third-party private and public health coverage. We defined  individuals as having private insurance coverage if they reported  having health insurance through a current or former employer or  union, insurance purchased directly from an insurance company, or  both. We defined individuals as having public coverage other than  Medicaid if they reported coverage through Medicare or TRICARE, or  having ever used or enrolled in health care provided through the  Department of Veterans Affairs (VA).
section_title: Methodology
paragraphs: Based on the variables defined above, we used calendar year 2012 ACS  PUMS data to estimate the number and percentage of Medicaid enrollees  with private and other sources of health coverage. We produced separate  estimates by Medicaid eligibility group and state of residence. To  generate our estimates, we applied the appropriate weights contained in  the ACS PUMS data files in order to expand the sample to represent the  total population and to account for the complex sample design.  Specifically, we used the person weights to generate estimated numbers  and percentages. We used the person replicate weights to generate  standard errors.
To assess the precision of our estimates, we calculated a relative  standard error for each estimate. A relative standard error is calculated by  dividing the standard error of the estimate by the estimate itself. For  example, if an estimate has a mean of 100 and a standard error of 20, the  relative standard error would be 20/100, which would be 20 percent.  Estimates with small relative standard errors are considered more reliable  than estimates with large relative standard errors. A small relative  standard error is a more precise measurement since there is less  variance around the mean. Unless otherwise noted, estimates included in  this report have relative standard errors of less than 15 percent.
section_title: Appendix II: Detailed Estimates of Medicaid Enrollees with Other Sources of Health Coverage
paragraphs: The following tables provide more detailed information about the  estimates derived from of our analysis of the 2012 American Community  Survey (ACS) Public Use Microdata Sample (PUMS). Specifically,   tables 1 and 2 provide estimates of the number and percentage of  Medicaid enrollees with other sources of health coverage by Medicaid  eligibility category and by state.
section_title: Appendix III: Comments from the Department of Health and Human Services
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Susan Anthony, Assistant  Director; Emily Beller; George Bogart; Britt Carlson; Laurie Pachter;   and Ying Long made key contributions to this report.