The "Medicaid Third Party Liability Act" modifies Medicaid's third-party liability rules by removing special treatment for certain payments, clarifying the role of health insurers, increasing state flexibility in accepting payment rights, and mandating verification of insurance status for Medicaid applicants.
Dan Crenshaw
Representative
TX-2
The Medicaid Third Party Liability Act modifies Medicaid's third-party liability rules by removing special treatment for certain care types, clarifying health insurers' roles in recovery, and increasing state flexibility in accepting payment rights. It mandates states to verify insurance status for Medicaid applicants to secure federal matching funds. States needing legislative changes gain delayed compliance to implement these modifications.
Medicaid Third Party Liability Act: Overhauling Payment Rules and Boosting State Power
The "Medicaid Third Party Liability Act" aims to shake up how Medicaid recovers funds when other parties (like private insurers) are responsible for healthcare costs. It's all about tightening up the system, clarifying who pays what, and giving states more control. Let's break it down:
Revamping Recovery
The core of the bill (SEC. 2) focuses on streamlining the "third-party liability" process. This is where Medicaid seeks reimbursement from other insurance sources that should have covered a patient's medical expenses. The act removes some special exceptions for certain types of care, making the rules more uniform across the board. Think of it like this: if you have private insurance and Medicaid, the private insurance should be paying first, and this bill makes sure that happens more consistently.
Insurers in the Mix
This is where it gets interesting. Starting January 1, 2026, states must clearly define in their contracts with health insurers (including big group plans) who's handling the recovery of payments from these third parties (SEC. 2). Is the state chasing the money, or is the insurer? This could make things smoother, but it also means insurers have a bigger role – something to watch. For example, a construction worker with both private insurance through their union and Medicaid might see their private insurer taking the lead in payment disputes, rather than the state Medicaid agency.
State Flexibility…and Responsibility
States get more leeway in accepting their right to recover payments and how they handle authorizations for third-party payments (also SEC. 2). While flexibility sounds good, it could lead to different rules in different states. Imagine a small business owner who moves from a state with one set of rules to another – they might face a whole new system for how Medicaid interacts with their private insurance. This is great for states that want more authority, but it could also introduce inconsistencies across the country.
Verification Hurdles
The bill also introduces a new requirement: verifying everyone's insurance status when they apply for Medicaid (SEC. 2). After January 1, 2026, states won't get federal matching funds if they haven't checked for other insurance coverage. This is meant to cut down on fraud, but it could also mean more paperwork and potential delays for people trying to get coverage. Think of a freelance graphic designer applying for Medicaid – they'll need to provide detailed information about any other insurance they might have, adding another step to an already complex process.
Time to Adjust
States that need to change their own laws to comply with these new rules get a grace period (SEC. 3). They have until the start of the calendar quarter after their next legislative session ends. This is important because it acknowledges that changing state laws takes time. However, it also means that implementation could be staggered across the country, potentially creating confusion in the short term.