Third Party Liability and Cost Avoidance
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Policies governing identification, filing, recovery, and coordination of third party resources for Alabama Medicaid recipients; applies to Alabama Medicaid Agency, providers, fiscal agent, and recipients interacting with third-party payors.
No material clinical or coverage changes in this revision.
Coverage and Recovery Rules
Coverage and recovery rules
Stance on payment responsibility, filing order, and recovery actions:
Exceptions: simultaneous filing permitted when Medicare intermediary crosses over claims; providers may file prior to third-party payment when benefit is paid on a 'set fee per day' basis provided the provider reports the third-party amount on the Medicaid claim.
Cost-effectiveness and premium payment
- Alabama Medicaid Agency may pay health insurance premiums for certain eligibles or recipients when the Agency determines that payment of the premium would be cost effective
- Cost-effectiveness means the expenditure of Medicaid funds for a set of services is likely to be greater than the cost of paying the health insurance premium
Criteria for determining cost effectiveness will be determined by the Alabama Medicaid Agency.
Billing when third-party exists
- Provider cannot bill the patient for Medicaid-covered services if the third party pays more than Medicaid allows and Medicaid zero-pays the claim
- Provider may bill a Medicaid patient if Medicaid denies a claim because of available third-party benefits and the provider cannot obtain sufficient information needed to file a third-party claim from the recipient, AVRS, MACSAS or the Medicaid Agency
Claim Data, Codes, and Cost-Effectiveness
| Providers must complete third party fields on Medicaid claims per Alabama Medicaid Provider Billing Manual. |
Filing, Documentation, Denials, and Subpoenas
File with third-party first; limited exceptions allow simultaneous or prior Medicaid filing
Providers must file claims with the primary third party before filing with Medicaid. Do not file with Medicaid until the third party responds with a payment or a denial, except when: (1) Medicare crosses over claims to the Medicaid fiscal agent (Medicaid and Medicare may be filed simultaneously), or (2) the third-party benefit is paid on a “set fee per day basis,” in which case the provider may file Medicaid prior to actual third-party payment but must indicate the amount the third party will pay on the Medicaid claim.
- File with third party first unless one of the specified exceptions applies.
- When Medicare crossover applies, claims may be filed simultaneously.
- For set fee-per-day third-party benefits, report the third-party amount on the Medicaid claim if filing before payment.
Document third-party payments on claims and resolve duplicates within 60 days
Providers who receive third-party payments must document the payment amount on the Medicaid claim. If a duplicate payment is received after Medicaid has been filed, the provider must, within 60 days, either refund the lesser of the insurance-paid amount or the Medicaid-paid amount to the Third Party Division or submit an adjustment request to the Medicaid Fiscal Agent to resolve the duplicate payment.
- Document third-party payment amount in the appropriate claim field when payment is received prior to filing Medicaid.
- Within 60 days of receiving duplicate third-party payment, refund the lesser of the insurance-paid amount or Medicaid-paid amount to the Third Party Division or submit an adjustment request to the Medicaid Fiscal Agent.
Attach and mark true third-party denials on Medicaid claims
Attach third-party denials to the Medicaid claim and indicate “Denied by Third Party” on the claim when a true denial exists. Only true denials (for example: policy lapsed, benefits applied to deductible, non-covered services) are acceptable; denials based on the third party’s requirement to use participating providers or obtain precertification are not acceptable unless additional documentation shows the requirement could not be met.
- Attach the third-party denial documentation to the Medicaid claim.
- Mark the claim “Denied by Third Party.”
- Provide further documentation when denials are due to participating provider or precertification requirements to justify why the requirement could not be met.
Send subpoena copy to Third Party Division; that notice satisfies Medicaid notification
When a provider receives a subpoena for medical records, they must respond immediately and send a copy of the subpoena to the Third Party Division of the Alabama Medicaid Agency indicating the records have been released; sending that copy serves as sufficient notice to Medicaid and substitutes for completing the Notification of Request for Medical Records from Provider form.
- Respond immediately to subpoenas and send a copy to the Third Party Division indicating records released.
- Sending the subpoena copy to the Third Party Division fulfills Medicaid’s notification requirement; the separate Notification of Request for Medical Records from Provider form is not required in this circumstance.
- Do not need to notify the Third Party Division when records are released to the Medicaid Fiscal Agent, SSA, Alabama Vocational Rehabilitation Agency, or the Alabama Medicaid Agency.
Key Terms
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