GAO: CMS not doing enough to limit Medicaid third party liability

Close to 8.5 million Medicaid beneficiaries also have private insurance, according to a recent Government Accountability Office (GAO) report, and state efforts to therefore ensure that Medicaid is the "payer of last resort" would benefit from additional federal action.

The report stated that as of 2012, 7.6 million Medicaid beneficiaries had private insurance. GAO further estimated that about 868,000 of the 7 million Americans who received coverage through Medicaid expansion in 2014 also have private insurance.

In theory, this should result in savings for both the state and federal government. Minnesota, for example, used electronic data matching technology to double the number of identified third party liability cases, GAO said. This saved $50 million over five years.

In most states, however, this is easier said than done. States face several challenges in coverage identification efforts, from time lags to missing data, the report noted. The Deficit Reduction Act of 2005 requires insurers to provide states with access to data in an effort to recoup payments, but it doesn't require insurers to do the same for Medicaid managed care plans.

What's more, a 2013 Department of Health and Human Services Office of Inspector General study found that the vast majority of states report issues with private insurers denying claims, failing to release coverage information or providing "incomplete or confusing information," GAO said.

States are taking action to reduce denials, and the Centers for Medicare & Medicaid Services (CMS) has issued guidance on what information insurers are permitted to release, but GAO said the agency must do more. CMS should strengthen its statements on data sharing requirements for both private insurers and state agencies.

While this GAO report did not pinpoint a specific dollar amount for the cost of failing to address third party liability issues, a separate report found that improper Medicaid payments resulting from gaps in managed care program oversight cost about $14.4 billion in 2013, FierceHealthPayer previously reported.

For more:
- read the GAO report (.pdf)