The Readiness Checklist states that a State Medicaid Agency (SMA) can exempt services from third-party

To exempt services from third party billing requirements, CMS requires the state to have clear and convincing documentation of non-coverage by insurers. There are multiple ways the state may obtain this documentation:

• The state may bill third parties and receive claims rejection notices. However, the state must assure that national billing codes for the items or services are included on claims, or, if local billing codes are used, that national codes and local codes are matched, so that rejection notices accurately reflect non-coverage of the item or service.
• The state may conduct a survey of insurers' benefit packages. The state can demonstrate non-coverage if it confirms with the top ten insurance carriers that their scope of benefits did not cover an item or service. However, since many insurers change their benefit packages on an annual basis, the state would have to confirm continued non-coverage on a yearly basis.
• For insurers not included in a survey, or as an alternative to a survey, the state may establish a precedent file by initially billing the insurer to obtain documentation of non-coverage, so that future claims would not need to be submitted to that insurer. The state would have to confirm continued non-coverage on a yearly basis.
• The state may request verification from the state agency or commission that oversees compliance with state law and regulations governing insurance plans that a certain item or service is never covered in insurance policies available in the state, either for the general population or for a specific population segment (for example, children under age 21).  The state would have to confirm continued prohibition of coverage on a yearly basis.

For more information, please review the Coordination of Benefits and Third Party Liability (COB/TPL) in Medicaid Handbook (PDF, 680.23 KB).